Channel 4's Dispatches programme, Profiting from kids in care, revealed shocking examples of bad practice, including homes using unvetted, untrained agency staff, and private businesses charging councils inflated prices for services not provided.
Tony Hunter, president of the Association of Directors of Social Services, said: "It's really about effective commissioning, knowing what needs children have and discussing in detail how best to meet them."
Many councils were looking hard at how they commissioned services and working with other authorities to exert more influence in the market, he added.
David Hawker, director of children's services in Brighton and vice-chair of the Association of Directors of Education and Children's Services, said it was vital local authorities knew who provides good quality residential care at a reasonable cost.
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