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Michael J. Hatton: Forest Healthcare NHS Trust, Whipps Cross Hospital, London, UK
Brian P. Mathews: Faculty of Business, University of Luton, Luton, UK
Introduction
The National Health Service (NHS) has undergone many changes in its 45-year history including in April 1991, the introduction of the purchaser-provider split, and the creation of an internal market for health services within the NHS. Service providers in the NHS have traditionally had an approach focusing on caring for their patients' physical and social needs. They have now entered into an unfamiliar arena; one based on a "business mentality".
The NHS internal market was based on the idea that mimicking private sector industries, and introducing competition, would decrease overall costs and increase service quality. The NHS purchaser-provider split has introduced the idea of buying and selling into the environment of health care. This is an alien concept to NHS managers and staff, one that will have to develop to ensure patients' healthcare needs are met, as well as fulfilling the political agenda behind the change.
To compete in the NHS internal market may require a realignment of top management thinking within individual provider units. As the purchasing function evolves, current customers are not bound to stay "loyal". Any strategy aimed at increasing customer loyalty will help the "sellers" in the NHS to keep what business they have.
Private sector strategies used in a competitive environment should also be applicable to the NHS. In the private sector, buying and selling between organizations is the established norm and has matured over the years. The purpose of this paper is to examine the applicability of private sector practices and, in particular, the issue of relationships and relationship marketing to help to secure long-term prospects for provider units.
The new NHS environment
Since its foundation in 1948, the NHS has undergone several reorganizations. From the 1970s changes have been introduced that were intended to strengthen management of the NHS by introducing private sector techniques. The Health Services Act 1973, implemented in 1974, introduced three tiers of management into the NHS. Its main objectives were to unify fragmented sectors, improve co-ordination between district health authorities (DHAs) and with local government, and to introduce "better" management at all levels. A White Paper published in 1979 and...