Patient Choice and the Death of the NHS Internal Market

pexels-photo-263402.jpegIn 1989 the white paper “Working for Patients” paved the way for the creation of the “internal market” in the NHS. Since then we have seen GP fundholding, the creation of Primary Care Groups/Trusts and the development of a payment system that funds hospitals based on the number of patients they see. The ongoing re-structuring and policy changes that have occurred since 1989 have left us with an internal market where Clinical Commissioning Groups (CCGs) purchase health care services from providers, including hospital trusts.

The theory of the internal market is very simple and assumes that market conditions will provide “consumers” with choice which will force “providers” to increase quality and lower cost or go out of business. It works in many industries, so has it worked in the NHS?

This is obviously a very difficult question to answer due to the many factors that influence the quality of healthcare (most notably the level of funding). Furthermore, it is very difficult to measure quality within the NHS. Consumer satisfaction (e.g. the friends and family test) is not a good measure of quality. From a financial perspective, it is slightly easier to weigh the transaction costs associated with an internal market against any efficiency savings that have been seen. However, I will not attempt to do this in this article, and will refer readers to numerous articles, written by the Nuffield Trust, the King’s Fund and other think tanks/academic organisations, on this subject.

What is clear is that NHS England has a choice itself. It can either scrap the internal market, and use the transaction costs to fund front line services, or improve the market to ensure that market forces lead to the desired outcomes. With the creation of Accountable Care Organisations and the development of Sustainability and Transformation Plans (STPs), the direction of travel looks clear. However, it is unlikely that the internal market will be completely dismantled. It is, therefore, worth looking at some of the practical barriers that have prevented the internal market achieving the improvements that the theory suggests it could make.

The biggest barrier to the success of the internal market has been the failure to give patients real choice. There are a number of reasons for this, but firstly let’s dispel some common myths about patient choice in the NHS.

1. “Patients do not want choice” – It is often said that patients want their local hospital to be fit for purpose and do not want to travel elsewhere for treatment. There is some truth in this, but as an increasing number of consumers are changing energy supplier, choosing different care homes and insurance suppliers, it is only a matter of time before patients will demand to be able to choose the best hospital for their treatment. After all, they have a legal right to do so.

2. “Choice cannot exist without spare capacity” – I am amazed how often I hear colleagues in the NHS make this statement. One of the most important issues for patients who need secondary care is waiting times. We know that demand often exceeds supply within the NHS but, if there are 2 queues and one is shorter than the other, I know which one I would choose.

So what is the real reason that patient choice has not delivered? Quite simply there is not enough accurate, high quality information available for patients to make informed choices. The website

“NHS Choices” provides limited information, but it does not provide the information that I would want when deciding where to have a hip operation. If I need a hip operation, I want to know

1. What will the clinical quality be like?

2. How long will I have to wait (for my specific procedure)?

NHS Choices provides the latest CQC rating (which is not specific to my procedure) and also the proportion of patients that were seen within 18 weeks (again not specific to my procedure). However, if I want to compare having my operation at different hospitals, this is not enough information. I want to know the average waiting time for the procedure that I am going to have. This information is available to the NHS and is provided in tools such as the iCaps Patient Pathways Tool. However, this information is not routinely available to patients. This may change in early 2017 when this information will be available on

NHS Choices does provide a vast array of information, including the percentage of registered nurse day hours filled as planned. However, this is not really the information that I need in order to make an informed choice.

The NHS has a choice – either get rid of the internal market and associated transaction costs or provide patients with the information required to make the internal market a reality. As consumers continue to exercise their right to choose in other services, it is only a matter of time before they start to exercise their legal right to choose their healthcare provider. However, we need detailed and specific information to inform these choices.

Mike Williams is Director of Analytics at iCaps Health Ltd

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