Introduction

The NHS is going through the biggest revolution in the way its services are delivered since its foundation in 1948. The key ingredients are payment by results, patient choice, foundation hospitals, and the deliberate injection of independent treatment centres and private sector providers into the NHS. Between them, they add up to the creation of a supplier market in UK health care. Surrounded by a clutch of new inspectors and regulators—the Healthcare Commission, Monitor (which oversees foundation hospitals), the National Institute for Health and Clinical Excellence, and others—these changes offer a far more sophisticated but also a much more open and aggressive version of the “internal market” that the Conservatives tried in the 1990s.

Of the various elements in the current reforms, arguably the most important is payment by results. This involves the creation of a national tariff for treatment that allows money to follow the patient and is based on average NHS costs. It is this which makes everything else possible. But it is the use of the private sector that has generated the loudest controversy, probably because it is the most visible part of the revolution. It provides the biggest direct challenge to existing NHS staff, and it breaks up what has been (or rather what has been seen to be) a public sector monopoly in the delivery of clinical services. Here I examine the history behind the change and its effect on the NHS.

Controversial reform

At the Labour party conference in September, the government faced a heavy defeat over the private sector's growing role. Paul Miller, chairman of the British Medical Association's consultants committee, has called the planned transfer of some NHS units …