The 2019 NHS Long Term Plan called for the establishment of integrated care systems across England by 2021, effectively ending the internal market.
Although the Thatcher government was slow to reform the NHS, following the 1983 Griffiths report,[1] from 1988 it began to apply the principles of New Public Management vigorously across the welfare state.
[2] The setting up of the market required the establishment of a system of Payment by Results and the formulation of a national NHS Tariff to complement the funding formula devised by the Resource Allocation Working Party.
The Tariff includes a weighting system, the market forces factor, which pays providers in high-cost areas – principally in London – enhanced fees.
As Kenneth Arrow explained in his famous 1963 paper, Uncertainty and the Welfare Economics of Medical Care[8] "A competitive healthcare market is grounded in the expectation that some hospitals or surgeries will go bust".
[13] In February 2019, NHS England called for the repeal of the regulations made under section 75 of the Health and Social Care Act 2012 which require competitive tendering.
[16] Karen James, chief executive of Tameside and Glossop Integrated Care NHS Foundation Trust, said in July 2020 that the NHS should aim to permanently scrap activity-based payment tariffs for acute care because block contracts – in which trusts are paid a set level of income – had encouraged "the right behaviours" in Greater Manchester during the COVID-19 pandemic in England.