A WHITE Paper to abolish the internal market in the NHS, the centrepiece of the Conservatives' reforms of the health care system, is to be introduced by the Government in preparation for legislation.
Its effect will be to halt the complicated system under which hospitals have to cost every aspect of patient care and invoice the health authority or doctor who sent them for treatment.
It will also end the two-tier service under which patients are given priority for hospital treatment not on the basis of their medical need but according to whether their GP happens to be a fund -holding doctor.
Frank Dobson, Health Secretary, has asked Alan Langlands, NHS chief executive, to draw up a plan to tackle "two-tierism" by ensuring that patients of non-fundholding GPs do not suffer disadvantages and to cut "unnecessary and burdensome bureaucracy".
The internal market, introduced in 1989, was intended to make the NHS more efficient by introducing pseudo-business methods of buying and selling. But it resulted in an endless paper chase that proved time-consuming and expensive to administer.
It achieved some success, for example the amount of hospital treatment provided has risen by 30 per cent since the reforms were introduced, but the price was judged too high.
Operating the market required a big increase in bureaucrats and the NHS employs 20,000 more senior managers than in 1989. Salary costs of managers and administrative staff have doubled to £2.4 billion.
These costs have proved politically unsustainable at a time when the number of nurses was falling and stories abounded of patients having to wait on trolleys for treatment.
The Government hopes that by cutting bureaucracy it will release an immediate £100 million which it says will enable an extra 100,000 patients to be treated.
The target is widely regarded within the NHS as optimistic; £100 million represents only one day's spending out of the NHS annual budget of £34 billion.
Nevertheless, some aspects of the reforms will remain and the legacy of the Conservatives' changes will be the division of health authorities and hospitals into commissioners and providers of care.
The power of NHS trust hospitals to sign contracts with developers to build new hospitals financed with private money is to be strengthened under the terms of a new Bill.
The Bill will streamline arrangements for trusts to enter into contracts under the Private Finance Initiative and for the Department of Health to give them speedy approval.
The aim is to break the log-jam in negotiations for privately-financed hospitals which has prevented a single major project receiving final approval.
The Private Finance Initiative was designed by the Conservatives to attract private investment into public services. Trust officials are required to ask for private bids for hospital building before committing NHS money.
The Bill indicates the Government's willingness to keep the system of private finance for public building projects provided it can be made to work more speedily.
Schemes proposed so far have become bogged down in negotiations between financiers, developers and the Treasury with the result that new hospital building has been delayed rather than speeded up.
Some hospital trusts have withdrawn from proposed new building schemes. Guy's and St Thomas' Hospital Trust, for example, spent £500,000 exploring a privately-financed rebuilding scheme only to withdraw when it found it could do it cheaper using NHS funds.
The Private Finance Initiative has so far resulted in a shortage of capital available for hospital building because the Conservatives reduced public spending on hospitals in the expectation, so far unrealised, that private capital would take its place.
