Impact of Devolution of Health Care in the UK: Provider Challenge in England and Provider Capture in Wales, Scotland and Northern Ireland?

Following devolution in 1999 to the Scottish Parliament, and Assemblies in Wales and Northern Ireland, the four UK countries offer a fascinating natural experiment to test the outcome of applying two different policy paradigms: the traditional ‘knightly’ policy paradigm, which is perceived to reward failure, in the National Health Service (NHS) on a small scale in Scotland, Wales and Northern Ireland; and the policy paradigm of provider challenge, which is perceived to reward success and penalize failure, on a massive scale in the NHS in England. The devolution settlement in the UK shows four marked differences from normal federal governance. First, it is political not fiscal: the UK taxpayer funds the NHS in each country, yet only the English NHS is held to account for its performance by targets set by the UK Treasury. Second, there is no elected body for England, so English political accountability for its NHS is exercised through general elections to the UK Parliament in which Members of Parliament from the other three countries vote, sometimes decisively, on legislation that applies to England only. Third, there is no basis for agreeing what should be the UK-wide elements of policy for devolved services. Fourth, one country dwarfs the others in scale: England, in terms of its population (50 million), is ten to thirty times larger than the other three countries. The traditional post-Second World War policy paradigm that applied to public services throughout the UK has been described by two policy advisers to former Prime Minister Tony Blair as one that assumed ‘knightly’ behaviour by health care providers and that ‘health professionals want to, and generally will, “do the right thing” if properly funded and accorded freedom from external interference’. A corollary of this paradigm is a system of perverse incentives that reward failure with extra resources: how could ‘knights’ be blamed for failures? In the 1990s, this paradigm was abandoned for schools in England and Wales: publication of league tables of examination performance named and shamed failing schools. A series of scandals involving doctors and perceived underfunding contributed to a perceived crisis in the NHS in the winter of 1999/2000. In January 2000, following a television interview, the Prime Minister committed the UK government to sustained and unprecedented annual increases in NHS funding with annual growth in real terms of about 5% a year from 2001/2002 to 2006/2007. Only in England, however, was the shift to munificence in funding accompanied by a paradigm shift: from policies that assumed knightly behaviour by health professionals to policies that created constructive discomfort for producers by penalizing success and rewarding failure. Across all public services in England, a new Prime Minister’s Delivery Unit oversaw transformation in performance of a select set of services (health care, schools, police and justice, roads and trains) against demanding targets and challenged provider capture of government departments. For example, the waiting time from a GP referral to an elective admission (including diagnostic tests) could take over two years in 2001, but from 2008 this had been reduced to less than 18 weeks. In 2000, the government announced a new regime of performance management for the English NHS that would reward success, through earned autonomy, and report performance in a way that inflicted public reputational damage: by naming and shaming organizations that failed to achieve national targets. This was accomplished using Star Ratings from 2001 to 2005 and an annual Health Check for providers from 2006. Although the UK government argued, in 2000, that this would be a more powerful way of driving improvement than provider competition, which had been tried in the internal market between 1991 and 1997, by 2002 the government began to reintroduce an internal market into the English NHS. In contrast, after devolution, the governments in Scotland and Wales stopped publication of school league tables, did not report failure to achieve targets in their NHS in a way that would inflict public reputational damage on ‘failing’ organizations, and sought improvement through integration instead of provider competition. The latter was attempted by abolishing the division between purchasers and providers, with organizations again responsible for meeting needs of populations as well as running services in their defined areas, as in the pre-1991 model of the NHS. Because of political and security problems, in Northern Ireland, devolution has had minimal impact on the development of new policies. The governments of each country have, however, pursued similar policy objectives in their NHSs,