chapter  9
28 Pages

Hospitals after the 1991 reforms: markets, hierarchies or networks? Creating and operating the internal market: the demise and return

Markets, hierarchies or networks?

The NHS reforms drew inspiration from a range of sources and, as a consequence, they had multiple ramifications for policy. First, looking westwards, it was suggested that market forces could be reconciled with the public purposes of the NHS and thus eliminate inbuilt inefficiencies and perverse incentives. The ideas of the American health management specialist, Alain Enthoven (1985) were particularly important here, because they appeared to render feasible the introduction of markets without the electoral suicide of a fully competitive (i.e. insurance-based) system proposed by the New Right (e.g. Adam Smith Institute 1981, 1984; Letwin and Redwood 1988; Whitney 1988). Second, looking backwards, government advisers drew inspiration from traditions of voluntarism and, specifically, the autonomy enjoyed by voluntary hospitals before 1948 (Timmins 1995: 462); there began a search for ways of liberating hospitals from the dead hand of bureaucracy. Third, looking eastwards, the collapse of state socialism presented the government with an ideological reservoir on which to draw. They represented the NHS as a monolithic bureaucracy, born out of the same post-war circumstances in which communism had triumphed, but a system which was ultimately doomed. Malcolm Rifkind put this case well, claiming that when the NHS was established, it was believed that:

the best way to administer resources was through a form of rigid, centralised planning. … That view was shared in Eastern and Western Europe as well … (but) a structure established 40 years ago does not necessarily make sense in the dramatically changed circumstances of the 1980s and 1990s … in this country and elsewhere we have seen a growing disillusionment with central planning and control.1