This latest in the NHS Confederation’s policy salon series, in association with the Kings Fund, is going to be more difficult than usual to write up coherently.

One reason for this is that, in addition to the Chatham House Rules (which are fine), much of the research informing the presentation and discussion is in peer review or yet to be published.

So there are no hard numbers here; broadly, what I will try to do is to give a summary of the themes, trends and discussion.

The novelty of policy evaluation
It is to the credit of the Department of Health that they commissioned academic research into the reform initiatives of the past decade in the NHS.

The quasi-market reform mechanics, of
1. increased diversity of providers
2. foundation trusts (FTs) – from 2003 onwards
3. payment by results
4. patient choice
were phased in over this period, making exact attribution of effects problematic. There were also quite a few billion more pounds introduced during this time.

Alongside these, the refusal of the NHS in the non-English ‘home nations’ to adopt the market mechanisms gives some scope for comparative assessment.

Past theory; present practice
US evidence suggests that higher levels of competition seem associated with higher-quality care if you have fixed prices. With variable prices, the evidence seems to point the other way.

Considering the NHS reform drivers in the abstract, one might expect Payment by Results (PbR) to increase provider activity and reduce unit costs, but it might also make providers discriminate against high-cost patients. Patient choice could also increase inequalities.

Impacts of provider diversity (mostly from qualitative data findings)
- local commissioners are influential in extent of provider diversity – in places, creating strong barriers to new entrants (through bidding and contracting), and thus such areas have see limited private penetration, affecting competition
- little head-to-head competition
- private sector seems positive for patient experience and efficiency, and third sector for niche expertise and hard-to-reach groups
- private and third sector tend to focus innovation on organisation, management and skill mix; NHS tend to focus innovation on clinical practice and technology
- NHS providers responded to ITSCs by introducing new care pathways and improving patient experience, but most reported that they perceived little competition
- ISTC patients report better experience than the NHS, but after allowing for case mix, LOS etc., issue of ownership is no longer significant

Impact of PbR
- PbR had expected effect of lowering unit costs, but not on volumes (commissioners were convinced PbR was dragging money out of budgets locally)
- analysis of FTs vs. comparable providers in Scotland shows significant reduction in length of stay; significantly greater rise in day case rates; and a lower growth rate in activity in FTs, implying in a modest way that PbR has been doing what we would expect
- feared negative effects on quality seem not to have materialised

Hospitals mortality reduction marginally faster in PbR, case mix standardised

How patients choose and providers respond
- studies show that the vast majority of patients think choice is important, and around half report being offered choice of hospital (similar to DH research figures)
- GPs are reluctant to prioritise choice routinely as a policy priority
- personal experience and GP were main sources of advice about choice of provider, rather than formal information on quality
- influences on patient choice are cleanliness and access time; not ease of parking and quality of food
- patients recalling being offered choice are more likely to travel to non-local hospital than those who didn’t recall (or get) the offer
- bad experience of a provider makes people likely to go elsewhere
- educated patients are more aware of choice and likely to go to non-local providers
- NHS hospitals perceived patient choice to be of limited significance, but a small percentage of patients were switching with offer of choice, which could prove important in future (during the period studied, providers were working waiting lists down in environment of growing budget)

Impact of competition with fixed prices on patient care
- hospital markets are highly concentrated compared with non-hospital markets, especially for non-electives
- commissioning patterns are similarly concentrated
- a decrease in concentration became visible particularly at the end of the period, with an increase in competition around rather than in urban areas – the impact of the policy appeared more in areas around cities, where there was less competition before
- increase in competition was associated with an improvement in clinical outcomes as measured in death rates and fall in length of stay – findings contrary to those in studies of the 1990s NHS internal market and GP fundholding
- death rates (not an ideal measure) fell more in hospitals which face more competition without increases in per capita spending or change in admissions
- 2009 research by LSE’s Zac Cooper et al show quicker fall in acute myocardial infarction mortality (as an emergency care condition, less amenable to coding and referral threshold effects) for patients living in more spatially competitive hospitals after January 2006 introduction of patient choice of elective provider
- there may be an effect related to competition arising from competitive acquisitions in the medical labour market

Disputing whether competition or stability works best
Van Reenen’s studies on competition and quality of management (which control for differences in labour market competitiveness) suggest positive correlation between quality of management and level of competition.

Other work on quality by region suggested that more stable quality of personnel produces better performance (contrasting good figures for NHS North East with poorer ones in NHS London).

