Paradoxes of GP fundholding: contracting for community health services in the British National Health Service

A socio-legal and economic analysis of contracting in the NHS internal market using a case study of contracting for district nursing

The introduction of an internal market in the National Health Service (NHS) in the United Kingdom necessitated the use of contracts between purchasers and providers. Little thought was given to the nature of these contracts by policy makers, who appeared to assume that the contracts could conform to the classical, complete model. This paper uses socio-legal and economic theories of contract (which provide an alternative model of relational contracts, in contrast to classical contracts) to explore how realistic that assumption was. An analysis of the institutional context in which the contracts were made is provided, including a legal analysis of the relevant legislation. Contracting by health authorities and GP fundholders is examined, using the results of a recent case study of contracting for district nursing services carried out in a health authority in Greater London. The results show that classical contracting is an inappropriate model for NHS contracts, but that relational contracting is not an entirely appropriate model either. Contracting was found to have increased the accountability of providers in respect of some financial matters, but not in respect of the quality of district nursing services. There are negative implications for the use of contracting in publicly financed health services--hierarchies may be more efficient (as lower transaction costs can be incurred) and possibly more effective in improving quality of care.

New labour and Britain's National Health Service: an overview of current reforms

Britain's National Health Service (NHS) has been the subject of unprecedented market reforms, which have failed to solve its problems. The New Labour government elected in 1997 has halted the drive toward the marketization of health care and replaced cost with quality as the central concern of NHS administration and policy. Major changes are occurring in the regulation of professional activity, with profound implications for the medical profession and the health service. The authors discuss these changes and possible future problems for the NHS.