Strategic Healthcare Purchasing: UK/Ontario

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The most advanced development of the purchasing function is with the English NHS. Other countries, such as the Netherlands are leaders in using competition to improve purchaser performance.

The priority for the English NHS has been to ensure the effectiveness of purchasing (or commissioning as it is called), as poor purchasing is seen as the weak link for ensuring good service delivery. For Ontario, this means that LHINs will need to be robust organisations with the necessary capabilities to undertake the necessary work to deliver integrated health services.

Strategic commission involves the following for LHINs:

  • Planning healthcare

  • Determining local health priorities within the provincial health strategy

  • Assessing and identifying local needs based on patterns of service that respond to the population’s needs

  • Establishing local capacity plans that extend into the future (and achieve the integration objectives)

  • Purchasing healthcare

  • Deciding which services are provided by which providers, taking into account current balance of service delivery (and risks in areas of strategic low priority) and future capacity requirements

  • Developing the right SAA arrangements that achieve integration (taking account of service utilisation, risk, quality)

  • Appropriately overseeing the resulting arrangements within a collaborative governance arrangement

  • Monitoring and performance managing healthcare services

  • Are the agreed services being provided to the volume that has been identified for the population’s needs?

  • Assessing provider clinical performance using quality assurance through external auditing and accrediting bodies that a service meets external standards, and SAA-specific quality standards that the LHIN may seek.

  • Is a high-quality, integrated patient experience being provided?

Effective purchasing focuses on delivering health outcomes to national targets, with the ability to establish novel provider arrangements as they see fit, and which provide at least equivalent clinical benefit (that ensures that changes are not just for change sake but are value-adding). This addresses an element of strategic purchasing about how to encourage novel forms of provision, and move beyond legacy providers.

Various challenges for strategic purchasing by LHINs include:

  • The ability of a LHIN to measure health needs and inequalities and model appropriate service provision, in the present and for the future.

  • The ability of a LHIN to collaborate with other LHINs and multiple providers particularly around specialist service areas.

  • The ability to achieve integration strategies with non-LHIN-funded providers.

  • Determining the appropriateness of cross-LHIN-boundary patient flows that may not be compatible with LHIN-based integration strategies.

  • How can LHINs achieve integration solutions that reduce inappropriate use of secondary care, by

  • shifting resources toward primary care,

  • enabling service redesign by providers

  • working with non-secondary-care/community providers.

This presents a developmental challenge for LHINs for a number of reasons:

  • There is a very small number of people on LHIN boards who have direct experience of the purchasing function, and who have not developed their perspective on health system performance from other than a provider experience. This means that considerable efforts will be needed to ensure that LHIN board members learn the appropriate strategic approaches to service redesign, transformation and integration from a non-provider perspective.

  • Proposal: a board-level development plan is needed to ensure that LHIN board members are able to embrace the appropriate health system reform models compatible with a purchasing function.

  • Differences between LHINs and providers are real in terms of them having different roles within the Ontario system; explicit recognition of this is necessary.

  • Proposal: individual chairs and chief executives of LHINs may find it useful to engage in a learning-set development process with chief executives and chairs of providers to explore their different roles.

  • LHINs need to engage with like-minded organisations with purchasing experience

  • Proposal: a series of workshops for LHINs with people with direct and practical experience of the problems and challenges of purchasing.


Commissioning in the NHS: challenges and opportunities, NERA Economic Consulting, London, June 2005.

NHS Alliance, The Future Shape of Primary Care and General Practice – who will be the providers of the future, and how will they be organised? November 2004). Dr Mike Tremblay led the development of this paper for the NHS Alliance.

Mike Tremblay, Tremblay Consulting

Role Description
Short term demand forecasting

Use of actuarial techniques to forecast demand, even in short term

Modelling techniques

Long term demand forecasting and capacity planning Strategic perspective on future activity levels taking account of epidemiological models and service design assumptions
Market management Taking account of longer-term capacity requirements, relationship between purchasing decisions affecting one provider may impact on others
Financial, risk management Risk pooling of high-cost low demand care where population is small or insuring against unavoidable overspending in high priority (necessary) areas of service delivery
Procurement Contract negotiation, based on agreed activity from planning process with providers
Supply chain management Pro-active approach to ensuring the best pattern of service delivery, rather than functioning as a ‘flow-through’ funding body
Patient relationship management Ensuring the administrative control of the patient’s journey through the healthcare system, to achieve service integration from the patient’s perspective
Contract management Reviewing service quality and service provision; payment
Information Standardised and timely information to monitor financial performance of the local system
Benchmarking Using comparative information on providers to permit service improvement through peer-learning

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