Education And Debate

Observations on the NHS internal market: will the dodo get the last laugh?

BMJ 1995; 311 doi: https://doi.org/10.1136/bmj.311.7002.431 (Published 12 August 1995) Cite this as: BMJ 1995;311:431
  1. Robert G Royce, director of commissioning
  1. aDyfed Health Commissioning Authority, St David's Hospital, Carmarthen, Dyfed SA31 3HB
  • Accepted 9 May 1995

Distinguishing between the theory and practice of the internal market has been obscured by the considerable controversy generated by the reforms themselves. In such an environment both the advocates and the opponents of a market based solution have tended to promote their respective claims by reference to underlying political philosophies and economic theories rather than practical experience. Royce gives his observations of the actual operation of the internal market with particular reference to the commissioning function in Wales. He highlights inadequacies and inequities in the current system and proposes some remedial actions. Central to these are the importance of ensuring equitable funding for all purchasers, acknowledging the necessity of rationing, and promoting efficient and effective health care, sometimes at the expense of patient choice and guaranteed local service provision.

To what degree the government's objective for the internal market was to mirror the economic behaviour of markets described by classical economists is open to debate. Nevertheless, the government set substantial public store on the perceived benefits of a market (managed or otherwise) within health care, particularly in its purported ability to enhance patient choice and improve efficiency and effectiveness.

The foundation of the reforms was the purchaserprovider split and the resultant creation of the internal market. It was always clear that a balance would be required between letting competition loose and managing the process of change, but the point remains that historically the NHS could be characterised as professionally dominated and bureaucratically administered. The reforms were intended to provide a market driven alternative.

Role of the Treasury

The reforms have been implemented while maintaining the strict financial controls which have historically applied to the NHS. Substantive change to the financial regime was never part of the reform package, and arguably the cash limits imposed by the Treasury are the principal reason the NHS has …

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