Should the NHS abolish the purchaser-provider split?

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 …