Contracts in the English NHS: Market levers and social embeddedness

This paper draws parallels between the market trend in the English NHS and Polanyi's (1957) The Great Transformation: The political and economic origins of our time, Beacon Press: Boston (originally published in 1944 in the United States as The Great Transformation, Rinehart: and Co: New York, and in 1945 in England as Origins of our time, Gollancz: London) account of how the rise of markets provokes a self-protective counter-reaction that tries to re-embed economic relations in social relations. We report findings from a qualitative study of NHS contracting, which examines the recent move to harder-edged contracts with greater use of financial penalties and incentives. In practice, use of these techniques tended to be confined to nationally-mandated sections of the contract rather than emerging from local bilateral agreements, and when things went wrong the parties relied more on cooperative behaviour than on the provisions of the contract to find solutions. Making the current contracting system work depended more on existing relational networks than on the incentive structures created by recent 'marketisation' initiatives, but the inability of the market to evolve as expected has encouraged policy makers to publish plans for further radical reforms.