A common market?

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A question I am commonly asked is: 'Where is the NHS going?' It seems on the verge of profound change. Yet the policy currents do not seem to flow in one direction enough for us to see the future clearly.

The last time there was serious reform, with the introduction of the internal market in 1991, the ideological basis for change, at least, was obvious. This time, it is not so clear. And there will be no 'big bang' akin to 1 April 1991. Change will be incremental but, in my view, no less profound.

Since 1997, though there was talk of a 'third way', the style and tone of government towards the NHS has been centrist, while encouraging collaboration around the edges. This has produced some success. As a Department of Health spokesperson put it: 'We wouldn't have got waiting lists down unless there had been a national target that was nationally enforced.'

However, HSJ readers are aware of the drawbacks of this style and, latterly, so are ministers. Recently, two policy themes have emerged in response to frustration with the slow pace of change when improving the responsiveness of services. The first is devolution of power to the local NHS.

This has been eased by the 1997 introduction of national bodies with regulatory-type roles. The standards set by the National Institute for Clinical Excellence and the performance assessments of the Commission for Health Improvement have allowed health secretary Alan Milburn to, in his own words, 'let go'.

The foundation trust policy is an obvious result. There are accompanying efforts to encourage greater public involvement and ownership of NHS institutions, such as primary care trusts, acute trusts and foundations, to be boosted by the Commission for Public and Patient Involvement.

At least two competing ideas are at play. One allows more autonomy for local public sector organisations, including a possible reduction in equity of performance across the NHS while maintaining a decent 'floor' of performance. This is highly controversial to the left of the Labour Party, which values equity more highly than other objectives. While the freedoms for foundations trusts have been watered down, expect them to be expanded in future.

The other competing idea develops social ownership in which public assets are influenced more directly by local people. This idea is more acceptable to the left - one reason it is being championed in the case of foundation trusts. I suspect these new forms of social ownership will not be effective enough in changing provider behaviour.

The second policy theme involves sharpening market incentives in the NHS. Examples are the new policies to change financial flows, to allow non-NHS providers to compete for NHS contracts, to allow patients more choice of provider after waiting six months for elective care, and encouraging more contestability between providers.

The effects of these policies will be muted initially, in part because of a paucity of providers, inadequate data and weak commissioning. But as a whole, these policies could have profound effects in the medium term.

These two themes are not mutually exclusive, and they signal a future with a mixed economy of ownership of secondary and primary care provision. No news here perhaps. But does this hark back to the 1991 internal market, with institutional divisions between hospitals and between hospitals and primary care, unhelpfully reinforced? Then, as now, this type of competitive market suits the provision of uncomplicated and predictable elective care - for which there is already a successful private market.

The costliest and most challenging conditions to treat are complex chronic medical conditions. Good care for these patients requires longstanding relations between clinicians working for different providers, not a binary handover arrangement in which a patient is referred to hospital and, after treatment, back to primary care.

Good care for these patients may require different financial incentives and strong relations between clinicians. It may also require a different concept of patient choice, in which the emphasis is not on the choice of provider location (since the patient needs to be treated close to home), but on a choice of treatment and where it is delivered. Policy in this area is underdeveloped.

It would be a mistake to think the future holds a 1991-style internal market with knobs on. The chronic care challenge, sharper market incentives, plus the possibility that there will eventually be a diversity of commissioners of NHS-funded care, are likely to spawn new, vertically integrated partnerships between providers. The future then could be no more, or less, than effectively regulated, managed care, UK-style, with all the permutations that brings.

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