Health Secretary Lansley appears to have U-turned on price competition in NHS

According to the Health Service Journal, the Government has performed a significant volte face regarding its reform to the National Health Service - it appears healthcare providers will not be able to compete with NHS services on price.

Under the original proposals, outlined in the Equity and Excellence White Paper, independent sector providers would have been permitted to compete for business with NHS Trusts on the basis of price (they are currently restricted to competing on quality). According to the HSJ, the reforms have been watered down to prevent price competition. The following is from the HSJ article:

The government has performed a significant U-turn on allowing price competition between NHS trusts and independent providers.

A letter to senior staff from NHS chief executive David Nicholson today said there was “no question of introducing price competition” – contradicting the Health Bill which refers to the tariff being only “a maximum price for that service”. 

Ministers have spoken about encouraging competition on price. But a senior Department of Health source told HSJ ministers had “changed their minds” on its dangers, although they added the real test was whether or not they changed the wording in the Health Bill. 

Last month Sir David told the Commons Public Accounts Committee price competition would be “extremely dangerous” without strong safeguards to protect quality. 

The DH now plans to develop guidance which will make clear offering NHS services below the national tariff will only be permitted in exceptional circumstances and subject to approval by strategic health authorities or their sucessor bodies.

Whilst the turnaround would be a welcome recognition of the dangers of sparking a 'race-to-the-bottom' with private providers cutting costs to secure commissioning contracts, the details remain to be determined - crucially, we await the Department of Health's definition of the 'exceptional circumstances' under which services may be offered at rates below the national tariff.


[Hat-tip to Alex Marsh (SodanAlexM on Twitter) who alerted me to this story].