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NHS internal market

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934: 93:, in five annual waves, as separate bodies, splitting purchasers from providers. Until they became trusts the providing organisations were called directly managed units. The trusts had boards with non-executives, analogous to company boards, and business people were encouraged to serve on the boards. The Act also established 156:
to be lower than in other systems as there were no systems for billing patients, and indeed until the advent of the internal market there was little discussion of the costs of treatments. The number and cost of managers, administrative and clerical staff certainly increased significantly between 1988 and 1992, but
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pointed out "There are no agreed definitions of 'administration' and 'management' in health care between (and sometimes even within) countries' health care systems." Nor is it clear which administrative functions are attributable to the market. Administrative costs in the NHS were generally thought
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The fundamental concept was that patients would choose between different providers, money would follow the patients and so the best hospitals (there was never any choice of community health services) would prosper. It was never explained what would happen to the less successful institutions. As
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explained in his famous 1963 paper, Uncertainty and the Welfare Economics of Medical Care "A competitive healthcare market is grounded in the expectation that some hospitals or surgeries will go bust". No hospitals did go bust, and only a minority of patients, mainly those needing
128:, were in a position to exercise choice between providers. Furthermore, as Arrow explained, "In practice, the theoretical advantages of choice are outweighed by the fact that people don't do a good job of making these choices in a competitive environment—it's almost impossible." 97:, a scheme whereby individual GP practices could take over the management of hospital services for their patients. Fundholding was abolished by the Labour Government in 1997/8. The Labour Party had campaigned against the internal market, but did not abolish it, though 209:, said in July 2020 that the NHS should aim to permanently scrap activity-based payment tariffs for acute care because block contracts – in which trusts are paid a set level of income – had encouraged "the right behaviours" in Greater Manchester during the 86:. The Tariff includes a weighting system, the market forces factor, which pays providers in high-cost areas – principally in London – enhanced fees. In 2019 it was decided to reduce the London weighting. 216:
In the financial allocations to local systems covering the second half of 2020–21, incentives and penalties depend solely on system-level performance, not performance of individual organisations.
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Opponents of the internal market have regularly claimed that the introduction of the internal market increased NHS administration costs from 5% to 14% of total expenditure. As a report from
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vigorously across the welfare state. The plan was to decentralize decision making and introduce competition, with the state becoming a purchaser, rather than a provider, of welfare services.
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told the Labour Party conference in 1999 that the dreaded Tory internal market was finally banished for good. It introduced primary care groups, which were soon converted into
672: 649: 206: 697: 202:, which started in 2019, further undermines the principles of the internal market, as it is intended to reduce incentives for increases in hospital activity. 176:
effectively ending the purchaser-provider split, although there has not yet been any legislative acknowledgment of the change in policy. In February 2019,
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launched a consultation on a proposed new 'provider selection regime' in 2022. This took effect with the passing of the
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are regarded as the official abandonment of the policy of competition in the English NHS, the establishment of
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In lieu of commercial failure, health and social care service regulators were established, first the
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concluded that "No-one knows the exact cost or benefit of the NHS internal market in England".
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and the formulation of a national NHS Tariff to complement the funding formula devised by the
802: 227:. NHS commissioners are longer automatically obliged to put clinical services out to tender. 136: 72: 938: 840: 723: 8: 845: 797: 820: 758: 472: 414: 389: 199: 102: 79: 44: 902:
National Medical Director (and interim Chief Executive of NHS Improvement): Professor
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which were given a budget to run hospitals and community health services (but not
673:"Historic shift from market principles as NHSE sets out new system-level funding" 188: 152: 108: 825: 94: 517:"No-one knows the exact cost or benefit of the NHS internal market in England" 405: 43:
was intended to open up the internal market to external competition. The 2019
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National Director, Transformation and Corporate Development: Timothy Ferris
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The setting up of the market required the establishment of a system of
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called for the repeal of the regulations made under section 75 of the
157: 105:—"thereby universalising fundholding while repudiating the concept." 90: 584:"Scrap laws driving privatisation of health service, say NHS bosses" 921: 698:"Government reveals details of plans to scale back NHS competition" 473:"An economist explains why healthcare can't be treated as a market" 111:
was one of the chief proponents of quasi-markets influencing the
650:"NHS should 'never return' to tariff system, says top trust CEO" 51:
across England by 2021, effectively ending the internal market.
