The NHS internal market: economic aspects of its medium-term development

With the re-election of the Conservative Party in the United Kingdom in April 1992, it is now likely that the major reforms of its National Health Service as outlined in the 1989 White Paper--Working for Patients--and embodied in the 1990 National Health Service and Community Care Act will be implemented to completion. This article examines the reforms as a re-structuring of incentives facing agencies within the internal market for health care, and forecasts how agency behaviour is likely to change as a result of such re-structuring. Medium-term implications of the reforms for hospitals, general practitioners and patients are derived. A number of problems in the continued development of the internal market are anticipated.