Foundation Trusts: A Retrospective Review

There is limited research evidence on foundation trusts (FTs) and much of the available material is in the form of commentary or the regular reports from Monitor. Comparative research is made difficult through lack of a counter-factual and robust methods are required to overcome bias. Summary points from the literature and from some initial analysis of Monitor reports that we have undertaken for this review are given below. Future policy and research issues are highlighted in the main report.

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

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.NHS contracts

Social health insurance systems in European countries: the role of the insurer in the health care system: a comparative study of four European countries

This paper examines the role of social health insurance in four European countries: Germany, Switzerland, France and the Netherlands. It attempts to elucidate the organisational structure, regulation and management of the social insurance schemes, as well as the relationships between the insurers, providers and consumers in the various countries with the aim of uncovering some of the inherent strengths, weaknesses and tradeoffs hich exist within social insurance systems.health care systems, Europe, insurance

Contracting in the UK NHS: purpose, process and policy

Contracting has played a central role in the NHS reforms as the principal mechanism by which resources are transferred from purchasers to providers. The nature, process and role of contracting are traced by examining the development of government policy on this issue since the inception of the reforms. Much of the emphasis in the early years of the reforms was on getting the detail of contracting ‘right’, with attention becoming focused more recently on wider commissioning issues and the nature of the purchaser-provider relationship. The contracting environment is described and consideration is given to the way in which changes in this environment have influenced the role and nature of contracting, particularly in terms of the tension between the role of the market and the role of management in the NHS. Contracts have been used partly as a management tool and partly as a means to promote competition, often through the threat of competition (‘contestability’) rather than actually switching contracts between providers. The present government’s stated intention to abolish the internal market will lessen the role of contracts as a mechanism to promote competition, but within a “system of contestability to force improvements in standards” (Labour Party 1996). If contestability is to be used more radically in the NHS, a clearer separation may be required between the ownership and operation of assets to address issues of poor provider performance. Longer-term contracts (or agreements) then become the framework within which providers operate to meet purchaser service specifications, with an increasing emphasis on quality and effectiveness of services, and a decreasing emphasis on annual activity and price negotiations. The key challenge will lie in creating an appropriate set of incentives to reward efficient providers, and to ensure sufficient flexibility in longer-term agreements to challenge poor performance.NHS contracts

The NHS performance framework: taking account of economic behaviour

The provision of quantitative information has been given a key role in securing good performance in the new NHS. A new National Performance Framework has been proposed encompassing a number of dimensions of performance. Whilst this approach to managing the NHS is welcomed, it is essential to understand the strengths and limitations intrinsic to the use of performance indicators for this purpose. In particular, complex behavioural consequences may arise in response to the collection and dissemination of performance data, some of which may be unintended, potentially dysfunctional and damaging for the NHS. Results from a recent study on the performance of NHS Trusts are used to illustrate the sort of unintended side-effects which occur within the current system and which may in principle be replicated in the new system in future. Whilst the possibility of such consequences does not invalidate the potential of the new Performance Framework to secure the desired changes in the NHS, it does suggest that careful attention needs to be paid to the assessment of unanticipated side-effects.performance, NHS Trusts

The NHS plan: an economic perspective

The NHS Plan, published in July 2000, presented an ambitious blueprint for the transformation of the way the NHS delivers health care. The backdrop to the Plan is the substantial increase in resources for the NHS promised for the next 5 years. At the heart of the Plan is the aim of ensuring these resources are used effectively to provide a health service “designed around the patient”. After reviewing the perceived flaws in the current system and dismissing the notion of alternative systems of health care funding, the main part of the Plan outlines the strategy for tackling the shortcomings. The discussion is wide-ranging and includes not only those areas we would expect to see covered, such as the interface between health and social care and the performance management system, but also issues such as investment in infrastructure, the relationships between the NHS and the private sector and key personnel issues such as the supply of health care professionals and their contractual arrangements. This discussion paper summarises the main elements of the Plan before focusing more closely on seven key themes on which economic analysis has a distinctive insight to offer – investment, information, labour markets, the independent sector, waiting times, performance management, and patient and carer responses. Some of the preconditions for success of the Plan are outlined and gaps in the available evidence to support various aspects of the Plan are highlighted. Our conclusions suggest that there is reason to be optimistic that the Plan will deliver many of its lofty aspirations if two key conditions are met. First, that front-line staff are on board and have the resources and the will to help implement the Plan; and second, that political expediency and the desire to achieve short-term goals does not drive out the commitment to the long-term aims for the NHS.The NHS Plan

The incentive effects of payment by results

Recently the English NHS has introduced an activity-based payment scheme for secondary care - the Payment by Results (PbR) policy. In this paper we discuss, from an economic perspective, the main intended and unintended incentives created by this policy. We also outline the role of different NHS institutions in monitoring and analysing the impact of PbR and consider the information and data requirements for such tasks.

