The regulator’s new report on local price setting and contracting warns that commissioners lack the necessary data and contracting experience.
As Monitor prepares to take on joint responsibility with NHS England for the NHS payment system, its report reveals serious concerns about the working of the new commissioning structure.
‘Local price setting and contracting practices for NHS services without a nationally mandated price’ is based on interviews with CCGs, CSUs and providers from the ambulance, acute, community, mental health and specialist care sectors.
According to Monitor, providers have “far better data than commissioners about the work they do and the costs of doing it,” and are unwilling to share their data with commissioners.
Commissioners also lack expertise in contractual relationships and linking payment to achievement. As a result, the report said, it can be “difficult for commissioners to negotiate and agree contract terms that deliver the best outcomes for patients.”
The transaction costs of local contracts are inflated by these problems, and commissioners avoid enforcing contracts through fear of “exacerbating providers’ existing problems” and so damaging services.
The regulator concludes: “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.”
The report will fuel concerns about the power of independent health providers such as Virgin Care to dominate NHS commissioning through their legal and commercial expertise.