As the UK competition landscape develops and the new economic regulator comes into effect, competition is increasingly a firm item on the reform agenda in the NHS in England. The NHS White Paper: Equity and Excellence: Liberating the NHS, envisages a significant extension of market mechanisms in the NHS in England.
The Nuffield Trust, in partnership with Monitor, is hosting a series of debates and discussions for policy-makers, practitioners, academics and others to assess how the NHS can develop market mechanisms to improve the efficiency and quality of health services.
This was the second seminar in our series of three debates on competition policy and took place at the Nuffield Trust’s Annual Health Strategy Summit. The session explored some of the key issues that the new economic regulator will have to address to be effective.
The discussion was chaired by Professor Alan Garber, Henry J Kaiser Jr Professor, Stanford University, who is unusual as he a professor of economics and a practicing physician. From this standpoint he is able to bridge the seemingly vast divide between the debate about quality improvement among medical professionals and the approach of economic regulators.
Other keynote speakers included:
- Paul Johnson, Director, Institute for Fiscal Studies, and Matthew Bell, Associate Director, Frontier Economics – their contributions focused on outlining the experience of economic regulation in the utilities (gas, electricity and communications) and the lessons for health care;
- Dr Stephen Dunn, Director of Strategy, NHS East of England, who outlined East of England Strategic Health Authority’s approach to introducing competition and the challenges of competition policy in practice with a case study covering the contracting out at Hinchingbrooke hospital;
- Professor Andrew Street, Professor of Health Economics at the University of York, who provided an overview of the Payment by Results (PbR) system and gave his assessment of the lessons that can be learned from the ways in which hospitals are incentivised.
There were many interesting themes but one stood out as fundamental: the approach to pricing. The current PbR systems sets annual prices for individual hospital spells for over 1,000 different diagnostic groups. The consensus from the discussion was that PbR was useful when the challenge facing the NHS was reducing waiting times for elective surgery, but it was agreed that it now has limitations as the NHS moves towards measuring health outcomes.
The seminar drew out lessons for policymakers, regulators, providers and commissioners (both at national and local level) and provided an interactive forum for a discussion on how the NHS can harness the power of competition.
