Since it was founded in 1948, the NHS has been subject to numerous reforms and reorganisations. The two most recent sets of major NHS reforms were those started by the then Conservative Government in 1989 and more recently those started by the Labour Government in 1997.

The single most important feature of the 1989 Conservative reforms was the decision to introduce some elements of a market allocation system into the NHS. This 'internal market' divided the health service into providers and purchasers of health care. Purchasers received funds from the government with which to buy the health services that their local population would require. Providers negotiated contracts with the purchasers: providing those services for an agreed sum of money. Both purchasers and providers were NHS organisations. Both were ultimately responsible to the Secretary of State for Health.

The 1997 Labour reforms changed various features of the NHS and introduced new bodies such as the National Institute for Clinical Excellence (NICE), which is discussed in Unit 4iv. The split between purchasers and providers has been retained. But the emphasis since 1997 is less on market forces and more on cooperation between organisations.

The two sets of reforms had similar aims.

Government objectives

1. To improve the government's ability to control output of the NHS and its cost.
   
   In practice this meant making doctors more accountable to government. Management and control has been a problem since the foundation of the NHS. The heart of the problem was the retention of clinical autonomy by doctors. This meant that no-one was allowed to question the doctors' decisions or their judgement apart from their professional peers. This made it difficult, if not impossible, to set performance targets for doctors or to restrict excessive use of medicines and other health services.
   
   
2. The government wanted to improve the efficiency of the NHS. This involved improving both productive efficiency and allocative efficiency (Unit 1). Productive efficiency requires the NHS to produce the maximum possible health care from the resources allocated to it. This means not just using resources to produce existing treatments as efficiently as possible but also switching resources to new more efficient treatments as they become available (this is sometimes called technical efficiency).
   
   Allocative efficiency involves making sure that the NHS is supplying the type of health care - treatments, operations or medicines - which consumers want and also ensuring that the correct quantities, i.e. the quantities which consumers want, are produced.
   
   

Now look at these (check the status bar for information)