A new study is to examine the role and limitations of competitive procurement of health services, with a particular focus on whether - and how - it stimulates innovation in service provision.

This new investigation follows on from the work of the Office of Health Economics (OHE)'s Commission on Competition in the NHS, whose report, published at the end of January, recommended "careful" expansion of competition between providers of NHS-funded health care in England.

The Commission found that, on the best available evidence, competition at regulated prices has improved the quality of some NHS services. Competition can help the integration of care, and there is no evidence that competition hampers integration, it said.

The new study is being undertaken by the OHE in partnership with the NHS Confederation. They point out that while competition - or at least the credible threat of it - either through the Any Qualified Provider (AQP) model or competitive procurement, is sometimes claimed to be an important source of innovation and performance improvement, empirical testing of that claim is lacking.

The OHE Commission report had concluded that, while competition in the NHS is controversial, it can, in the right circumstances, be used to stimulate the provision of better health care than is achieved without competition. However, it emphasised: "this does not mean that competition is desirable or feasible for all NHS services or for none - the question is for which services and where competition would benefit patients."

Among the Commission's conclusions were that AQP arrangements allowing patients - helped by their GPs - to choose where to get their health care are suitable in some cases, while in others, competitive procurement by local NHS commissioning bodies on behalf of the populations they serve will be more appropriate.

Routine collection and publication of patient outcome measures should continue to be expanded to enable evaluation of the effects of competition, the OHE Commission also recommended.

The new OHE/NHS Confederation study will aim to establish: - the extent of discretionary competitive procurement of health services by Primary Care Trusts (PCTs) in England over the last three years; - why it has been selected as a route to innovation and improved quality and value for money; - the role and type of new entry (if any); - any early evidence on impact; and - where competitive procurement is considered unlikely to be appropriate, and why not.

The work will combine an analysis of the NHS Supply2Health database and a survey of PCT clusters, and seek information on: - the rationales for the competitive procurements of health services that have been undertaken; - the expected or actual role of new entry, and any early evidence of impacts emerging; and - views on where such an approach to improving quality and value for money is considered inappropriate, and why.

The study will be led by John Sussex, deputy director at the OHE, working with Professor Maria Goddard, director of the Centre for Health Economics at the University of New York.