One of the key criticisms outlined was that the reforms follow a long line of centrally-driven initiatives that “move the chairs” in NHS commissionning, without fundamentally altering lines of accountability. GP consortia fundamentally will be statutory bodies placed in a hierarchical framework reporting first and foremost to Whitehall, and not to patients or the public; just as with PCTs.  The difference – and, the Government hopes the key difference that will lead to a step change in the quality of commissioning – is that consortia will be led by clinicians, not managers (or ‘bureaucrats’ as Cameron et al. prefer to badge them).

But the reality is the central grip over commissioning will be retained, through the NHS Commissioning Board.  Today, the Health Bill confirms this, stating, for example, that:

• The NHS Commissioning Board can sack a GP consortium’s accountable officer, or disband the consortium altogether if it underperforms.
• The board can vary the area a consortium covers, force it to take on additional practices, or remove practices from it.
• The board can strip consortia of any functions it wishes if they underperform.
• The board can top-slice consortia funding to create contingency funds.
• Consortia performance will be assessed annually and published by the NHS Commissioning Board.

This creates significant potential for any local action by consortia to be constrained.

Given that the DH has, also today, announced some 130 performance indicators for PCT clusters/GP consortia in the transition, there is, is there not, a very real possibility that the next three years is spent performing less of a ‘liberation’, more of a reinvention of the wheel?  Sir David Varney, former head of public service transformation for Gordon Brown, documents the big risks involved in the plans, in an essay for Civitas today.

Lansley would be better off pursuing a course of commissioning reform that would, instead, transfer accountability to the patient and taxpayer.

Despite a few significant contradictions (like n administrative cap on commissioners or including in the ‘liberation’ of foundation trust hospitals new powers for the Secretary of State to demand information from them), there is much to applaud.  By and large, Lansley gets it: that for the NHS to meet its productivity challenge it will need competitive challenge from new providers with new ideas.

And so, the consultation response is explicit about the need to create a competitive ‘social market’ in the NHS, through the principles of any willing provider and impartial commissioning; and through the extension of patient choice.  Recognising, also, the fact that markets in public services, typically, are only as good as the regulatory framework they are placed in, much attention is paid to reforming Monitor, reconfigured as an economic regulator, with the function of supporting continuity of vital services, yes, but also promoting competition.  It will have teeth: including the power to fine providers that indulge in anti-competitive practice, and the power to direct commissioners to open up markets.

There is also a big emphasis on rolling back the ability of the Secretary of State to micromanage, with additional freedoms for foundation trusts (in essence, Monitor’s compliance regime being dropped, with responsibility passed onto FT governors) and the removal of the Secretary of State’s general power of direction over NHS bodies (as well as a ‘duty’ to maximise autonomy).  Finally, recognising the power of published information in driving performance, there is a concerted and long-overdue effort to provide for a comprehensive set of indicators on clinical performance (via the NHS Outcomes Framework and NICE quality standards).

But then it all becomes a bit of a dog’s breakfast.  One word, commissioning.  All PCTs – the current geographically-based commissioners of care in the NHS, in charge of how the NHS budget is spent in 151 regions of England – are being abolished in 2013, to be replaced by consortia of general practice (of which every general practice in the country must be a member).  Now, there is nothing wrong with the aim of greater clinical involvement in commissioning: it is a key weakness in PCTs.  PCTs, too, have by and large not done a great job (in some cases to put it mildly).

But what is problematic is mandating that all PCTs be abolished across the country, by 2013, in favour of organisations by and large starting from scratch.  If you need an idea of how difficult this will be, and how risky it will be at a time when the NHS finances will be squeezed like no other time in its history, look no further than the Government’s own Operating Framework for the NHS in England 2011/12.  ‘This is a broad and complex agenda… I do not underestimate the scale of what lies ahead’, says Sir David Nicholson, NHS Chief Executive, in the introduction.