27:, to separate the roles of purchasers and providers within the 715: 31:
in the United Kingdom. Previously, healthcare was provided by
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National Director, Specialised Commissioning: John Stewart
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Tameside and Glossop Integrated Care NHS Foundation Trust
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National Director, Chief Financial Officer: Julian Kelly
318:"Blair's NHS will adopt the best of the old and the new" 439:"Uncertainty and the welfare economics of medical care" 879:
National Director, Strategy and Innovation: Ian Dodge
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National Health Service and Community Care Act 1990
316: 295:"London trusts to lose £300m after tariff change" 950: 562:"Are Andrew Lansley's NHS reforms being binned?" 497:. Socialist Health Association. 23 February 2015 268: 539:"Is this the end of the NHS's internal market?" 345:"Hospital trusts bring internal health market" 187:From March 2019, with the effective merger of 731: 738: 724: 700:. Health Service Journal. 22 February 2022 630:. Health Service Journal. 18 November 2019 89:The internal market initially established 470: 413: 297:. Health Service Journal. 23 January 2019 269:Le Grand, Julian; Bartlett, Will (1993). 16:Policy of competition in the English NHS 559: 67:, following the 1983 Griffiths report, 951: 670: 652:. Health Service Journal. 22 July 2020 608:. Health Service Journal. 1 March 2019 719: 436: 387: 184:which require competitive tendering. 471:McCartney, Margaret (10 July 2017). 221:Department of Health and Social Care 71:it began to apply the principles of 390:"Markets, politicians, and the NHS" 13: 388:Klein, Rudolf (27 November 1999). 168:The reforms introduced in 2017 by 14: 970: 671:Norton, Tom (16 September 2020). 560:Triggle, Nick (11 January 2019). 325:from the original on 18 June 2022 133:Commission for Health Improvement 84:Resource Allocation Working Party 933: 932: 437:Arrow, Kenneth (December 1963). 205:Karen James, chief executive of 54: 47:called for the establishment of 745: 690: 664: 642: 620: 598: 576: 553: 531: 509: 495:"Cost of the Market in our NHS" 487: 271:Quasi-markets and Social Policy 182:Health and Social Care Act 2012 41:Health and Social Care Act 2012 628:"Tipping point for the tariff" 464: 430: 381: 359: 337: 309: 287: 262: 237: 1: 783:Clinical commissioning groups 519:. Full Fact. 27 February 2018 369:. Guardian. 28 September 1999 321:. Independent. 30 June 1995. 230: 826:hospital trusts/acute trusts 586:. Guardian. 28 February 2019 541:. Economist. 2 November 2017 446:The American Economic Review 249:Socialist Health Association 211:COVID-19 pandemic in England 135:, which was replaced by the 7: 788:Health and wellbeing boards 33:regional health authorities 10: 975: 367:"Tony Blair's full speech" 930: 895: 873:Chief Operating Officer: 854: 811: 775: 753: 475:. British Medical Journal 406:10.1136/bmj.319.7222.1383 245:"Griffiths Report on NHS" 163: 918:Chief Scientific Officer 798:Local HealthWatch groups 225:Health and Care Act 2022 959:National Health Service 836:community health trusts 394:British Medical Journal 174:integrated care systems 146: 141:Care Quality Commission 63:was slow to reform the 49:integrated care systems 29:National Health Service 23:was established by the 863:Lord Prior of Brampton 793:Integrated care system 677:Health Service Journal 909:Chief Nursing Officer 803:NHS Property Services 137:Healthcare Commission 73:New Public Management 39:) in their area. The 896:Professional leaders 846:mental health trusts 768:Maple Street, London 198:The move away from 103:primary care trusts 61:Thatcher government 21:NHS internal market 821:List of NHS trusts 347:. BBC. 19 May 1998 200:Payment by Results 80:Payment by Results 45:NHS Long Term Plan 946: 945: 867:Chief Executive: 841:foundation trusts 113:Blair governments 966: 936: 935: 869:Amanda Pritchard 831:ambulance trusts 740: 733: 726: 717: 716: 710: 709: 707: 705: 694: 688: 687: 685: 683: 668: 662: 661: 659: 657: 646: 640: 639: 637: 635: 624: 618: 617: 615: 613: 602: 596: 595: 593: 591: 580: 574: 573: 571: 569: 557: 551: 550: 548: 546: 535: 529: 528: 526: 524: 513: 507: 506: 504: 502: 491: 485: 484: 482: 480: 468: 462: 461: 459: 457: 443: 434: 428: 427: 417: 400:(7222): 1383–4. 