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A socio-legal and economic analysis of contracting in the NHS internal market using a case study of contracting for district nursing


  • Allen, Pauline


The introduction of an internal market in the National Health Service (NHS) in the United Kingdom necessitated the use of contracts between purchasers and providers. Little thought was given to the nature of these contracts by policy makers, who appeared to assume that the contracts could conform to the classical, complete model. This paper uses socio-legal and economic theories of contract (which provide an alternative model of relational contracts, in contrast to classical contracts) to explore how realistic that assumption was. An analysis of the institutional context in which the contracts were made is provided, including a legal analysis of the relevant legislation. Contracting by health authorities and GP fundholders is examined, using the results of a recent case study of contracting for district nursing services carried out in a health authority in Greater London. The results show that classical contracting is an inappropriate model for NHS contracts, but that relational contracting is not an entirely appropriate model either. Contracting was found to have increased the accountability of providers in respect of some financial matters, but not in respect of the quality of district nursing services. There are negative implications for the use of contracting in publicly financed health services--hierarchies may be more efficient (as lower transaction costs can be incurred) and possibly more effective in improving quality of care.

Suggested Citation

  • Allen, Pauline, 2002. "A socio-legal and economic analysis of contracting in the NHS internal market using a case study of contracting for district nursing," Social Science & Medicine, Elsevier, vol. 54(2), pages 255-266, January.
  • Handle: RePEc:eee:socmed:v:54:y:2002:i:2:p:255-266

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    Cited by:

    1. Ashton, Toni & Cumming, Jacqueline & McLean, Janet, 2004. "Contracting for health services in a public health system: the New Zealand experience," Health Policy, Elsevier, vol. 69(1), pages 21-31, July.
    2. Allen, Pauline & Hommel, Petra Riemer, 2006. "What are `third way' governments learning? Health care consumers and quality in England and Germany," Health Policy, Elsevier, vol. 76(2), pages 202-212, April.
    3. Donato, Ronald, 2010. "Extending transaction cost economics: Towards a synthesised approach for analysing contracting in health care markets with experience from the Australian private sector," Social Science & Medicine, Elsevier, vol. 71(11), pages 1989-1996, December.
    4. Harris, Rebecca & Brown, Stephen & Holt, Robin & Perkins, Elizabeth, 2014. "Do institutional logics predict interpretation of contract rules at the dental chair-side?," Social Science & Medicine, Elsevier, vol. 122(C), pages 81-89.
    5. Palmer, Natasha & Mills, Anne, 2005. "Contracts in the real world: Case studies from Southern Africa," Social Science & Medicine, Elsevier, vol. 60(11), pages 2505-2514, June.
    6. Oliveira Cruz, Valeria & McPake, Barbara, 2010. "The "aid contract" and its compensation scheme: A case study of the performance of the Ugandan health sector," Social Science & Medicine, Elsevier, vol. 71(7), pages 1357-1365, October.
    7. Guinness, Lorna, 2011. "What can transaction costs tell us about governance in the delivery of large scale HIV prevention programmes in southern India?," Social Science & Medicine, Elsevier, vol. 72(12), pages 1939-1947, June.
    8. Allen, Pauline, 2006. "New localism in the English National Health Service: What is it for?," Health Policy, Elsevier, vol. 79(2-3), pages 244-252, December.
    9. Petsoulas, Christina & Allen, Pauline & Hughes, David & Vincent-Jones, Peter & Roberts, Jennifer, 2011. "The use of standard contracts in the English National Health Service: A case study analysis," Social Science & Medicine, Elsevier, vol. 73(2), pages 185-192, July.


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