Diverse qualitative case studies of reform
- Parts of the NHS are largely untouched by the quasi-market changes (mental health system), and said they knew nothing about these changes
- local circumstances and priorities matter
- commissioners and providers’ perspectives differed (PbR not uniformly viewed as positive by commissioners), but both agreed that the reforms focused minds
- commissioners felt handicapped by PbR, FTs, ISTCs, budget constraints, PCT restructuring
- impact of patient choice was blunted by strength of previous referral patterns
- perceived tension in policy and behaviour between competition and collaboration (integrated care) in face of the newer fears about financial sustainability – leading to disparate policy drivers - elements of command and control (targets), choice and competition and collaboration - all present together; problematic because ‘targets and terror’ sit uneasily with collaboration and competition

Interim conclusions about the research
- Those who support competition and markets could find cause to be cautiously optimistic. However, the studies are not looking at the costs to engineer competition and choice (a recent Civitas report suggested that the NHS had the worst of both worlds: all the costs of the market without any of the benefit)
- the NHS is still some distance from running as a fully fledged market, though hospitals seem to be competing on quality.
- implementation varies by area and speciality – these reforms appear to best fit the world of elective care and where high contestability and measurability exist
- no obvious signs of harm to services have emerged from quasi-market reforms, but it is hard to measure this well
- the impacts are probably modest compared to targets’ impact, but they are in the direction expected. Perhaps the NHS is more responsive to being taken by the throat, rather than being competed for?
- choice may be working as small changes in flow send big signals to providers
- this (second) NHS quasi-market may have stronger incentives for quality and efficiency than the 1990s version
- the findings broadly in line with other recent studies, but not Audit Commission / Civitas reports (obviously, produced prior to the dissemination of this data)

Discussion
A lively unattributable discussion ensued.

The paradox was noted that as research appears to validate positive effects of competition, the current policy vogue is moving towards integration and collaboration in the face of financial fear.

The importance of culture was apparent in various remarks. One researcher noted that when discussing what drives change, respondents often first talk about their organisation’s culture - the externality is a desire to meet CQC thresholds and targets; if you then drive down to operational level, thos e same people are saying to their clinicians, ‘this is a competitive environment now, we’re going to lose business if you don’t change your care pathways’.

It was also noted that many elective surgeons also work in highly competitive private sector environment, where they behave as some of the most competitive professionals you’d ever meet.

Scepticism about the impact of quasi-market reform was voiced noting that US systematic reviews of public reporting find its effect limited in a much more competitive system. It was suggested that the impact of funding, national targets dating back to 1997, national service frameworks (NSFs) and quality fameworks may contribute to this in a delayed response. Another possibility was the effect of chance.

The need for SHA-level presentation of data was suggested – reinforced by latest cancer progress report, very new data on 1-years survival rate for colorectal and lung cancers shows great differences by PCT area. This was seen to reinforce the case for more regional presentation of data.

It was noted that while the research dismissed the impact of ISTCs, a body of experience and anecdotal evidence from ISTCs’ impact on practice appeared to regard them as significant: in some localities, outputs varied hugely once an adjacent ISTC introduced – a case was cited where productivity on cataracts saw a 200% improvement in outcomes and output.

Commissioning affected local attitudes to competition, as PCT strategy around market entry and facilitation was very significant to supply side diversification.

It was observed that while PCTs reported discontent with a range of policy drivers listed above, they might be entitled to feel a bit hopeless with the preponderance of views writing them off as “the weakest link” and “corpses not for resuscitating”.

It was also observed that drtivers such as tariff can be used effectively with local agreements to unbundled: tariff and the GP contract not handed down on tablets of stone, and managers earning 6-figure salaries should be competent to vary their use of these tools – as with Agenda For Change and the consultant contract – skilled people find ways to use levers.

FTs' impact was not studied sepcifically. Monitor has produced work indicating that the authorisation process makes a difference to the efficiency of provider process (but is more pessimistic about post-authorisation effects).

The policy vogue towards collaboration and collusion and integration as nostrums to financial stress was thought by some to assume possible reduction in choice and competition.

It was suggested that various forms of collaboration can be appropriate to certain sets of needs – managing long-term conditions requires different drivers and behaviours.

One conclusion about the effects of choice and competition on providers could be ‘you ain't seen nothing yet’, as future NHS financial constraints mean providers will pay even more attention to changes of 1-2% of patient flows.

Primary care was not much discussed: it was suggested that strong external competitive challenge to much of primary care provision ‘collusion’ (beyond LMCs and contracts for life) might ensue from Liberal Conservative health policy – the potential problem being the betting of the farm on commissioning.

(And the Kings Fund now has lovely posh soap in its toilets.)