Area of work:

The Coalition Government's reforms paved the way for more competition for the provision of health services. This joint research programme between the Institute for Fiscal Studies and the Nuffield Trust was established to examine the use of competition and market mechanisms in health care in England and internationally.

In this audio slideshow, Sandeepa Arora, Nuffield Trust, and George Stoye, Institute for Fiscal Studies, outline findings from our research into public payment and private provision in health care.

The Coalition Government's Health and Social Care Act 2012 marked a major milestone for the NHS in England’s 20-year journey from a planned system to a competitive market for the supply of health care services. These reforms have continued under the Conservative Government that was elected in 2015. 

This began with the development of the internal market in the 1990s and the Labour Government extended it with the introduction of patient choice, foundation trusts, payment by results (the system used to pay hospitals for the episodes of care they provide to patients) and independent sector treatment centres.

Working with the IFS, we are establishing a long term expertise in the use of competition and market mechanisms in health care

While the reforms do not propose to introduce a fully competitive market for health care, they do seek to strengthen the role of competition and choice for the provision of health services, based on quality.

Our research programme with the IFS

Against this backdrop, we formed a partnership with the Institute for Fiscal Studies to take forward a wide-ranging research programme, which resulted in a series of publications and debates that sought to address specific questions around the use of competition and market mechanisms in health. This programme was completed in 2014. 

Our aim was to gather evidence which would help to influence the development of regulatory policy by the Department of Health and Monitor.

Project 1: Choosing the place of care

 Two Government policies over the past 10 years have sought to increase choice around where patients are treated. Since 2006 patients referred for specialist treatment have been offered a choice as to where they attend their first outpatient appointment.

Since 2007, there has also been an increase in the number of Independent Sector Treatment Centres (ISTCs), which are privately-owned but treat NHS patients.

Responding to such policy changes, the first output from our joint programme with the IFS examines how patterns of outpatient attendances and inpatient admissions have changed since the expansion of the ISTCs.

The research, published in the report: Choosing the place of care: The effect of patient choice on treatment location in England 2003-2011 (Nuffield Trust, November 2012), shows that, since 2006/07, ISTCs have taken on an increasing proportion of both outpatient and inpatient care, across a range of different operation and specialities.

While volume has increased for all types of trust, this has meant a decrease in the proportion of patients attending their nearest NHS trust – suggesting that choice and private provision reform may be creating real competition in the health service.

Project 2: Public payment and private provision

The second project from this programme of work aimed to understand the changing relationship between the public and private sector over the past decade, in both the financing and delivery of care. Such trends are of particular importance following the passage of the Health and Social Care Act 2012, which changed the way health care is commissioned in England. The key findings from this strand of work, published in the report: Public payment and private provision: the changing landscape of health care in the 2000s (May 2013), are that:

  • over this period, rapid growth in public health spending was matched by a slowdown in the growth of private health spending;
  • at the same time, an increasing volume of publicly funded care was delivered by the private sector – meaning that the NHS became a major client for many private health care providers; and
  • over the 2000s, the number of NHS-funded hip and knee replacements rose by a half whilst there was fall in the numbers of privately funded procedures.

Alongside the report, we published a number of additional resources includes blogs, interactive data and an audio slideshow, which are available to access under 'Project outputs' on the right-hand side of this page.

Expert workshop (sub-title same size as those used for the project headings above)

In December 2013, we held an academic workshop exploring the role of competition in health care. Following the event we published the report: Competition in UK health care: reflections from an expert workshop.

Future updates

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Project outputs



  1. Making competition work in the English NHS: the case for maintaining regulated prices

    1 Oct 2011
    Journal of Health Services Research & Policy

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