Financial incentives, competition and a two tier service: lessons from the UK National Health Service internal market

Abstract

The experience of General medical practitioner (GP) fundholding is analysed for evidence of the response by family doctors to financial incentives. An analysis of consultant outreach, the local provision of out-patient services, in Scotland finds little evidence of a response, based on comparing the experience of fundholders with non-fundholders. At least in the case of hospital based services, financial incentives seem to be of secondary importance. Financial incentives for such services depend on consultant compliance which, arguably, was missing when it came to creating a two-tier service which deliberately favoured patients from fundholding practices.