OHE Commission Background

In most markets, competition is viewed as an important means for driving economic efficiency and meeting the preferences of consumers. Health care, however, is not like most markets for a number of reasons. In the NHS, an additional consideration is that an extensive health care infrastructure already exists; changing that by introducing a multiplicity of providers actually could be inefficient.

The use of competition between NHS providers as an explicit tool of UK health care policy commenced with the separation of health care purchasing from its provision, and the consequent creation of an NHS ‘internal market’ in 1991. During the 1990s, competition was expressed in traditional market terms, including price. The NHS reforms since then initially downplayed competition, but, in England at least, subsequently re-emphasised it. Today, the emphasis is on non-price competition only, that is, competition based on quality. Competition is put forward as enabling and supporting patient choice. Choice is both an end in itself and, arguably more importantly, a mechanism intended to stimulate providers of publicly funded health care to produce both greater quality and efficiency, that is, improve performance.

The choice policy is being applied most obviously to acute, elective hospital care, where in principle an ‘any willing provider’ policy operates in England. Choice and competition also are being extended both to primary care, with GP practices being encouraged to compete with one another and with other service providers, and to longer-term care. Far less obvious candidates for a competitive provider ‘market’ are highly specialised services with low patient numbers and/or requiring costly and highly specialised assets to deliver them (including specifically trained and experienced staff). Planning and cooperation seem more attractive there. It is not clear, however, where the boundaries lie between services that might benefit from competition and those that would not.

The principle of competition transcends the organisational and ownership forms of health care providers. Competition does not necessarily imply a greater role for private commercial and voluntary sector providers of health care services (the ‘independent sector’), though a greater role for them is hard to envisage in the absence of competition.

NHS policy has developed differently in Northern Ireland, Scotland and Wales. Competition is not actively promoted and, in the latter two, the purchaser/provider split of the 1990s has been reversed. The lessons of the ‘natural experiment’ with different approaches to competition within the NHS across the UK will be an important area of interest to the Commission.