An empirical analysis of the purchaser‐provider relationship in the NHS internal market

Abstract

Introduces the relationship marketing paradigm as a means of analysing the purchaser-provider relationship within the NHS internal market. This focus is justified in the context of the limitations of orthodox economic analysis. The research evidence is based upon a national survey of all NHS trust hospitals in England. The survey consisted of key questions relating to the process of relationship building strategies employed by NHS hospital trusts. In particular, emphasis was given to non-price competitive behaviour, i.e. the extent to which health care contracts were augmented or customized by providers. An empirical analysis is presented, identifying those factors driving such non-price competitive behaviour, based upon a LOGIT model. The results suggest the hypotheses tested are consistent with the evidence from our survey. Finally, the model is used to make some tentative predictions regarding the future of the purchaser-provider relationship within the reformed NHS.

Exploring the development of relationship marketing in the National Health Service: An empirical analysis of supplier–purchaser relationships in a quasi-market environment

“…Recent evidence 14,15 indicates that the extent of relationship marketing within NHS contracting in secondary care is much more marked than earlier studies had suggested. 16,17 Moreover, earlier research into NHS contracting identified that from an economic perspective, one key attribute of an emerging relationship marketing culture within the NHS during the Labour Government's first post-1997 term was the tendency for NHS Trust hospitals to include elements within basic service agreements which were not specifically costed up, e.g.…”

“…contract customization, there is strong evidence 14,15,20 suggesting that NHS hospitals and their purchasing partners were actively designing governance procedures measuring contract performance against such intangible aspects of contracts.…”

“…supplementary patient transport, information systems support, and quality support systems. 14,18 Thus, from an economic perspective, the focus of the current research was on non-price competitive aspects of the contracting process within the quasimarket in NHS secondary care. This focus is relevant given that with the ongoing development of payment by results systems within the NHS contracting process which effectively places a price ceiling on treatments, e.g.…”

Non‐price competition in NHS secondary care contracting: empirical results

“…However, within the context of the JHOM 22,5 former NHS Internal Market, there is compelling evidence that gaming was much more widespread than previously thought (Gray, 2000;Gray and Ghosh, 2000a).…”

“…Logit analysis is used to identify and examine the key drivers of three non-price competitive, relationship building strategies. These strategies are contract augmentation, contract customisation and default contracting; all of which are deployed to tie in the purchaser more closely with the provider of secondary care, especially within the context of existing or emergent quasi-markets (Gray and Ghosh, 2000a). Moreover, the logit results are presented using marginal effects techniques to predict the impact upon the relevant relationship building strategies of unit changes in the appropriate independent variables.…”