Education And Debate

Present dangers and future threats: some perverse incentives in the NHS reforms

BMJ 1995; 310 doi: (Published 13 May 1995) Cite this as: BMJ 1995;310:1245
  1. Calum Paton, professor of health policya
  1. a Centre for Health Planning and Management, Keele University, Keele, Staffordshire ST5 5SP
  • Accepted 7 February 1995

The NHS reforms have come to mean all things to all men (and women). Identifying a market oriented purchaser-provider split as the conceptual heart of the reforms is still, however, useful. There are important perverse incentives in and around the NHS that are associated with the reforms; furthermore, many reactions to the resulting problems are paradoxical and often counterproductive. Hitherto most criticism of the reforms from the health policy and management community (as opposed to the professions and the public) has been tactical rather than fundamental. There are serious problems for the NHS associated both with the NHS market and with current, often tacit, strategies for the future of the service.

There are paradoxes and perverse incentives associated with the NHS reforms. The paradoxes concern reactions to current trends; the perverse incentives flow from many of the mechanisms and structures created in the NHS since 1991.

It is increasingly taken as axiomatic that the “purchaser-provider split” is a good thing. Criticism of the NHS reforms by policy analysts is thus usually tactical rather than fundamental. It might emphasise, for example, inadequate coordination in purchasing1; a tendency by the government to muddle through rather than act strategically2; or the inadequate attention paid to appropriate outcomes and the inadequate or inappropriate uses that information is put to.3 But these relatively gentle critiques ignore problems that stem from the heart of the reforms. Several of these problems are increasingly of concern.

Perverse incentives

Evidence for my comments on perverse incentives comes partly from confidential interviews conducted during 1993-4 with chief executives and board members of health trusts, health authorities, and health commissions; clinical directors; and business managers. Naturally the phenomena noted cannot be proved to be part of a uniform picture, and indeed research that links cause and effect in …

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