Hospitals have more negotiating power than commissioning groups, Monitor says

BMJ 2013; 347 doi: (Published 26 September 2013) Cite this as: BMJ 2013;347:f5846
  1. Gareth Iacobucci
  1. 1BMJ

Poor quality data and weak contracting skills are undermining the effective commissioning of healthcare services in England, new research from the regulator Monitor has found.

The study1 found that healthcare providers hold too much negotiating power, with commissioners sometimes lacking strong contracting skills, and are often unwilling to impose financial sanctions on providers.

The paper, “Local price setting and contracting practices for NHS services without a nationally mandated price”, has been published ahead of Monitor taking on joint responsibility with NHS England for the whole NHS payment system in England from 2014-15, including both national prices and local contracts.

It is based on interviews conducted with clinical commissioning groups, commissioning support units, and providers from ambulance, acute, mental health, and specialist and community sectors.

The report said that providers had access to “far better data than commissioners about the work they do and the costs of doing it,” and added that they must share more data to help commissioners make informed decisions.

It said that this was compounded by some commissioners lacking expertise in areas such as contractual risk sharing, and using locally designed approaches to link payment to achievement.

Imbalances in access to data and contracting expertise “can make it difficult for commissioners to negotiate and agree contract terms that deliver the best outcomes for patients,” the report said.

Monitor said that weaknesses in these areas were also inflating the already high transaction costs associated with managing local contracts.

The study also highlighted that commissioners were sometimes reluctant to enforce contracts, particularly financial penalties, “for fear of exacerbating providers’ existing problems.”

It said that while this may be justified in the short term, “it may be against patient interests in the longer term to withhold from providers this potentially powerful incentive to improve quality and efficiency.”

Monitor said that the findings from the research would inform proposed changes to the national tariff payment system for 2014-15,2 currently subject to consultation.

The report concluded, “One option may be to set national prices for more services. But setting national prices is only one among Monitor’s many regulatory tools and may not always be suitable. Other tools, such as improving the quality of data to inform local decision making, may be more effective in some circumstances.”


Cite this as: BMJ 2013;347:f5846


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