Arguments for an internal market model

In Reflections on the management of the national health service, economist Alain Enthoven argued in 1985 that an internal market model would offer substantial improvements over the existing NHS structures, where referrals were not tied to payment.

He suggested that an internal market model would prompt the development of proper costing systems, thus creating more cost efficiency. Under his model, each district health authority would be responsible for purchasing hospital care for their resident population and be compensated for out-of-area referrals.

Enthoven's ideas were common in right-wing think tank circles at the time.

Source(s)

Enthoven A.
Reflections on the management of the National Health Service: An American look at incentives to efficiency in health management in the UK.
The Nuffield Provincial Hospitals Trust; 1985.