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Head To Head

Should the NHS abolish the purchaser-provider split?

BMJ 2016; 354 doi: (Published 12 July 2016) Cite this as: BMJ 2016;354:i3825
  1. Alan Maynard, professor emeritus of health economics, University of York,
  2. Michael Dixon, general practitioner, Devon
  1. Correspondence to: A Maynard alan.maynard{at}, M Dixon mike{at}

This interesting experiment is not likely to have been worth it, thinks Alan Maynard. But Michael Dixon says that if properly funded and released of red tape the internal market could increase accountability

Yes—Alan Maynard

The NHS internal market was created after a contentious general election in 1987 focused attention on the NHS’s inadequate funding, long waiting lists for elective surgery, and large unwarranted variations in clinical care.1 2 Economists (me among them) attributed these problems to a lack of incentives for efficiency, and the remedies offered included increasing competition in the NHS.3 The US economist Alain Enthoven recommended an “internal market.”4

Creation of an internal market

Against this background the prime minister, Margaret Thatcher, announced an “in-house” confidential inquiry into the NHS in 1988. As a market ideologue, her initial preference was to increase the role of private insurance. Ultimately this led to supply-side reform and the creation of an internal market of purchasers and providers of care.5 Hospitals became “trusts.” Government gave health authorities block grants to fund the commissioning of care from providers. As an afterthought, groups of general practitioners were permitted to become fundholding purchasers, initially with limited budgets. In general, health economists regarded the 1991 reforms as an interesting experiment.

Since then there has been a “continuous revolution” of reforms, rarely informed by evidence or accompanied by evaluation. Hospital trusts were transformed into foundation trusts. Health authorities evolved into primary care trusts, then clinical commissioning groups (CCGs). These have not demonstrably improved performance (see for example Bojke and Goddard’s review6).

General practice fundholding was extended during the 1990s but was abolished by Tony Blair’s government in 1997. Subsequently, research indicated …

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