Entrepreneurial Activity in the Public Sector: Evidence from UK Primary Care

The late 1980s and early 1990s witnessed some of the most fundamental changes in the provision of health care in the UK since the introduction of the National Health Service (NHS) itself over fifty years ago. The basic thrust of these reforms was to reproduce the characteristics of a market within a public sector activity, in order to enhance efficiency and improve quality. The central feature of this process was the institution of a purchaser-provider split to create a quasi-market in health care. Thus, while the state continues to fund the provision of health care, it ceases to be the sole provider. Instead the state or its agents purchase health services on behalf of consumers from a range of different providers. Two mechanisms drove the process of reform in the primary care sector; first, the institution of a new General Practitioner contract in 1990 which changed the terms and conditions under which GPs were required to provide care and second, the introduction of fundholding which devolved budgetary responsibility for the provision of primary care and the purchase of certain forms of secondary care to individual GP practices.