Public services: are composite measures a robust reflection of performance in the public sector?

A composite indicator is an aggregated index comprising individual performance indicators. Composite indicators integrate a large amount of information in a format that is easily understood and are therefore a valuable tool for conveying a summary assessment of performance in priority areas. This research investigates the degree to which composite measures are an appropriate metric for evaluating performance in the public sector. Do they reflect accurately the performance of organisations? To what degree are they influenced by the uncertainty surrounding underlying indicators on which they are based? Are they robust and stable over time? The construction of composite measures creates specific methodological challenges that make such questions especially pertinent. We address these through a series of quantitative analyses of panel data relating to healthcare (Star ratings of NHS acute Trusts) and local government (Comprehensive Performance Assessment (CPA) ratings of authorities) in England where composites have been widely used. The creation of a composite comprises a number of important steps, each of which requires careful judgement. These include the specification of the choice of indicators, the transformation of measured performance on individual indicators, the specification of a set of weights on individual indicators, and combining the indicators using aggregation methods or decision rules. We use Monte Carlo simulations to examine the robustness of performance judgements to these different technical choices. We show the extent to which composites provide stable performance rankings of organisations over time and assess whether variations are due to genuine performance improvement or merely the result of random statistical variation. The analysis suggests that the judgements that have to be made in the construction of the composite can have a significant impact on the resulting score. Technical and analytical issues in the design of composite indicators have important policy implications. We highlight the issues which need to be considered in the construction of robust composite indicators so that they can be designed in ways which will minimise the potential for producing misleading performance information which may fail to deliver the expected improvements or even induce unwanted side-effects.performance measurement, performance indicators, composite indicators

Trends in health care commissioning in the English NHS: an empirical analysis

In recent years there have been marked changes in organisational structures and budgetary arrangements in the English NHS, potentially altering the relationships between purchasers (primary care organisations (PCOs) and general practices) and providers. Using data on elective hospital admissions from 1997/98 to 2002/03 we find that commissioning has become significantly more concentrated at PCO and GP level. There was a reduction in the average number of different providers used by PCOs (16.7 to 14.2), an increase in the average share of admissions accounted for by the main provider (49% to 69%), and an increase in the average Herfindahl index (0.35 to 0.55). About half the increase in concentration arose from the increase in the number of purchasing organisations from 100 to 302. The rest was due to mergers amongst providers and the abolition of fundholding. GP fundholding practices which held budgets for elective admissions had less concentrated admission patterns than non-fundholders whose admissions were paid for by their primary care organisation. There was an increase in concentration of admissions for both types of GP practice but fundholders used more providers, had smaller shares at their main provider, and had smaller Herfindahl indices.concentration, Herfindahl, purchasing, budgets, elective admissions

Fairness in Primary Care Procurement Measures of Under-Doctoredness: Sensitivity Analysis and Trends

The White Paper Our Health, Our Care, Our Say noted concerns about geographical equity of access to GPs (Department of Health, 2006, page 63), listed the 30 PCTs with the lowest number of GPs per head of need adjusted population, and set out policy initiatives to attract additional providers of general practice services to these PCTs. We were asked to evaluate the impact of these policies on the bottom 30 PCTs and will report in Autumn 2010. In this report we consider a number of related measurement issues which are relevant for consideration of policy on equality of access to general practice. Our main conclusion is that whilst the set of worst provided PCTs varies, sometimes substantially, with the choice of GP supply measure, need adjustment, and population base, the set of 30 identified by the White Paper contains a core of around 10 PCTs which are amongst the worst provided on most possible alternative definitions. The White Paper set also contains a larger fringe group which are in the bottom 30 on some definitions, particularly when the White Paper definition of GPs is used, but which also often fall outside the worst provided bottom 30. There is no obviously right set of definitions of GPs, need adjustments, and populations which can be implemented with available data. Judgements are required and those underlying the White Paper seem not unreasonable. However, we suggest that consideration be given to broadening the definition of the general practice staff from GPs to include practice nurses and possibly non-clinical staff as well.