A statistic for you. Approximately £40 billion of total NHS expenditure in 2011/12 was spent on local contracts for services that do not have nationally mandated prices. Monitor’s recently published research paper assesses just how effective local contracts have been in delivering more for patients.
Monitor reports that local commissioners face a number of challenges in contracting for services that deliver better quality care for patients without a national price.
Some of the challenges to effective local contracting include:
- ‘Pressure on local commissioners to balance annual budgets may act as a barrier to improve patient care.
- Commissioners and providers lack consistently good quality information.
- Commissioners are not always able to negotiate with providers on equal terms.
- Transaction costs can be high.
- Contract enforcement is not always credible as commissioners are sometimes reluctant to use financial sanctions.
- Commissioners often rely on good relationships with providers to overcome these challenges’.
From 2014/15 NHS England and Monitor will take responsibility for setting prices for the whole NHS payment system in England, including both national prices and local contracts.
This report highlights just how difficult it is for commissioners to create effective local contracts. CCGs and NHS England’s Area Teams have only recently started their new and challenging role. They need time to establish themselves. According to Monitor’s research paper ‘measures to improve local contracting must take these circumstances into account’.
The research paper will clearly help to inform Monitor’s consultation on the forthcoming 2014/15 National Tariff Payment System which is due out shortly.
