Abstract
BackgroundOver the past three decades, a limited range of market like mechanisms have been introduced into the hierarchically structured English National Health Service (‘NHS’), which is a nationally tax funded, budget limited healthcare system, with access to care for all, producing structures known as a quasi market. Recently, the Health and Social Care Act 2012 (‘HSCA’) has been enacted, introducing further market elements. The paper examines the theory and effects of these market mechanisms.MethodsUsing neo-classical economics as a primary theoretical framework, as well as new institutional economics and socio-legal theory, the paper first examines the fundamental elements of markets, comparing these with the operation of authority and resource allocation employed in hierarchical structures. Second, the paper examines the application of market concepts to the delivery of healthcare, drawing out the problems which economic and socio-legal theories predict are likely to be encountered. Third, the paper discusses the research evidence concerning the operation of the quasi market in the English NHS. This evidence is provided by research conducted in the UK which uses economic and socio-legal logic to investigate the operation of the economic aspects of the NHS quasi market. Fourth, the paper provides an analysis of the salient elements of the quasi market regime amended by the HSCA 2012.ResultsIt is not possible to construct a market conforming to classical economic principles in respect of healthcare. Moreover, it is not desirable to do so, as goals which markets cannot deliver (such as fairness of access) are crucial in England. Most of the evidence shows that the quasi market mechanisms used in the English NHS do not appear to be effective either. This finding should be seen in the light of the fact that the operation of these mechanisms has been significantly affected by the national political (i.e. continuingly hierarchical) and budgetary context in which they are operating.ConclusionThe organisational structures of a hierarchy are more appropriate for the delivery of healthcare in the English NHS.
Highlights
England in the 20th and 21st century is generally a market based, capitalist society, as far as the production of most goods and services is concerned, it is notable that the funding and delivery of many public services has not been left entirely to markets
It provides a technical analysis based on economic theory and evidence.) The paper consists of a first section examining the fundamental elements of markets, comparing them with the operation of the mechanisms of authority and resource allocation employed in hierarchical structures to deliver public services
Pricing and contracting in the quasi-market Turning to the key mechanisms of the National Health Service (NHS) quasi market – pricing and contracting – we find that available evidence bears out the issues raised by theory in some respects, but not in others
Summary
England in the 20th and 21st century is generally a market based, capitalist society, as far as the production of most goods and services is concerned, it is notable that the funding and delivery of many public services has not been left entirely to markets. This paper will examine the theory, possible difficulties and actual effects of introducing market like mechanisms into the hierarchically structured English National Health Service (NHS), bearing in mind that the NHS is a nationally tax funded, budget limited system, with access to care for all. (The paper does not seek to provide a historical, political or political economy analysis of why markets have become more prevalent in English public services It provides a technical analysis based on economic theory and evidence.) The paper consists of a first section examining the fundamental elements of markets, comparing them with the operation of the mechanisms of authority and resource allocation employed in hierarchical structures to deliver public services. The paper examines the theory and effects of these market mechanisms
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