Contracting in the National Health Service (NHS): recognizing the need for co-operation

Within the reorganized National Health Service hierarchical relationships between Health Authorities and Trusts have been replaced by functional differentiation. However, differentiation of function cannot be seen as an end in itself and management of the relationship between purchasers and providers must include managing the differentiation as well as the function. This paper suggests that collaborative and administrative activities have a distinct role to play in health service management. The paper suggests that in health service management market strategies are likely to dominate in relation to resource allocation activities. The paper also argues that administrative strategies are likely to be necessary within the internal market system--to bridge the gap resulting from the differentiation of function.