The National Health Service and Community Care Act 1990 received royal assent on 29 June 1990. The act made provision to split the provision and commissioning (ie purchasing) of healthcare. These proposals had been outlined in the white paper Working for patients in January 1989.
The 1990 act gave the secretary of state powers to establish NHS trusts by order. These trusts were to assume responsibility for the ownership and management of hospitals or other facilities which were previously managed or provided by regional, district or special health authorities. These ‘self-governing’ trusts had greater freedoms to borrow money, generate income and raise revenue directly from providing services.
The act also created the legislative structure that would underpin the general practice fundholding scheme. This gave authorised practices the opportunity to manage their own budget for practice expenses, drugs and some hospital services, giving GPs the freedom to choose where to purchase services.
The act allowed GPs to apply to regional health authorities to become fundholders on a voluntary basis. Fundholding was originally restricted to practices with a list size greater than 11,000 (Leese, 1994). The restrictions on list sizes were later relaxed to allow practices with a registered population of over 5,000 to become standard fundholders. Those with a list size of under 3,000 were able to purchase community services and outpatient care (community fundholding) (Dixon and Glennerster, 1995). Fundholding was voluntary, but many GPs who were competitive independent contractors took to it with enthusiasm.
Family health services authorities replaced family practitioner committees.