Second, we examine how far the doubling of administrative expenditure
between 1989/1990 and 1994/1995 is due to shifts in the cost function and
changes in administrative tasks. One of the justifications for the current sweeping
changes in the organisation of the National Health Service is that the introduction
. of the internal market and changes to the general practitioner GP contract from
1990/1991 onward led, amongst other things, to an increase in administration
. costs Department of Health, 1997 . By estimating an administrative cost function
for primary care services we provide some evidence of the possible effect of the
internal market, in particular of the spread of fundholding practices, on administrative costs in primary care.