Is the purchaser–provider split dying?

Is the ‘purchaser–provider split’ dead? No. Is it dying? Quite possibly.

These questions are prompted by what is going on in the NHS right now and by the second annual lecture for NHS Providers, given by Sir David Nicholson last week.

Having largely kept silent since leaving NHS England Sir David re-appeared to tell the government, point blank, that it simply has to find more money for the NHS. No doubt about that.

He opened by saying that he would not be making any major policy pronouncements: ‘So I won’t be saying that the Department of Health should be abolished or that the purchaser–provider split should be put in the dustbin of history where it belongs.’ In questions, however, he was tempted further.

Sir David lived with – indeed implemented – the purchaser–provider split for the better part of the last 25 years of his NHS career. One suspects he saw the intellectual attraction of it – that it is no bad thing if the NHS consciously decides what it wants to buy with its £100 billion budget, and then commissions it from whoever is best placed to provide it: competing publicly owned services, or the private and voluntary sectors. But one suspects his heart was never entirely in it. In answer to questions he noted, with a slightly wolfish smile, that ‘remarkably the system worked without it’ in the years before 1991, while adding that the danger without it is that the NHS becomes totally dominated by providers. Some 'counter-weight' is needed to prevent that.

But, he said, if you look at many of the leading clinical commissioning groups, ‘they are really providers, that’s what they want to be’ and the world of vanguards is seeing commissioners and providers seeking to change the way services are provided through a model of co-operation that doesn’t really fit with the purchaser–provider divide. As we seek new ways for the money to flow in order to create the new models of care, it would be sensible ‘to put it [the split] to one side and not seek ideologically to try to get ourselves back to that. And I think it will disappear over time.’

One suspects Sir David may be right – or that, at the very least, the purchaser–provider divide is starting to evolve radically. Take Devo Manc and any other areas that take on the whole health and social care budget. There may well still be contracts operating within such arrangements. But if the location of care is going to change significantly, the planning behind that is going to look a lot more like planning than purchaser/providing, particularly if the whole thing has to stay within budget.

Equally, seeking to sort out long-troubled ‘whole health economies’ – Cumbria, Essex and parts of Devon – almost by definition means looking beyond the purchaser–provider divide, as does the attempt by the Care Quality Commission for a whole-system form of inspection and Jeremy Hunt’s idea for a single measure of ‘good’.

There are other factors in play. Provider deficits – in both foundation and non-foundation trusts – are stretching the model to breaking point. This goes right back to the original argument between Gordon Brown and the Treasury, and Tony Blair and Alan Milburn, over the creation of foundation trusts. That dispute was partly politically motivated on Brown’s part. But the Treasury had a question to which no satisfactory answer has yet been found. What happens when a foundation trust goes bust? Who meets the bill? The answer, back then, was always, the Treasury, which is why it refused to allow foundation trusts full borrowing powers.

The nearest parallels to foundation trusts are universities and housing associations. But, in the last analysis, a financially failed university can be closed and a housing association has assets and rental streams, so it can be taken over.

In the NHS, these solutions appear not to apply. This is partly because – very broadly speaking – we are now left mainly with district general hospitals and larger organisations, having closed huge numbers of small hospitals between the 1970s and 1990s.

District general hospitals may be being hollowed out from above by the concentration of specialist services and from below by the desire for care closer to people’s homes. But the need for a decent-sized health facility in large towns is not going away, and there appears to be no private market to successfully take financially failed ones over as Hinchingbrooke demonstrated. So the theory of the market – that financially failed organisations will close and or be taken over for pennies – appears unable to deliver for NHS hospitals.

All this puts the theory of the purchaser–provider split under huge pressure. Not everywhere, but in many places. Add to all that the moves towards accountable care-type provider organisations, or provider networks that commission within themselves while being answerable to a more strategic commissioner, and a decidedly different form of commissioning is emerging. The core idea behind the purchaser–provider split – consciously decide what you want to provide and then acquire it from whoever is best placed to provide it – lives on. But the English singularity – lots of small commissioners all operating a purchaser–provider split – looks to be on its way out. A long slow exhalation rather than an overnight death. But dying.

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Comments

#544901 Pearl Baker
Independent Mental Health Advocate & Advisor/Carer
Independent

Until we have a 'seamless' singular Health & Social Care System there will always be variations across the country depending on the 'priorities' of each CCGs 'he who speaks loudest' will probably receive most funding, regardless of those 'groups known to be 'suffering' from poor care and support.
Deprivation should not assumed to be coming from poor areas around the country, it can often be seen from 'rich' counties. Mental Health has always been the Cinderella of all Health & Social Care, and nothing has changed. 'integration' is the most important part of Health & Social Care, unfortunately Primary Care Services are mostly to blame by their poor understanding of 'integration'. To discharge someone with a history of Severe Mental Illness many hospital admissions from a 'Care Plan' is the norm. 'No Integration' here', and 'data' collected for 'The NHS Atlas' of Variation in Healthcare' cannot possible be correct.

#544910 Roger steer
Consultant
Healthcare audit consultants

The whole point of the pp split was to remove perverse incentives to deny healthcare amongst providers.
It is discouraging that many are still nostalgic for denial of healthcare.

#544914 Alice Hodkinson
GP, teacher, student, ex CCG Board member
Various

Commissioning has led to a great deal of perverse incentives such as small organisations not having the machinery to generate sparkly business plans so communities lose volunteer transport services, hospitals being paid to do more investigations so clinical skills are not used or relied on, so-called payment by result which is actually payment for activity, drain of money from GP/1ary care (90% or patient contact) to hospitals (10%). I could go on...... So, no, we don't want to go back to the bad old days, but I don't think this is better, do you Roger?

#544915 Roger steer
Consultant
Healthcare audit consultants ltd

Alice, cCommissioners have always been too small to manage effectively; providers should be organising transport services; the uk suffers from late and under diagnosis of illness; payment for activity is better than payment for inactivity or denial of healthcare.
Personally I have seen major improvements in healthcare in my time. Don't throw the baby out with the bath water.

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