Long-term contracts in the NHS: a solution in search of a problem?
Purchasers and providers in the National Health Service (NHS) are now required to move from annual contracting cycles to longer-term contracts. The benefits are expected to include more efficient investment and improved sharing of financial risk. This paper argues that the economic analysis of longer-term contracts has assumed implicitly that agents operate in the private sector. Once the constraints of the public sector are introduced, the apparent economic benefits of longer-term contracts become doubtful. The paper explores these issues using evidence collected from analysis of the contracts of a sample of Health Authorities and from semi-structured interviews with individuals involved in the contracting process. We conclude that with the property rights and financial structure of the public sector, the move from short- to long-term contracts is unlikely to produce the improvements in performance expected by the government. Copyright © 1999 John Wiley & Sons, Ltd.
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Volume (Year): 8 (1999)
Issue (Month): 8 ()
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- Chalkley, Martin & Malcomson, James M, 1996. "Contracts for the National Health Service," Economic Journal, Royal Economic Society, vol. 106(439), pages 1691-1701, November.
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- Williamson, Oliver E, 1983. "Credible Commitments: Using Hostages to Support Exchange," American Economic Review, American Economic Association, vol. 73(4), pages 519-40, September.
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