385: 379: 378: 376: 374: 363: 357: 356: 354: 352: 341: 335: 334: 332: 330: 320: 313: 307: 306: 304: 302: 291: 285: 284: 266: 260: 259: 257: 255: 241: 126:elective surgery 37:general practice 974: 973: 969: 968: 967: 965: 964: 963: 949: 948: 947: 942: 926: 891: 855:Management team 850: 807: 771: 749: 744: 714: 713: 703: 701: 696: 695: 691: 681: 679: 669: 665: 655: 653: 648: 647: 643: 633: 631: 626: 625: 621: 611: 609: 604: 603: 599: 589: 587: 582: 581: 577: 567: 565: 558: 554: 544: 542: 537: 536: 532: 522: 520: 515: 514: 510: 500: 498: 493: 492: 488: 478: 476: 469: 465: 455: 453: 441: 435: 431: 386: 382: 372: 370: 365: 364: 360: 350: 348: 343: 342: 338: 328: 326: 315: 314: 310: 300: 298: 293: 292: 288: 281: 267: 263: 253: 251: 243: 242: 238: 233: 189:NHS Improvement 166: 153:York University 149: 109:Julian Le Grand 57: 17: 12: 11: 5: 972: 962: 961: 944: 943: 931: 928: 927: 925: 924: 915: 906: 899: 897: 893: 892: 890: 889: 886: 883: 880: 877: 871: 865: 858: 856: 852: 851: 849: 848: 843: 838: 833: 828: 823: 817: 815: 809: 808: 806: 805: 800: 795: 790: 785: 779: 777: 773: 772: 770: 769: 766: 761: 757:Headquarters: 754: 751: 750: 743: 742: 735: 728: 720: 712: 711: 689: 663: 641: 619: 597: 575: 552: 530: 508: 486: 463: 429: 380: 358: 336: 308: 286: 279: 261: 235: 234: 232: 229: 165: 162: 148: 145: 95:GP Fundholding 56: 53: 15: 9: 6: 4: 3: 2: 971: 960: 957: 956: 954: 941: 940: 929: 923: 919: 916: 914: 910: 907: 905: 904:Stephen Powis 901: 900: 898: 894: 887: 884: 881: 878: 876: 872: 870: 866: 864: 860: 859: 857: 853: 847: 844: 842: 839: 837: 834: 832: 829: 827: 824: 822: 819: 818: 816: 814: 810: 804: 801: 799: 796: 794: 791: 789: 786: 784: 781: 780: 778: 776:Commissioning 774: 767: 765: 764:Skipton House 762: 760: 756: 755: 752: 748: 741: 736: 734: 729: 727: 722: 721: 718: 699: 693: 678: 674: 667: 651: 645: 629: 623: 607: 601: 585: 579: 563: 556: 540: 534: 518: 512: 496: 490: 474: 467: 451: 447: 440: 433: 425: 421: 416: 411: 407: 403: 399: 395: 391: 384: 368: 362: 346: 340: 324: 319: 312: 296: 290: 282: 276: 273:. MacMillan. 272: 265: 250: 246: 240: 236: 228: 226: 222: 217: 214: 212: 208: 203: 201: 196: 194: 190: 185: 183: 179: 175: 171: 170:Simon Stevens 161: 159: 154: 144: 142: 139:and then the 138: 134: 129: 127: 122: 121:Kenneth Arrow 116: 114: 110: 106: 104: 100: 96: 92: 87: 85: 81: 76: 74: 70: 66: 62: 59:Although the 55:Establishment 52: 50: 46: 42: 38: 34: 30: 26: 22: 937: 875:David Sloman 759:Quarry House 702:. Retrieved 692: 680:. Retrieved 676: 666: 654:. Retrieved 644: 632:. Retrieved 622: 610:. Retrieved 600: 588:. Retrieved 578: 566:. Retrieved 555: 543:. Retrieved 533: 521:. Retrieved 511: 499:. Retrieved 489: 477:. Retrieved 466: 454:. Retrieved 449: 445: 432: 397: 393: 383: 371:. Retrieved 361: 349:. Retrieved 339: 327:. Retrieved 311: 299:. Retrieved 289: 270: 264: 252:. 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Index

National Health Service and Community Care Act 1990
National Health Service
regional health authorities
general practice
Health and Social Care Act 2012
NHS Long Term Plan
integrated care systems
Thatcher government
NHS
from 1988
New Public Management
Payment by Results
Resource Allocation Working Party
NHS trusts
GP Fundholding
Tony Blair
primary care trusts
Julian Le Grand
Blair governments
Kenneth Arrow
elective surgery
Commission for Health Improvement
Healthcare Commission
Care Quality Commission
York University
Full Fact
Simon Stevens
integrated care systems
NHS England
Health and Social Care Act 2012

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