Table 1 Conditions which need to be satisfied for a quasi-market to work (adapted from Bartlett and Le Grand 1993)

competitiveness

the quasi-market should be competitive on both sides (many purchasers, many providers)

information

both providers and purchasers need access to accurate, independent information in order to monitor quality and minimise opportunistic behaviour on the part of the provider

transaction costs

(whether set-up or continuing) should be no higher than any cost savings generated by competition

motivation

economic theory suggest that providers should be motivated by financial considerations, and purchasers by user interest

cream-skimming

there should be no motivation for providers to pick and choose some patients over others on the base of cost or complexity of treatment