Move back to market economics may mean excellence takes second place

Published: 15/08/2002, Volume III, No. 5818 Page 17

When The New NHS: modern, dependable was published in December 1997, the Labour government laid out its wares. The internal market would be abolished, patient convenience and quality improvement would take pride of place. Such a vision attracted plaudits as better hospitals and healthcare services - the holy grail of any government - seemed within reach.

But after five years of reform and upheaval, the NHS is coming full circle. Research undertaken by the King's Fund argues that proposals outlined in Delivering the NHS Plan herald the return of the marketplace, albeit by any other name (cover feature, pages 24-29). The new model strays from the internal market of the 1980s in that prices will be centrally fixed and private providers will be involved in competition. Head of NHS finance directorate Richard Douglas has argued that this should allow deals to be negotiated based on quality and quantity. The King's Fund asserts that this will have a marked impact on hospitals' income, and quality improvement may also be hampered as evidence shows that high-cost providers deal with price fixing by compromising on the quality of their service.

While changes to financial and performance management systems are inevitable if Shifting the Balance of Power is to be implemented, managers will face a tough time. The basis on which prices are set has yet to be agreed, as has private sector acceptance of fixed prices. How will the new system work with a commissioning structure in which activity and cash are much more tightly controlled from the centre? How will patients exert influence? If there is competition, will the gap between best and worst hospitals widen?

What will be the future of 'uncompetitive' hospitals that experience a drop in income?

How will recruitment and retention be affected? And how can quality improvement be safeguarded as hard-pressed managers wrestle with new financial systems?

An increasingly impatient public is demanding a high-quality health service. A first-class service focusing on their needs has been promised, and this is what must be delivered.

The executive summary of Delivering the NHS Planmight state that when it comes to the health service there are only two arguments that matter - how it is run and how it is funded. But the NHS cannot afford to lose sight of its quality goals. l