Competition and efficiency in health care--the case of the British National Health Service

This paper examines the factors leading to the introduction of a competitive market in the British National Health Service (NHS). It can be seen that this most radical overhaul in the 45 years of the service was precipitated by economic but also ideological factors. Competition was seen as a means to producing the efficiency that would lead to better health care. The competitive market was introduced without public debate or reference to similar experiences in health care provision in the USA. Little consideration was given to the strengths and weaknesses of such a system. The purchaser-provider model chosen has been expensive to introduce. It has failed to stimulate competition amongst providers and the formal economic evaluation of its performance has so far been minimal. At first sight the separation of purchaser-provider functions has done little to disturb the traditional bureaucratic features of the NHS. The scope exists, however, to open up competition to a much greater extent. Depending on political feasibility, competition would be the necessary mechanism to prepare the NHS for sale into private ownership.