Schisms in the Church: National Health Service Systems and Institutional Divergence in England and Wales

In the wake of devolution, the four countries of the United Kingdom pursued strikingly different National Health Service (NHS) reforms. While England created a supply-side market more radical than the previous internal market system, Wales moved to a softer version of the purchaser/provider split. This article deploys institutional theory to analyze the forces shaping change, and describes the hybrid forms of economic organization emerging, including the economic regulation model implemented in England. The schism has resulted in separate NHS subsystems and warrants a different analysis from the more familiar phenomenon of infield divergence. We argue that schism was triggered by political-regulatory influences rather than economic or other social institutional forces, and predict that other decentralized public health care systems may follow a similar path. While political-regulatory, normative, and cognitive institutional influences push in the same direction in Wales, the misalignment of political-regulatory and normative elements in England looks set to result in a period of organizational turbulence.