Civitas Institute for the Study of Civil Society

February 2010

Media information: EMBARGO: 0001hrs Monday 1 March 2010


Comprehensive review of evidence shows NHS market failing to deliver widespread benefits


Lose-lose situation as market forces and central control jostle to be main lever of reform


As the debate over the future of a market in the NHS intensifies, the independent think tank Civitas releases the first comprehensive review of the evidence since the most recent policy overhaul in 2002. It illustrates that market forces have contributed to:


  • Improved access for patients

  • Reduced waiting times

  • Increased efficiency and improved financial management in providers

However, benefits are not widespread:


  • Providers remain all-powerful and commissioners (Primary Care Trusts) weak

  • Innovation is meagre

  • Payment systems encourage providers to be 'average'

  • Inter-professional and inter-organisational collaboration is undermined

Laura Brereton, author of the report, said: 'While there have been improvements, they are not clearly attributable to market-based reforms. The NHS appears to be in the unfortunate position of taking on the extra costs of competition without realising the benefits'.


What's happened


In The impact of the NHS market: An overview of the literature authors Laura Brereton and Vilashiny Vasoodaven draw together the existing evidence on the effectiveness of the various market initiatives pursued by New Labour in the NHS since 2002.


On the demand side


As commissioners, Primary Care Trusts lack the necessary skills to drive performance and purchase effectively; are reluctant to break historic patterns of purchasing care; and are afraid to stand up to providers. Their accountability is weak.


Practice-based Commissioning - commissioning at GP level - is being led by a few enthusiastic practices to good effect.


But many practice-based commissioners are more interested in self-provision than commissioning new services; the quality of financial infrastructure and information is highly variable; and governance is poor.


Patient choice has contributed to a decrease in waiting times and led some providers to advertise services.


But the uptake of choice is not widespread; the Choose and Book system on which it relies is restrictive; and the quality of information on providers available to patients is weak.


On the supply side


The threat of competition has, in some places, driven efficiency. Quality of care, including patient satisfaction, is often seen to be better in 'new entrants', such as privately-run Independent Sector Treatment Centres.


But competition has led to confusion over the relationship between providers and commissioners, and has made inter-organisational/professional collaboration more difficult.


Foundation trusts have generally performed well financially and on routine quality measures. They are gradually increasing public involvement.


But they were the best performing hospitals even before their status changed and there is little robust evidence to suggest they are particularly innovative.


On payment


The payment-by-results tariff has coincided with an increase in activity and efficiency; a decrease in unit costs; and improved financial management.


But cost control remains poor; the tariff - set at average costs - encourages providers to be 'average'; and hospitals are incentivised to induce demand inappropriately.


Lost benefits


Author Laura Brereton said: 'Market-based reform in the NHS promised great things, but, as things stand, it has yet to bring about the benefits we see from markets in other industries in any comprehensive form: increased responsiveness to customers; better quality; improved efficiency; and innovation'.


James Gubb, director of the health unit at Civitas, said: 'This review could not have come at a more important time, when debate about the future of the market in the NHS is intensifying and finances are starting to bite.


'More work is needed, but it is clear there have been both benefits and costs. Whilst the NHS is better than it was in 2002, wavering commitment to the idea of a market has unquestionably stymied the impact it could have had.'



For more information contact James Gubb/Laura Brereton on: 020 7799 6677 / 079 3024 3570


Notes for Editors


i. Civitas is an independent social policy think-tank. It receives no state funding either directly or indirectly and has no links to any political party. Civitas's health policy research seeks to take an objective view of health care in Britain. It aims to offer an improved perspective on how best to deliver equitable and high standards of health care for all.


ii. Civitas is currently conducting an in-depth study into how markets are operating in the NHS, for which this review forms a backdrop. It is due to be published in April.


iii. The full review can be accessed at: www.civitas.org.uk/nhs/download/Civitas_LiteratureReview_NHS_market_Feb10.pdf