The NHS experienced the most significant cultural shift since its inception with the introduction of the so-called internal market, outlined in the 1989 White Paper, Working for Patients, and which passed into law as the NHS and Community Care Act 1990.

The internal market was the Conservative Government's attempt to address problems, such as growing waiting lists, which had arisen in the 1980s as a result of NHS resources being constrained while demand rose inexorably.

Before the 1990 Act a monolithic bureaucracy ran all aspects of the NHS. After the establishment of the internal market, 'purchasers' (health authorities and some family doctors) were given budgets to buy health care from 'providers' (acute hospitals, organisations providing care for the mentally ill, people with learning disabilities and the elderly, and ambulance services).

To become a 'provider' in the internal market, health organisations became NHS Trusts, independent organisations with their own managements, competing with each other.

The first wave of 57 NHS Trusts came into being in 1991. By 1995, all health care was provided by NHS Trusts. Over the same period, many family doctors were also given their own budgets with which to buy health care from NHS Trusts in a scheme called GP fund holding. Not all GPs joined this scheme and their budgets were still controlled by health authorities, which bought health care 'in bulk' from NHS Trusts.

Patients of GP fund holders were often able to obtain treatment more quickly than patients of non-fund holders. This led to accusations of the NHS operating a two tier system, contrary to the founding principles of the NHS of fair and equal access for all to health care.

Observers credit the internal market with improving cost consciousness in the NHS, but at a price: that the competition it encouraged between 'providers' saw unnecessary duplication of services. The election of a new Government in May 1997 brought a new approach to the NHS. Pledging itself to abolition of the internal market, the new Government set out an approach which aimed to build on what had worked previously, but discarding what had failed. A new white paper issued by the Department of Health, "The New NHS. Modern. Dependable.", put forward a "third way" of running the service - based on partnership and driven by performance. The paper set out an approach which promised to "go with the grain" of efforts by NHS staff to overcome obstacles within the internal market, building on the moves which had already taken place in the NHS to move away from outright competition to a more collaborative approach.

The white paper described this approach as "a new model for a new century", based on six key principles:

• to renew the NHS as a genuinely national service, offering fair access to consistently high quality, prompt and accessible services right across the country;

• but second, to make the delivery of healthcare against these new national standards a matter of local responsibility, with local doctors and nurses in the driving seat in shaping services;

• third, to get the NHS to work in partnership, breaking down organisational barriers and forging stronger links with local authorities;

• fourth, to drive efficiency through a more rigorous approach to performance, cutting bureaucracy to maximise every pound spent in the NHS for the care of patients;

• fifth, to shift the focus onto quality of care so that excellence would be guaranteed to all patients, with quality the driving force for decision-making at every level of the service;

• and sixth, to rebuild public confidence in the NHS as a public service, accountable to patients, open to the public and shaped by their views.

As the NHS entered its 50th year, a new era had begun.

Click here for more details on "The New NHS. Modern. Dependable."