Gwyn Bevan: Competition between commissioners

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  • 1. Competition betweencommissioners: lessons from theNetherlands? Nuffield Health Strategy Summit 25 March 2010 Gwyn Bevan Department of Management, LSE R.G.Bevan@lse.ac.uk
  • 2. Competition between commissioners: lessons from the Netherlands? 21 years of purchaser  Mutual Healthcare / provider Purchasers  1989: internal market  Choice  1997: 3rd way  Choice &  2000: targets & terror competition  NHS  2002: internal market  Different packages + patient choice
  • 3. Purchaser / provider withcompetition (1989 -97) Working for Patients (1989)  Internal market  provider competition  choice by health authorities & GP fundholders  ‘money follows the patient’ Le Grand (1999)*  Little evidence of change Incentives too weak & constraints too strong *Competition, cooperation, or control? Health Affairs
  • 4. Tuohy’s ‘accidental logic’*:NHS state hierarchical system Ministers accountability  Access & failures  Autonomous providers & purchasers? Collegial decision making  GPs & specialists  Effective purchasing / commissioning? Needs of populations? Patient choice? No need for information on prices & quality * Tuohy (1999) Accidental Logics. Oxford University Press
  • 5. Purchaser / provider without competition (1997 to 2002) The new NHS (1997)  1997 to 2000: search for 3rd way  command & control  producer capture  internal market  fragmentation, inequity, instability & high transaction costs
  • 6. Purchaser / provider withoutcompetition (1997 to 2002) The NHS Plan (2000)  2000- 2005: command & control without producer capture by ‘star rating’ (‘targets & terror’)  threat of switching work often a weak lever to drive improvement in a local NHS trust, as was shown by failure of ‘internal market’
  • 7. Purchaser / provider No competition: 3rd wayNumbers waiting elective admissions (England) (‘000s)400300200100 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 >6 months >9 months >12 months
  • 8. Purchaser / provider No competition: star ratingNumbers waiting elective admissions (England) (‘000s)400 Star ratings published300200100 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 >6 months >9 months (2004) >12 months (2003) Source: Department of Health (2005) http://www.dh.gov.uk/assetRoot/04/08/26/27/04082627.pdf
  • 9. % waiting < 13 weeks forhospital admission (March 2008) Source: Connolly et al (2010) Funding and Performance of Healthcare Systems in the Four Countries of the UK before and after Devolution. The Nuffield Trust.
  • 10. Barber (2007) Instruction toDeliver Awful  adequate  Command & control  public not satisfied  have to keep flogging the system Adequate  good / great  quasi market & consumer choice  innovation from self- sustaining systems
  • 11. Purchaser / provider with competition & patient choice (from 2002) Delivering the NHS Plan (2002) No  Patient choice  World Class Commissioning  Provider diversity  FTs & ISTCs  ‘money follows the patient’  Standard tariff (PbR) competition by quality
  • 12. The impact of the NHS market:An overview of the literature* No good evidence reforms produced beneficial outcomes classical economic theory predicts of markets provider responsiveness to patients & purchasers  large-scale cost reduction  innovation in service provision NHS incurs transaction costs of market without benefits * Brereton & Vasoodaven (2010) http://www.civitas.org.uk/nhs/download/Civitas_LiteratureReview_NHS_market_Feb 10.pdf
  • 13. Continuing problems Failure to create true functioning market  political interference  weak purchasers  barriers to exit & entry Lack of a stable policy environment  Purchasing:200 DHAs  100 HAs + 480 PCGs  300 PCTs  150 PCTs  GP Fundholding abolished  PBC Source: Brereton & Vasoodaven (2010) http://www.civitas.org.uk/nhs/download/Civitas_LiteratureReview_NHS_market_F eb10.pdf
  • 14. Choice & competition betweenMutual Healthcare Purchasers? MHPs: Insurers without risk rating  the Netherlands by risk equalisation  England by lack of competition Options for choice of MHP  without competition (no incentives)  Competition NHS (MHP incentives)  Competition different packages (MHP & patient incentives)
  • 15. Choice of MHP: Risk equalisation Annual expenditure Formula funding 100 based on analysis by small area  75 Risk equalisation 50 based on analysis by individuals 25  ACRA research led by Nuffield (for 0 PBC) 1% 5% 10% 25% Actual Estimated (age & sex) Source: Lamers and van Liet (1996)
  • 16. Choice of MHP with competition Dutch EnglishMarket regulation Competition   Solvency   Consumer Protection  Sufficient numbers MHPs   Providers  
  • 17. Choice of MHP with competitionby packages Dutch EnglishTransparency Insurance products  
  • 18. ReflectionsThe Netherlands England MHP competition but  Little evidence of as yet little selective provider competition contracting Model exported to  Model abandoned by Germany & New Zealand, Switzerland Scotland & Wales
  • 19. Can the English hare learn fromthe Dutch tortoise?The Netherlands England Corporatism, Etatism,  State hierarchical Subsidiarity, Coalition system + government majoritarian One policy government Dutch procession of  blitzkrieg  army of Echternach over 20 occupation in hostile years territory*  4 policies in 20 years *Shock (1994) Medicine at the centre of the nation’s affairs, BMJ