The jury is still out on the degree of gains being generated and we have some evaluation work to undertake in this area. Still further along the spectrum there have been proposals developed by CHEs and others, which have involved the creation of large organisations to integrate the purchasing and provision of services. To picture what these might look like, imagine the purchasing function of the THA combined with a CHE and other providers, in one organisation. Superficially this could appear to be an answer to the problem of fragmentation between providers and to the problem of a purchaser which is not placed to make detailed rationing decisions. But aggregation brings its own difficulties.
Large organisations can lose focus, lacking innovation and strategic direction.
The Challenge of Monopolies Large organisations with disparate functions are also difficult to manage. When they are monopolies as well, the challenges to make them responsive to the market are considerable. Monopolies have few external forces encouraging them to be innovative. Centralised monitoring is a poor substitute for creating an environment where performance is demanded and if not delivered, where purchasers, consumers or referring clinicians will go elsewhere. Imagine there is only one insurance company in town that would provide cover for your house burning down and that insurance company owns all the building firms in town.