The problem, really, is twofold.  One, as the Operating Framework well recognises, there is a very real risk of a loss of financial control in transition – either as attention is diverted to putting in place new structures and systems, or as things fall through gaps in organisational responsibilities.  In order to deal with this, then, ‘a tight grip on finances is required’ (Operating Framework words).  This, in plain English, means a tight central grip on what commissioners are doing, and how they are spending their money.  PCTs are being herded into larger clusters to manage their demise (not good news if you look at the past evidence of PCT mergers on performance).   In reality they will be little more than local enforcers of the DH; as evidenced by the ‘reform’ framework they are to be assessed against.  The new NHS Commissioning Board, supposedly the vehicle for liberating commissioning, is to be headed up by none other than Sir David Nicholson himself: more of an old-skool ‘command and controller’ than a ‘liberator’ in the Lansley mode.  And QIPP – the DH’s programme for efficiency savings –the first thing new GP consortia are to be engaged with during the transition, is earmarked for ‘tighter grip’.   The language of the Operating Framework, at times, could not be more different than the White Paper response.

The second point is that, with such wholesale change, it is very unlikely that you’ll see too much of the new competitive impulse that Lansley has correctly identified as a big route out of the NHS’s productivity dilemma.  Why?  Because this requires strong commissioning, not the entire commissioning system being in flux.  It is no accident that the number of tenders issued by PCTs has dropped off sharply since the publication of the White Paper.  And neither is it enough to simply rely on the potential of expanding patient choice; or, for that matter, introducing competition law.  The latter won’t be properly operational until at least 2013.  And, for the former to be effective, it requires alternative options; i.e. new entrants.  It is naive to expect private and voluntary sector organisations, that need to justify their existence, to jump into a politically uncertain market without any guarantee of income and rely on GPs offering patients an impartial choice.  (This is not to mention potential difficulties with the BMA’s stance on competition, and the impact of GP’s having clear provider interests.)

The biggest concern, however, is this: that once we get to the point where GP consortia are operational, all but the most entrepreneurial and trailblazing will be subsumed in the very same centralised, restrictive and unsupportive structure as currently besets PCTs.  And then the NHS truly will be stuck with regard to driving productivity: waiting lists will have returned and care will be rationed.

Let’s be clear, I’m not taking issue with GPs being involved in, or leading, commissioning organisations, but with the way in which this reform is being advanced.  To start with, as the recent Civitas publication Refusing Treatment showed, there is much that could be done to make the market in the NHS more effective without significant structural change (including many of the measures mentioned in the opening paragraphs of this blog).

More widely, while some (or even many) GP consortia may well do a better job than PCTs, it is highly unlikely that all GP consortia will do a better job than the best PCTs: organisations should be assessed by their worth, rather than political imperative.  It would be, in essence, far better to lead reform on a human scale: allowing the undertaking of the small-scale experiment, the watching of results, the mimicking of what works and the discarding of what doesn’t.

What might this entail for commissioning reform? First, take the shackles off PCTs and assess commissioners by the outcomes they achieve, not processes followed. Second, enable entrepreneurial GPs (such as the 52 GP “pathfinders”) and other organisations to take over PCTs following a rules-based procedure and failure regime, not central mandate. Third, allow commissioning organisations to change organisational form and governance structures, including to mutuals or cooperatives. Fourth, work towards a system where patients could choose who they want to commission their health care, rather than the state deciding it for them.

With such an approach the NHS could build on the best of what currently exists, and focus on what it should be doing: improving quality and driving productivity.

Some of the wider points in relation to this are:

First, what evidence that exists on GP-led commissioning in the NHS comes from a different context to that proposed: one where GPs could volunteer to take on hard commissioning budgets for a sub-set of care, very different to now where every general practice must be part of a consortia and hold budgets, and the risk, for the vast majority of health care.  In the United States, where the latter has been tried, only one in 10 associations succeeded both financially and in terms of improving patient care, according to the Nuffield Trust.

Second, as stated, it is likely that GP consortia will be smaller in terms of population capture than existing PCTs.  While this may make them more local, it may also make them too small to commission effectively in terms of their ability to bring in alternative providers as a competitive challenge to acute trusts to up their game (a separate aim of the White Paper).  Certainly, the international trend is towards larger, not smaller, commissioning organisations.

Third, one cannot and should not ignore the possible impact of such fundamental restructuring of commissioning at a time when the NHS faces its greatest ever productivity challenge: around 4-5% per annum over this parliament according to the King’s Fund/IFS.  Such productivity gains are far in advance of what either the NHS (-0.4%) or private sector industry (+2.3%) have achieved in recent times and will only come about through competition and the fundamental reconfiguration of provision, led by effective commissioning.  Yet past experience suggests effectiveness may fall, rather than improve, in the short-run following restructuring.  When 203 PCTs were merged in 2006, performance on finance and quality of care dropped the following year; taking on average three years to catch up with the relative performance of those that weren’t merged.

