From quasi-market to market in the National Health Service in England: What does this mean for the purchasing of health services?

Abstract

The purchasing function was first developed within the British National Health Service as part of a quasi-market introduced by a Conservative government in 1990 and retained by the Labour government on coming to power in 1997. Since 2002 further reforms in England have begun to transform the quasi-market into a ‘real’ market with greater diversity of supplier, including from the private sector, a payment regime designed to reward additional hospital activity and new rights for patients to choose their provider. Evidence from the quasi-market era suggests that the purchasing function made little significant impact on services for patients or shifts in the pattern of hospital provision. The new market reforms, in theory, provide an opportunity to overcome prior weaknesses in the purchasing function. As this market develops, we suggest that the purchasers should develop three new sets of skills and activities if they are to be effective: the identification of need and shaping of demand; shaping the structure of supply; and holding the market to account.