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Last Updated: Sunday, 6 August 2006, 23:46 GMT 00:46 UK
Is this the NHS market? Shh...
By Nick Triggle
Health reporter, BBC News

Labour came to power saying it would dismantle the Tories' internal NHS market.

But as ministers forge ahead with their reform programme, the question arises: are they just building a bigger, more competitive version?

Ministers have introduced a series of reforms

Like the proverbial elephant in the corner of the room, "the NHS market" is the subject ministers dare not mention.

The government talks about transforming the NHS in England with cuts to waiting lists and record rises in budgets.

Pushed further, they say they have given patients choice and care is being designed around patients.

But never will a minister say they are creating a market.


Pushed on the matter last year, Health Secretary Patricia Hewitt denied the NHS followed such a pattern.

It would be a pretty odd kind of market where the user cannot pay and the providers cannot compete on price
Health Secretary Patricia Hewitt

She told the London School of Economics in December: "It would be a pretty odd kind of market where the user cannot pay and the providers cannot compete on price."

However, doctors and nurses, trade unions and right-wing think tanks all feel the NHS is being turned into a market.

Both models allowed GPs to take responsibility for their own budgets to commission services
The Tory version was known as fundholding, but was criticised for pitting doctor against doctor and creating a two-tier system
The modern version is known as practice-based commissioning and is much more based around doctors acting in local networks rather than competing against each other

This year saw the introduction of Patient Choice, with people being able to choose where they go for treatment.

The way money moves round the health system is also being altered as services begin to be paid per patient treated, rather than hospitals receiving lump sums as they have in the past.

Although, as the health secretary has pointed out, one part of the NHS cannot undercut another by competing on price.

So why is there such reluctance to utter the "m" word?

Many experts claim it is because ministers fear their reforms will be associated with the move by the Conservatives to create the infamous internal market in the early 1990s.

The policy was lambasted for its tendency to foster excessive duplication of services.

But, much like the government's current reforms, it was born out of a desire to make the NHS more efficient.

The internal market was the Conservative government's attempt to address problems, such as growing waiting lists, which had arisen in the 1980s as a result of NHS resources being constrained while demand rose.


Providers such as hospitals, mental health services and ambulance crews were set free from the monolithic NHS bureaucracy and given trust status.

This allowed them to sell their services to purchasers - health authorities and some family doctors - for a negotiated fee.

By the time Labour came to power they were promising to abolish the market, immediately stripping GPs of their powers to buy services - a system known as fundholding.

It was claimed the scheme had created a two-tier service with fundholders, who controlled their own budgets, being able to get access to treatment much quicker than other NHS doctors.

Any market involves buyers paying sellers - those providing the service
Under the Tories, it was left to hospital or other provider trusts to haggle with the buyers, health authorities or GPs
But the Labour incarnation is rolling out a system, known as payment by results - but this does have a fixed price for each procedure

However, within three years the government published its 10-year NHS Plan which paved the way for a more market-driven approach.

"It is a sensitive issue for the government," said Paul Miller, chairman of the British Medical Association's consultants committee. "They don't want to be accused of going back to the Tory days of the internal market.

"But there are many parallels. Hospitals are having to compete for patients to get paid and they are also facing competition from the private sector."

The NHS is now a marketplace with NHS organisations and private firms slugging it out for patients
Alex Nunns, Keep Our NHS Public

And in this respect, some believe Labour's incarnation of the NHS market goes further than the Tory equivalent.

Nearly a 10th of NHS operations are carried out by the private sector, many in clinics called independent sector treatment centres, set up to perform minor surgery such as cataract operations and hip replacements.

Firms are also being encouraged to run GP services - the first contract was signed earlier this summer in east London - and adverts have gone out asking for companies to bid to help primary care trusts - the commissioning arm of the NHS.

Ministers argue this is creating extra capacity, rather than competing with NHS facilities.


But Alex Nunns, from the anti-private sector campaign group Keep Our NHS Public, said: "If you think about it, the Labour version actually goes further. We never had this level of private involvement before.

"The NHS is now a marketplace with NHS organisations and private firms slugging it out for patients."

Health policy expert Professor Nick Bosanquet, a member of centre-right health group Reform, agreed.

A market must have different providers offering the buyers business
The Thatcher government passed a law allowing hospitals, mental health services and ambulance organisations to become independent of central NHS control to offer their services
Such NHS trusts still exist, but Labour has added an extra ingredient to the mix - private firms. They now carry out nearly one in 10 NHS ops

"Labour said they would dismantle the market, but they have ended up building it up even more.

"Everyone working in the NHS recognises it as a marketplace."

But others are less sure.

The government's market reforms have only just started to be rolled out - patient choice is in its first year, the new funding system is only operational for some hospital services and the private sector has only dipped its toe in the primary care market.

John Appleby, chief economist at the King's Fund health think-tank, said: "I think the jury is still out, we will have to see what happens.

"I am not sure there is the competition at the moment that there was in the Tory years.

"Providers and purchasers cannot haggle over price now. There is a set tariff for each procedure, whereas in the past good negotiators would drive the price down or up depending if they were buying or selling."

Patient surgery choice extended
31 May 06 |  Health

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