Can the English National Health
Service learn from the Dutch
reforms?
Meeting the medium term challenge of the
financing of health & aged care in England
27 January 2011
The Royal Society, London
Gwyn Bevan
Department of Management, LSE
R.G.Bevan@lse.ac.uk
Objectives of health care reforms in
OECD countries*
2. Cost control: rationing & expenditure caps


UK
from
1990s
1. Equity: access by need
not ability to pay

3. Performance:
incentives &
competition
* Cutler (2002) Equality, Efficiency, & Market Fundamentals: The Dynamics of
International Medical-Care Reform. Journal of Economic Literature.
Law of requisite variety:
3 goals  3 instruments
Cost control
Equity
Performance
NHS 1980s: 3 goals & 2
instruments
Cost control: fixed
total budget
Formula funding 
equitable allocations
Health
authorities
run providers
Below target
 income: no
‘efficiency’ savings
‘Efficiency’
savings
Above target
 income: cuts not
‘efficiency’ savings
From 1991: purchaser / provider
3 goals & 3 instruments
Cost control: fixed
total budget
Formula funding 
equitable allocations
NHS providers
Efficiency by
competition
Purchasers
Private providers
Internal market (1989 -97):
Design*
 Purchaser / Provider
 Provider competition
 ‘money follows the patient’
 Selective contracting
 health authorities
 GP fundholders
 (no patient choice)
*Working for Patients
Internal market (1989 -97):
Impact
 Le Grand (1999)*
 Little evidence of change
 Incentives too weak & constraints
too strong
 Tuohy (1999)**
 NHS logic
 Ministerial accountability
 Collegial decision making
 Poor information on prices & quality
* Le Grand (1999) Competition, cooperation, or control? Health Affairs
** Tuohy (1999) Accidental Logics. Oxford University Press
Patient choice & competition
(2006 - 10): Design*
 Provider competition
 ‘money follows the patient’ (PbR)
 standard tariff: quality competition
 Selective contracting
 Primary Care Trusts
 World Class Commissioning
 Patient choice
 Provider diversity
 Foundation Trusts & Independent
Sector Treatment Centres
*Delivering the NHS Plan
Patient choice & competition
(2006 - 10): Impact
No
 Failure to create
functioning market*
 political interference
 weak purchasers
 barriers to exit &
entry
 changing policies
 reorganisations
* Brereton & Vasoodaven (2010)
http://www.civitas.org.uk/nhs/download/Civitas_LiteratureRe
view_NHS_market_Feb10.pdf
Impact both NHS markets?
Overview of literature*
 No good evidence reforms produced
beneficial outcomes classical economic
theory predicts of markets
provider responsiveness to patients &
purchasers
 large-scale cost reduction
 innovation in service provision
 NHS incurs transaction costs of market
without benefits?
* Brereton & Vasoodaven (2010)
http://www.civitas.org.uk/nhs/download/Civitas_LiteratureReview_NHS_market_Feb10.pdf
NHS from 2010?
We will stop the top-down reorganisations of
the NHS that have got in
the way of patient care
If reorganisation of purchasers
is the answer …
Population ('000s)
500
400
300
200
100
0
91-94
94-97
97-01
GP
01-05
05-11
Authority
11-13
13-?
Liberating the NHS: Objectives?*
 NHS commissioning board
 Steering not rowing?
 GP Consortia
 GPs involved in shaping services?
 Independent providers
 Choice & managed competition?
 Reorganisation
 Evolution not revolution?
* Equity and excellence: Liberating the NHS
Reflections: 20 years of
market reforms
The Netherlands
 1 agreed policy
 Dutch procession of
Echternach
 MHP competition
 as yet little selective
contracting
 Model exported
 Germany &
Switzerland
England
 5 blitzkriegs (SW1)
 army of occupation in
hostile territory?*
 Provider
competition
 limited impact
 Model abandoned
 New Zealand,
Scotland & Wales
*Shock (1994) Medicine at the centre of the nation’s affairs, BMJ
Going Dutch: Provider 
Purchaser competition?
Cost control: fixed
total budget
Risk-adjusted
funding 
equitable
allocations
PCT clusters
Efficiency by
purchaser
competition &
selective
contracting /
integration
Mutual Healthcare
Purchasers (MHPs)
Mutual Healthcare Purchasers
(MHPs)
 Plurality
 PCTs / GP consortia
 Insurers? Foundation Trusts?
 Define catchment areas
 Guarantee duty of care
 Selectively contract / integrate
 Explicit insurance contract
 Choice of packages
 Restrict choice? Charges?
NHS Commissioning Board:
Regulation of MHPs
 Entry
 key competences & duty of quality
 Competition
 sufficient numbers & information
 Equity
 funding & open enrolment
 Insurance
 solvency & transparency
Can the English National Health
Service learn from the Dutch
reforms?*
Thank you
Gwyn Bevan
Department of Management, LSE
R.G.Bevan@lse.ac.uk
* Bevan & van de Ven (2010). Choice of
providers & Mutual Healthcare Purchasers:
can the English NHS learn from the Dutch
reforms? Health Economics, Policy & Law