Given this, there is also a very real risk that central control will be re-asserted in the interim period, carrying the danger that the restructuring will, ultimately, just lead to a re-invention of the wheel.

So, is there a better way: a way in which we might achieve the benefits of improved performance and increased localism and clinical input, without another round of top-down restructuring?  Here’s one suggestion.  First, the shackles should be taken off PCTs.  They should be freed of interference from Strategic Health Authorities (which the White Paper is right to abolish); and assessed by the outcomes they achieve not the processes they follow. Second, to increase clinical input, GPs should be given increased statutory influence over PCTs and, according to a rules-based procedure, able to take them over.  Third, there should be a rules-based failure regime: a 90-day notice period where other PCTs or entrepreneurial groups of GPs have the option of taking over a commissioning organisation that is failing.  Fourth, PCTs should be free to change organisational form and governance structures: to merge and de-merge and, more radically, form as mutuals or cooperatives.

This should then permit a series of locally-initiated experiments in commissioning that could be learnt from, rather than further centrally-initiated engineering that has failed the NHS throughout its history.

Based on in-depth interviews with executives at NHS (foundation) trusts, PCTs, practice-based commissioners and private sector providers across three health economies in England, the study finds isolated examples of the market having significant positive effects on quality, efficiency, innovation and patient-focus.

As one leading clinician said:

‘[The trust being a business] makes us think in a lean fashion. For example, we recently streamlined prosthesis and implants. It wasn’t our preference, but doing it saved money without adversely affecting patient care. We have to be making money in our own patch. If we’re not, we have to ask ourselves why, because other hospitals can make money on the tariff… You can’t lose money this way in the real world, and you shouldn’t be able to do it in the health service.’ (p.34)

However, the study concludes that overall the market has thus far failed to deliver such benefits on a systematic scale.

The question is why benefits have not been more widespread. Refusing Treatment draws on the evidence presented by interviewees to consider two explanations: one, whether this is so because the idea of a market is flawed; two, because it has been stifled and not allowed to take hold. On balance it finds in favour of the latter:

• Most participants saw the benefit of the basis of the market: an impartial purchasing function separate from providers.
• Where the market has been used (i.e. where providers report feeling genuine competitive pressure from patient choice and where PCTs have put services out to tender and chosen alternative providers) participants did report positive effects.
• Generally, a ‘market’ has not been in operation in the NHS: few services have been put out to tender and most providers are able to act as monopolies dictating terms to PCTs, rather than competing for PCT business. One provider executive said:

‘We don’t need to compete, we’re as full as we can be… simply being the local NHS provider has resulted in increased demand over the past few years. We’ve not needed to take any action.’ [p.70]

The study uncovers numerous barriers that must be removed, skills developed and attitudes changed if the market is to be effective. It finds:

• A structural imbalance of power favouring providers (hospital trusts) at the expense of purchasers (PCTs/practice-based commissioners).
• An uneven playing field between NHS and private/voluntary sector providers, to the tune of a 14 per cent cost-advantage for NHS providers.
• Severe constraints on the ability of PCTs to effectively tender services. These include: existing NHS providers operating at ‘full’ capacity; significant barriers to entry for private and voluntary sector organisations; bullying and predatory pricing by hospital trusts; poor data quality; and (above all) the bureaucratic and time-consuming nature of the procurement process.
• Payment-by-results for non-elective care to be inappropriate and encouraging unnecessary use of secondary care.
• PCTs and hospital trusts have yet to adapt to operating in a market environment. In particular, PCT management and commissioning skills – in terms of strategy, decision-making, performance management and tendering – are weak. Many hospital trusts, too, appear either unprepared or ill-equipped to respond to the needs of commissioners, with poor cost control.
• A deep cultural reverence for the NHS as something more than a health system is acting as a powerful break on market incentives. In particular, the emotive notion of the ‘NHS family’ encourages a counter-productive ‘us vs. them’ attitude between the NHS and private and voluntary sectors. It also enables hospital trusts to exert a powerful force on PCTs tending towards the status quo – often where patients would be better served by the introduction of new services in the community. One provider executive said:

  ‘PCTs are scared of the providers’ political power. They are afraid of putting services out to tender… and that the hospitals will then go and do something to retaliate that will cause the PCT managers to lose their jobs.’ [p.73]

The latter is found to be the most important factor explaining the failure of the market to bring greater benefit for patients. ‘Most people in most places have tried to block [it]’, said one DH official.

