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Longer-term agreements for health care services: what will they achieve?

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  • Diane Dawson
  • Maria Goddard

    ()
    (Centre for Health Economics, The University of York)

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    Abstract

    Government policy announced in the White Paper is to require purchasers and providers in the NHS to move from annual contracting cycles to longer-term contracts (agreements). It would appear the original arguments for this change came from the economics literature, suggesting longer-term contracts would help deal with problems of asset specificity, promotion of new entry and transactions cost. The Labour government emphasises longer-term contracting as a means of shifting the focus of purchaser provider relations from price and activity to quality of service and strategic planning. This Discussion Paper reports the results of research into the extent and nature of long-term contracting in the NHS. It is based on examination of contracts from a sample of six health authorities and their GP Fundholders, supplemented by interviews with individuals from these Health Authorities and Trusts who were involved in the contracting process. The paper considers the extent to which the problems identified in the theoretical literature on duration of contract are likely to be observed in the NHS and the extent to which it is likely a movement to longer-term contracting will achieve the benefits expected.

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    File URL: http://www.york.ac.uk/media/che/documents/papers/discussionpapers/CHE%20Discussion%20Paper%20157.pdf
    File Function: First version, 1998
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    Bibliographic Info

    Paper provided by Centre for Health Economics, University of York in its series Working Papers with number 157chedp.

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    Length: 28 pages
    Date of creation: Aug 1998
    Date of revision:
    Handle: RePEc:chy:respap:157chedp

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    Web page: http://www.york.ac.uk/che
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    Related research

    Keywords: NHS contracts;

    References

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    1. Crocker, Keith J & Masten, Scott E, 1991. "Pretia ex Machina? Prices and Process in Long-Term Contracts," Journal of Law and Economics, University of Chicago Press, vol. 34(1), pages 69-99, April.
    2. Chalkley, Martin & Malcomson, James M, 1996. "Contracts for the National Health Service," Economic Journal, Royal Economic Society, vol. 106(439), pages 1691-1701, November.
    3. De Fraja, Gianni & Hartley, Keith, 1996. "Defence Procurement: Theory and UK Policy," Oxford Review of Economic Policy, Oxford University Press, vol. 12(4), pages 70-88, Winter.
    4. Blair, Roger D & Kaserman, David L, 1987. "A Note on Bilateral Monopoly and Formula Price Contracts," American Economic Review, American Economic Association, vol. 77(3), pages 460-63, June.
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