Principal-agent relationships in general practice: the first wave of English Personal Medical Services pilot...

To investigate how far English National Health Service (NHS) Personal Medical Services (PMS) contracts embody a principal-agent relationship between health authorities (HAs) and primary health care providers, especially, but not exclusively, general practices involved in the first wave (1998) of PMS pilot projects; and to consider the implications for relational and classical theories of contract.

Content analysis of 71 first-wave PMS contracts.

Most PMS contracts reflect current English NHS policy priorities, but few institute mechanisms to ensure that providers realise these objectives. Although PMS contracts have some classical characteristics, relational characteristics are more evident. Some characteristics match neither the classical nor the relational model.

First-wave PMS contracts do not appear to embody a strong principal-agent relationship between HAs and primary health care providers. This finding offers little support for the relevance of classical theories of contract, but also implies that relational theories of contract need to be revised for quasi-market settings. Future PMS contracts will need to focus more on evidence-based processes of primary care, health outputs and patient satisfaction and less upon service inputs. PMS contracts will also need to be longer-term contracts in order to promote the 'institutional embedding' of independent general practice in the wider management systems of the NHS.