The challenge facing the NHS behemoth is how to squeeze £20bn-worth of extra services out of existing resources while implementing what some call the biggest reform of the organisation since its inception over 60 years ago.

The commonest complaint from those who work in the organisation is that it is being reformed so often staff are never left to get on with the job they do best – treating patients. The NHS is our most popular national institution – but ministers cannot leave it alone.

As each new reform succeeds the last, staff become preoccupied with their jobs and their future prospects, and arguing about structures. There is never a chance, they say, for the existing arrangement to bed down and prove itself before.

After the previous Tory government introduced the internal market and GP fundholding in the 1990s, Labour moved to eliminate them in 1997. Elements of both reappeared after 2000 with the launch of NHS Foundation Trusts – which could offer new services, compete with rival trusts and keep any surplus – and Primary Care Trusts which controlled GPs and introduced practice-based commissioning, giving family doctors a (tentative) say in what services were purchased for their patients. In 2006, the number of PCTs was halved from around 302 to 152, causing further disruption. Yesterday's White Paper heralds another convulsion. As GPs prepare to take on their new responsibilities, NHS trusts plan how to deal with hundreds of GP consortia and PCT staff ponder their job prospects in 2013, they must also respond to demands for a major efficiency drive. Though spared the Treasury axe, the £20bn efficiency savings demanded of the NHS over the next four years is a tough challenge. Can the organisation pull off both tasks at once?

The independent think-tank Civitas sees trouble ahead. It says the upheaval will damage the NHS just at the moment when it can least afford it. It predicts a one-year dip in performance in absolute terms and says it will set the NHS back three years.

James Gubb, director of its health unit, says: "The NHS is facing the most difficult financial time in its history. Now is not the time for ripping up internal structures yet again on scant evidence but for focussing minds on the task ahead and getting behind the difficult decisions PCT's will have to make."

Merging PCTs had a disastrous effect on their quality rating in 2006, with the proportion judged "good" or "excellent" falling from 34 per cent to 12 per cent in the following year. Yet among those that did not merge, the proportion scoring good or excellent rose over the same period. It took three years for the merged PCTs to catch up with the non-merged.

The starkest warning is from Mid-Staffordshire, where five PCTs merged, which lost sight of what was going wrong at the local trust – Staffordshire Hospital – later billed the worst NHS scandal where there were hundreds of excess deaths attributed to "apalling" standards and which is now the subject of a public inquiry.

Julian Le Grand, professor of health policy at the London School of Economics, disagrees. The changes planned by the coalition Government build on market reforms, including GP fundholding, introduced by the previous Tory government 20 years ago and reinvented by Labour as "practice-based commissioning", the forerunner of Mr Lansley's GP commissioning consortia.

Professor Le Grand said: "It is not actually a massive revolution. Quite a lot is already in place. The NHS is not under threat from massive spending cuts. We need to keep things in proportion. I believe market-oriented reforms have worked. If we are moving to GP commissioning my belief is it will increase competitive pressure. I think it is the way forward."


1988 Kenneth Clarke introduces the internal market

1991 William Waldegrave introduces GP fundholding

1998 Frank Dobson abolishes GP fundholding and the internal market

2001 Alan Milburn introduces primary care trusts

2006 Patricia Hewitt halves the number of primary care trusts

2010 Andrew Lansley brings in GP commissioning consortia