OHE Commission on Competition in the NHS

OHE Commission on Competition

Following on its successful Commission on NHS Outcomes, Performance and Productivity, the OHE launched the independent OHE Commission on Competition in the NHS in February 2011. The purpose of the Commission is to investigate whether, how and where in the health services competition may be beneficial or harmful overall.

In January, 2012, the Commission released is report.  The basic findings are summarized in the "Results" tab below and the fully report is available for download from this website.

The charge to the Commission

The Commission was charged with reviewing existing evidence and procuring additional research as needed on critical issues.  It was to produce a final report at the end of its deliberations with recommendations for policy and implementation. Specifically, the Commission was to address:

  • The characteristics of publicly funded health care services that determine whether competition or contest is likely to be beneficial

  • Non-price and price competition

  • How competition and contest, where potentially beneficial, might be enabled, promoted and regulated

The Commission members

James Malcomson (Chair), All Souls College and University of Oxford

Mike Bailey, Medical Director and Deputy Chief Executive, St George’s Healthcare NHS Trust

Anita Charlesworth, Chief Economist, The Nuffield Trust

Nigel Edwards, Acting Chief Executive, NHS Confederation

Julian Le Grand, London School of Economics and Political Science

Carol Propper, Imperial College London and Bristol University

Bob Ricketts, Director, Provider Policy, Department of Health, England

Adrian Towse, Director, Office of Health Economics

Jon Sussex, Deputy Director, Office of Health Economics

The OHE acted as the secretariat to the group to ensure the smooth running of the Commission and keep the time commitments of its members to a minimum. The OHE Commission, however, worked independently and its conclusions express the personal views of its members.

For further information, please contact Jon Sussex

In most markets, competition is viewed as an important means for driving economic efficiency and meeting the preferences of consumers. Health care, however, is not like most markets for a number of reasons. In the NHS, an additional consideration is that an extensive health care infrastructure already exists; changing that by introducing a multiplicity of providers actually could be inefficient.

The use of competition between NHS providers as an explicit tool of UK health care policy commenced with the separation of health care purchasing from its provision, and the consequent creation of an NHS ‘internal market’ in 1991. During the 1990s, competition was expressed in traditional market terms, including price. The NHS reforms since then initially downplayed competition, but, in England at least, subsequently re-emphasised it. Today, the emphasis is on non-price competition only, that is, competition based on quality. Competition is put forward as enabling and supporting patient choice. Choice is both an end in itself and, arguably more importantly, a mechanism intended to stimulate providers of publicly funded health care to produce both greater quality and efficiency, that is, improve performance.

The choice policy is being applied most obviously to acute, elective hospital care, where in principle an ‘any willing provider’ policy operates in England. Choice and competition also are being extended both to primary care, with GP practices being encouraged to compete with one another and with other service providers, and to longer-term care. Far less obvious candidates for a competitive provider ‘market’ are highly specialised services with low patient numbers and/or requiring costly and highly specialised assets to deliver them (including specifically trained and experienced staff). Planning and cooperation seem more attractive there. It is not clear, however, where the boundaries lie between services that might benefit from competition and those that would not.

The principle of competition transcends the organisational and ownership forms of health care providers. Competition does not necessarily imply a greater role for private commercial and voluntary sector providers of health care services (the ‘independent sector’), though a greater role for them is hard to envisage in the absence of competition.

NHS policy has developed differently in Northern Ireland, Scotland and Wales. Competition is not actively promoted and, in the latter two, the purchaser/provider split of the 1990s has been reversed. The lessons of the ‘natural experiment’ with different approaches to competition within the NHS across the UK will be an important area of interest to the Commission.

The Report of the OHE Commission on Competition in the NHS

Released on 31 January 2012, the report recommends careful expansion of competition among providers of NHS-funded health care in England. It sets out the evidence compiled and analysed by the OHE Commission during 2011 and concludes that:

  • Based on the best evidence available, competition at regulated prices has improved the quality of some NHS services.

  • Competition can help the integration of care – and there is no evidence that competition hampers integration.

Determining when and where competition is most likely to be effective is a challenge because health care consists of such a wide variety of very different services, delivered in dissimilar locations. To assist in the process of such assessment, the OHE Commission has developed a tool to help define where competition is most likely to be effective; this tool is included in the report.

The report suggests that although competition in the NHS is controversial, in the right circumstances it can be used to stimulate the provision of better health care than is achieved without competition. This does not mean that competition is desirable or feasible for all NHS services in all locations. The issue is not whether to have competition for all NHS services or for none; the question is for where and for which services competition would produce benefit for patients.

The evidence on competition in the NHS is limited, the report notes, but what is available implies that, used carefully, competition can benefit patients. The OHE Commission recommends:

  • That where current providers’ performance suggests health care could be improved, competition should be given serious consideration
  • The likely effectiveness of competition can be assessed before it is tried – using the analytical tool developed by the OHE Commission and described in the report

  • "Any qualified provider" arrangements allowing patients, helped by their GPs, to choose where to get their health care are suitable in some cases

  • In other cases, competitive procurement by local NHS commissioning bodies on behalf of the populations they serve will be more appropriate

  • Routine collection and publication of patient outcome measures should continue to be expanded to enable evaluation of the effects of competition

A copy of the report and three background papers are available for download here.

The presentation about the report made at the launch event may be downloaded here.