Competition versus integration: how to get the balance right

The debate about competition in the NHS is often polarised between those who are ideologically opposed to any role for the private sector in the NHS and those who believe the NHS is a monopoly that needs to be broken up.

It seems Health Secretary Andrew Lansley is more in step with the latter, having modelled his plans for the NHS on his experience working as Norman Tebbit's private secretary in the 1980s when competition was introduced into the telecoms market with an independent regulator.

The Health and Social Care Bill sets out plans for an economic regulator – the new Monitor. While its main duty will be to protect the interests of patients, it will be given significant power to promote competition 'where appropriate'. The impact this will have on the NHS will largely depend on Monitor's interpretation of the phrase 'where appropriate'.

Competition is not an end in itself, rather a means to an end. A more sophisticated debate is needed about where competition is appropriate and where it cannot deliver benefits to patients or taxpayers.

Our recent joint debate with Cambridge Health Network centred on how and where competition could bring benefits and could enable greater integration and collaboration. As members of the audience commented, the use of competition needs to be 'tactical not ideological' and needs 'careful design'.

The debate identified different types of competition: competition within a market for patients and for referrals, and for a market, through a competitive tending process for contracts. Delegates expressed concern about price competition, particularly in a market where quality is not easily observed. Competition was seen to be appropriate in areas such as primary care and community services, where the costs of entry are low, but not in specialist areas of care without careful planning.

Is it possible to create competition between services, consortia and networks? Our discussion reflected a desire to move away from a system that encourages competition between hospitals for episodic care and where payments can encourage activity to one in which there is competition between integrated delivery systems or networks of providers. The productivity challenge will require different organisations to work together. The key will be to encourage innovative partnerships and clinical integration while at the same time ensuring patients will be able to 'exit' and there is at least some contestability for contracts. This suggests a more limited role for 'any willing provider' markets than government policy suggests.

If competition is designed to encourage providers to deliver higher quality and more efficient care, how will this be achieved? Some of our delegates felt that poor care was often tolerated and excellence went unrewarded. The current proposals include clear sanctions for those who fail to meet quality standards and a process of special administration and insolvency for those who get into financial difficulty. But there seems little incentive for the managers of high-performing providers to deliver excellent care and compete for patients. Although information and transparency are important, evidence suggests that GPs and patient are loyal to local institutions, even those delivering mediocre care. Given the limitations of choice, these providers need to be challenged more publicly perhaps through Healthwatch and local authorities.

Ultimately the impact of competition will depend on whether politicians are willing to allow the market to work, how Monitor functions, and how providers respond to the changing market. In the face of public and professional opposition the more unpalatable consequences of competition are likely to be mollified.

Watch the interviews and presentations from our debate on competition versus integration in the NHS

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