Competition, cooperation, or control? Tales from the British National Health Service

The British National Health Service (NHS) recently underwent a massive social experiment, inspired in large part by the ideas of U.S. experts. This involved the creation of an internal or quasi-market, separating purchaser from provider and encouraging competition among providers. After reviewing the evidence concerning the impact of this experiment, I conclude that the impact in fact was minimal, partly because of the retention of central government control and partly because the experiment was based on an inadequate understanding of professional and managerial motivations. The paper draws out general lessons of the experiment for other market-oriented health care systems and examines whether the lessons are reflected in the new batch of NHS reforms initiated by the recently elected Labour Government.