Long-term contracts in the NHS: a solution in search of a problem?

✍ Scribed by Diane Dawson; Maria Goddard

• Publisher: John Wiley and Sons
• Year: 1999
• Tongue: English
• Weight: 82 KB
• Volume: 8
• Category: Article
• ISSN: 1057-9230
• DOI: 10.1002/(sici)1099-1050(199912)8:8<709::aid-hec482>3.0.co;2-0

✦ Synopsis

Purchasers and providers in the National Health Service (NHS) are now required to move from annual contracting cycles to longer-term contracts. The benefits are expected to include more efficient investment and improved sharing of financial risk. This paper argues that the economic analysis of longer-term contracts has assumed implicitly that agents operate in the private sector. Once the constraints of the public sector are introduced, the apparent economic benefits of longer-term contracts become doubtful. The paper explores these issues using evidence collected from analysis of the contracts of a sample of Health Authorities and from semi-structured interviews with individuals involved in the contracting process. We conclude that with the property rights and financial structure of the public sector, the move from short-to long-term contracts is unlikely to produce the improvements in performance expected by the government.