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The European Journal of Health Economics
Published in: The European Journal of Health Economics 7/2016

01-09-2016 | Original Paper

Quality target negotiation in health care: evidence from the English NHS

Authors: Eleonora Fichera, Hugh Gravelle, Mario Pezzino, Matt Sutton

Published in: The European Journal of Health Economics | Issue 7/2016

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Abstract

We examine how public sector third-party purchasers and hospitals negotiate quality targets when a fixed proportion of hospital revenue is required to be linked to quality. We develop a bargaining model linking the number of quality targets to purchaser and hospital characteristics. Using data extracted from 153 contracts for acute hospital services in England in 2010/2011, we find that the number of quality targets is associated with the purchaser’s population health and its budget, the hospital type, whether the purchaser delegated negotiation to an agency, and the quality targets imposed by the supervising regional health authority.
Footnotes
1
The national targets were for risk assessment of admitted patients for venous thromboembolism and for patient satisfaction.
 
2
The target level of quality for the venous thromboembolism national goal was set nationally.
 
3
More generally, but equivalently for model specification purposes, we can assume that the choice of the number of targets has a monotonic increasing effect on quality and consequently on patient benefit.
 
4
Here and elsewhere subscripts on functions denote partial derivatives, so, for example, B n  = ∂B/∂n, B nx  = ∂(∂B/∂n)/∂x.
 
5
Hospital revenue R includes the CQUIN incentive payment which is a fixed proportion of the total payment for treating patients.
 
6
V and U are concave in n so that lnV and lnU are also concave in n and, since the sum of concave functions is concave, the first order condition is also sufficient.
 
7
Proof available from authors on request.
 
8
The assumption that B nh  = B hn  > 0 implies that B h (n * ;·) > B h (0;·).
 
9
This covers 91 % of acute hospitals. Details of CQUIN contracts for the other 16 English acute hospital trusts were not available.
 
14
If an agency negotiated the contract we take the total expenditure of the PCTs for whom it negotiates.
 
16
Letting I k = (0,..,1,… 0) denote a vector with 1 in the kth position and 0 elsewhere, the coefficient on the kth explanatory variable is
$$\ln \left( {\frac{{\mu ({\mathbf{x}} + {\mathbf{I}}_{k} )}}{{\mu ({\mathbf{x}})}}} \right) = \ln \left( {\frac{{\exp (({\mathbf{x}} + {\mathbf{I}}_{k} ){\varvec{\upbeta}})}}{{\exp ({\mathbf{x\beta }})}}} \right) = \ln \left( {\exp (\beta_{k} )} \right) = \beta_{k}.$$
 
17
We also attempted to estimate a count variable sample selection model [13, 18], but the model did not converge.
 
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Metadata
Title
Quality target negotiation in health care: evidence from the English NHS
Authors
Eleonora Fichera
Hugh Gravelle
Mario Pezzino
Matt Sutton
Publication date
01-09-2016
Publisher
Springer Berlin Heidelberg
Published in
The European Journal of Health Economics / Issue 7/2016
Print ISSN: 1618-7598
Electronic ISSN: 1618-7601
DOI
https://doi.org/10.1007/s10198-015-0723-8

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