A healthcare market where competition is heavily regulated threatens to restrict commissioners in their goal to secure quality, value for money services, says King’s Fund director of policy Anna Dixon.

At the heart of the coalition’s health reforms is the proposal to extend the role of Monitor as an economic regulator and to increase patient choice by extending choice to any qualified provider. The government appears to believe that competition will drive the changes in the health system needed to deliver the unprecedented productivity savings and quality improvements required.

Definitions of commissioning include concepts of both purchasing and planning. The world class commissioning competencies included stimulating the provider market as well as active contract management. Current guidance requires commissioners to go to competitive tender to deliver a new service model and to award contracts on value for money rather than price.

The hope is that clinical commissioning groups will engage clinicians to drive improvements in services and that they will be better placed than their predecessors to commission services that reflect public and patient preferences.

Our research on the impact of patient choice found that factors such as targets and patient feedback were seen as important drivers of service improvements by providers. Patients want to be involved in decisions about their care and to know they can go elsewhere after a bad experience, but there is little evidence that choice of provider by patient or referring doctor spurs competition on the basis of quality. This suggests that it is by creating competition for the market rather than by promoting patient choice that commissioners will have the greatest impact.

Commissioning needs to focus on outcomes, not how the service should be delivered. Data needs to be used intelligently to decommission low value providers and encourage referring to high value (low cost/high quality) providers.

So why is the government encouraging a policy of any qualified provider and fixed prices which in effect takes away the ability of commissioners to negotiate a better deal?

For any qualified provider to function several things need to be in place: a single qualification process (Care Quality Commission registration and Monitor licensing), standard contracts (something for the NHS Commissioning Board), nationally defined standards and measures of quality (new NICE standards), a standard price (best practice tariffs set by Monitor).

The King’s Fund’s report, Economic Regulation In Health Care, argues there is an inherent tension in the government’s proposals between the role of Monitor as a market regulator and the role of the NHS Commissioning Board and clinical commissioning groups. There is no obvious parallel with the role of commissioners in other sectors.

In telecoms and the utilities, regulators are there to protect consumers from overpricing by monopoly providers and to promote competition. They have also ensured consumers have clear information about products and prices and have made choice/switching easier. While the government has removed the duty on Monitor to actively promote competition, if the Cooperation and Competition Panel’s report on any willing provider for routine elective care is anything to go by, in future we can expect Monitor to police how commissioners are supporting patients to exercise choice.

The emphasis on choice must not diminish commissioners’ ability to use competitive tendering or designation to selectively contract with one or more providers, or to use franchising arrangements to generate competition for the market. The Commons health committee’s second report on commissioning was clear that it regarded it as “essential that NHS commissioners are able to choose the pattern of service delivery which reflects their clinical and financial priorities”. The government proposes to phase the implementation of any qualified provider so, at least initially, the balance of power still rests with commissioners. The speed and pace of change needed in the NHS to respond to the financial challenges it faces cannot simply be left to the invisible hand of the market. There will still be a role for active commissioners to shape the market and to secure value for money on behalf of the public and patients.