The report makes a number of recommendations that remain relevant as responsibility for commissioning is transferred from PCTs to GP consortia:

• There must be a sustained commitment on behalf of the Government to the market and to principles and parameters that support it. This, above all, means consistency in policy (the continued lack of which is discouraging long-term investment) and that ministers start telling a new story for the NHS as a health service that strives to offer high quality universal health care coverage, free-at-the-point-of-use, from the best providers available. It should no longer be presented as a culturally revered system of nationalised provision and government focus should be on supporting PCTs as commissioners, not on supporting hospital trusts.

• The DH should be re-cast from acting as the headquarters of a large corporation of providers to being the ‘headquarters’ of a commissioning system. It should be split into provisioning and commissioning arms (the NHS Commissioning Board). The temporary provisioning arm should provide management oversight before all NHS trusts become foundation trusts or are subject to alternative solutions (taken over, reconfigured or, where unsustainable, closed). Initial tasks for the new NHS Commissioning Board should be to: develop a more effective and less ‘tick-box’-type regulatory framework; encourage a less burdensome and prescriptive approach to tendering; encourage ‘relational’ contracting; simplify standard NHS contracts; and work towards a system of more integrated payment for non-elective care.

• The report does not support the abolition of PCTs in favour of GP consortia: it does not believe this addresses the root causes of the market’s underperformance. However, when formed, GP consortia should be framed along the lines of local health insurers charged with the goal of securing the best possible health care for their citizens within a constrained budget. They should act as independent, unbiased, evaluators and purchasers for patients free from institutional allegiance.

• Providers should be placed in a more competitive framework. This would entail: the enforcement of meaningful competition law; the enforcement of full cost allocation and accounting; ironing out cost disadvantages for the private/voluntary sectors; and the creation of a proper failure regime for NHS providers.

Full copies of the report can be purchased online at Amazon.co.uk.

Such a move is understandable in light of the Coalition Government’s plans to disband PCTs from 2013 and hand over commissioning powers to new consortia of GPs, but is likely to add to the chaos of reorganisation rather than diminish it.  It may be effective in London, where PCTs have for sometime collaborated in the commissioning of secondary care, but elsewhere,where they have not, past evidence suggests big problems: reduced financial control and lower quality care.

Recent analysis conducted by the independent think-tank Civitas of the last time PCTs were merged, in 2006, showed that in the 222 PCTs merged there was:

• A sharp drop in ‘quality of services’ ratings on the Healthcare Commission’s Annual Health Check.  The percentage of merged PCTs rated ‘good’ or ‘excellent’ fell from 34% in 2005/06 to 12% in 2006/07.

• A fall in the percentage of merged PCTs rated ‘good’ or ‘excellent’ on ‘use of resources’ from 5% in 2005/06 to 4% in 2006/07.

By comparison, significantly improved performance was registered in the 80 PCTs that were not merged.

• In terms of ‘use of resources’, the percentage of PCTs that were not merged rated ‘good’ or ‘excellent’ jumped from 15% in 2005/06 to 34% in 2006/07.

• In terms of ‘quality of services’, the percentage of PCTs that were not merged rated ‘good’ or ‘excellent’ improved from 35% in 2005/06 to 39% in 2006/07.

Overall, it took a period of three years before the relative performance of PCTs that were merged reached pre-merger (i.e. 2005/06) levels against those that were not.

There is, in other words, a significant risk that the merging of PCTs being proposed by the Department of Health and SHAs significantly harms health system performance: that is financial management and quality of care for patients.  This risk is amplified by the widespread changes currently being invoked throughout the NHS as a result of the White Paper Equity and Excellence: Liberating the NHS.

Who exactly is going to be accountable for financial control and monitoring quality of care during the period of transition from PCTs to GP consortia: PCTs as they exist now, larger conglomerates of merged PCTs, SHAs, the Department of Health, or the GP consortia ‘under construction?  No-one seems to know.

With such unclear lines of responsibility and accountability it is very easy to envisage costs spiraling out of control at just the time the NHS can’t afford it; and just at a time PCTs need to be getting a real grip on spending and using the market to switch poor quality, high cost, services to more appropriate settings.