News / Purchaser-provider split has uncertain future (Convergence 2017)

He said the the move had effectively been signalled when NHS England announced plans to pilot accountable care organisations or systems earlier this year. Mr Collins said this would be a major change in policy, which would have implications for many of the market mechanisms that have been central to the running of the English health service for the last two decades.

The Conservative party did promise to review the internal market as part of its manifesto commitments, although there have been no further details since it returned to government without an overall majority in June.

However Mr Collins said that while there was unlikely to be an end to the purchaser-provider split through legislation, some 'powerful forces' were acting to close the divide. These included recognition that current demographic pressures and the increasing incidence of chronic conditions could only be met by integrated services. This had created an impetus for large capitated budgets that meant purchasers and providers were 'joined at the hip'. 'There is recognition that if one organisation fails, they all fail,' he said.

He added that the service had also abandoned any idea that it would let providers fail.

Mr Collins underlined that a continued need for 'funders and planners' was not the same as having a purchasing operation at arm's length from providers. He suggested there was no consensus on the future role for commissioning, but it was already clear that fundamental changes were underway. There was a move away from complex financial incentives towards using capitated budgets. In future relationships were also likely to be based on open book accounting.

He said there were a lot of grey areas still being thought through. Should capitated budgets have elements of performance related payment – linked to outcomes? If so he asked, 'how practical will it be to withhold elements of that budget if performance is poor?'

He added there was also uncertainty over the future role of competitive tendering. 'If purchasers and providers are coming together, there is less space for these levers than there used to be,' he said.