Background
Competition
In the early 1990s, the then Conservative government took the first steps towards introducing market forces into the provision of health care services within the NHS.
The key reform was the separation of the provision of services from payment for them. The provider side of the NHS – mainly hospital and some community services but not primary care – was, over time, re-organised into independent trusts. Payment for services, or purchasing as it came to be known, remained with district health authorities. In addition, some GPs, known as fundholders, took over some purchasing – mainly of elective care – on behalf of the patients registered with them.
The first White Paper issued by the Labour government elected in 1997 indicated its intention to abolish GP fundholding but it retained the purchaser/provider split for hospital services. Other services were, however, put under the direct control of primary care trusts – the successors of district health authorities.
In the years following publication of the NHS Plan in 2000, the Labour government’s attitude towards the use of market forces began to change. The NHS Plan set a number of demanding targets, of which those for waiting times for hospital treatment were the most salient.
By 2002 the then Labour government had decided that waiting time targets could not be met without further action. It introduced patient choice of hospital, initially on an experimental basis in London and for patients on waiting lists for cardiac surgery. This allowed patients to choose hospitals where waiting times were short.
The introduction of patient choice was accompanied by a reform of the method of payment for hospital services: if choice was to work, payment had to follow the patient to his or her place of treatment. A new system of paying hospitals was introduced, known as Payment by Results, which linked payment to the number of operations carried out. In this way hospitals were given a direct incentive to attract more patients and hence compete for patients.
At the same time the Labour government decided that the NHS alone could not meet the waiting time targets set in the NHS Plan. It therefore established a national procurement programme of what were known as independent sector treatment centres (ISTCs) to treat patients with cataracts and other common conditions.
From January 2006 patient choice was extended across England and all specialties; by 2008 patients were able to choose at the point of referral to be treated in any NHS hospital or any registered independent sector provider. By this time the new payment system had been extended to nearly all hospital services, and the then government was seeking to extend it to those provided in the community.
Changes were also made to the constitution of NHS providers to enable them to compete more effectively. Provided that they could demonstrate financial viability, trusts were able to apply for foundation status. In principle this gave them a greater degree of independence from the Department of Health and greater freedom to raise capital and develop new services. A new regulator, Monitor, was established both to award foundation status and monitor their subsequent performance.
These changes applied primarily to hospitals. From 2004 onwards the Labour government introduced new arrangements for primary care that allowed new entrants to bid to take over GP and related services. More recently they took the further step of proposing – and subsequently requiring – that primary care trusts divest themselves of their provider services. This in effect introduced the purchaser/provider split in community services, opening the way for these services to be subject to competition via competitive tendering.
The coalition government is committed to extending patient choice so that patients undergoing elective procedures will be able to choose which consultant led team carries out their treatment by April 2011 where clinically appropriate. It also plans to introduce choice for some mental health services and for diagnostic testing and post-diagnosis from 2011.
The government has also proposed that all NHS hospitals become Foundation Trusts by 2013 and is considering granting foundation trusts greater flexibilities, for example by relaxing the statutory limit on the amount they can borrow (see Liberating the NHS: Regulating healthcare providers)
Under these proposals Monitor’s powers will be extended so that it becomes the financial regulator for all providers of NHS care with the power to license providers and to regulate prices. It will have powers to apply competition law not just to NHS providers but also to privately funded health care and social care.
Co-operation
The Labour government promoted policies that emphasised the need for closer working between different parts of the NHS. Official reports in the 1990s had already identified the fact that cancer and other services were poorly organised, meaning that patients often did not get the specialised care they needed and links between hospitals and the services such as rehabilitation that patients needed after discharge were often poor.
The NHS Cancer Plan published in 2000 therefore proposed that a series of cancer networks should be established; hospitals within each network should work together to ensure that patients had access to high-quality services wherever they lived.
The NHS Plan – also published in 2000 – argued that many other services were also poorly organised and introduced what it termed national service frameworks. Like the Cancer Plan these set out the best way of providing services for each client group and emphasised the need for the various parts of the NHS to work together to ensure that patients received high-quality care.
These standards centre around ‘care pathways’. These define all the services that a patient requires for each stage of their treatment, irrespective of where and by whom the care is provided. It requires providers to work together to ensure that the transition from one provider to another is ‘seamless’.
The need for close co-ordination of this kind is particularly important for those with long-term conditions. They may require a wide range of health services as well as social care – the responsibility of local authorities. The continuity of care and effective links between the various services that co-operative working can promote are particularly important for these patients.
In 2008 the Department of Health issued a set of guidelines for the management of competition and co-operation and established a co-operation and competition panel to advise on individual cases where local proposals may conflict with these principles and on the development of co-operation and competition in general.
The coalition government is planning to strengthen the integration of services across care pathways through new quality standards to be developed by NICE, for example, in the new dementia standard.
The government also plans to create statutory health and well being boards within local authorities to promote integration, including joined up commissioning of local NHS services, social care and health improvement.
