Providers need to get their act together while commissioners look the other way

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Even before the Health and Social Care Bill has passed through parliament, the NHS is implementing radical changes to the organisation of commissioning. Primary care trusts (PCTs) have had to downsize and restructure while at the same time supporting the development of GP consortia.

This leaves little time for them to focus on commissioning services. GPs themselves, when they are not busy seeing patients, are focused on establishing consortia and drawing up new governance arrangements. So what should providers do while commissioners are busy looking the other way?

Providers have been under significant financial pressure in recent years; if they simply try to do more for the same, this will eventually have an adverse impact on quality. Our analysis of the productivity challenge suggests the real opportunities lie in shifting care between sectors and organisations, and in the clinical redesign of services. Some PCTs have tried to lead this process, convening clinicians to redesign care pathways and then using these new pathways as the basis for commissioning.

In the absence of any strategic leadership from commissioners, providers themselves will need to come together to agree a common approach to improving the value delivered by the system. In future, market management and the specification of services will be less influenced by local commissioners. GP consortia will not be in a position to specify services; first, they will not have the capacity to do so, and second the transaction costs in the system would simply be too high. Even if they try to do so, large providers receiving patients from many different GP consortia may offer a standard package and manage the risks and costs internally as many large providers in the United States do faced with multiple payers.

In future, although the NHS Commissioning Board will directly commission relatively few services, it will have a significant role in drawing up national service specifications – in line with NICE standards. The contracting model which allows 'any willing provider' suggests that as long as a provider (working alone or in partnership with other providers) is able to meet these standards they will be reimbursed at a fixed price. Although there has been discussion about the reintroduction of price competition, in fact the Bill allows Monitor to set a fixed or a maximum price.

It is clear that the tariff will be able to cover two or more services, opening up the possibility of creating payments for pathways of care and even risk-adjusted capitation payments for a 'year of care' for a diabetic, for example. If the Commissioning Board and Monitor are creative in how they manage this process, there is a real opportunity to stimulate innovation on the provider side and encourage integrated care. Lead providers could take financial responsibility and then, working with others through joint ventures and subcontracts, manage the care and financial risks across the pathway.

This will require NHS providers to enter into new types of risk-sharing contracts. Some academic health science centres are already developing plans to create broader partnerships that will evolve into integrated delivery systems. Commissioning needs to move away from commissioning institutions to commissioning services and care, specifying the outcomes to be achieved not how the service should be provided.

There is a danger that providers misunderstand the implications of competition law for the NHS and therefore resist the idea of forming partnerships or integrating services. In the private sector, providers have long-term relationships with suppliers, enter into joint ventures and form consortia to bid for contracts. NHS providers may need to break up their current configuration of services – for example, creating franchises of specialist services in local hospitals which are owned and run by other trusts.

The coalition government's reforms have implications for providers, but the most immediate disruption will be felt by commissioners. Providers must not wait around until the commissioning intentions of GP consortia are clear. They need to be proactive, working with others in the voluntary and private sectors to design high-value services which no commissioner could refuse to buy.


Richard Grimes

Comment date
01 February 2011
I am an FT governor (the tea cosy wearing type that was identified in a recent Financial Times article, ie community focussed rather than business focussed). My Trust is about to take over the PCT community health services and the plan is to use this as an opportunity to provide more care in the community. The trust is rural, so patients travelling to the hospital is an issue.

I would like to echo Red Dolphin's sentiment: patients want to see seamless end-to-end care, and my experience is that the more providers there are the more artificial "interfaces" that are are created. The drive towards "competition" means that services have been sliced and diced into business units so that services can be tendered. These are largely artificial and have little relation to the patient's condition.

At the moment we have typical patient pathways involving GP->Secondary->Community/GP at its simplest. But included in here may be OOH providers and ambulance trust paramedics. Are patients aware of this? No. They expect the NHS. Patients get frustrated when they are passed between one provider to another and find different procedures and often experience "passing the buck" where the patient is told that they will be someone else's responsibility. The patient expects seamless NHS care, not to be treated as a revenue stream. I do not see that this situation will improve, since in the future we will see, in addition, 111 service providers, multiple community service providers and multiple secondary providers, and an explicit and blatant show of competition.

The interface between two providers varies, sometimes (the ideal) the patient passes from one to the other without them noticing ("it's all the NHS!" is a typical sentiment) but other providers, particularly those from the private sector have very uneasy boundaries. I think this is inherent in the policy of allowing non-NHS providers (even not-for-profit, who still have to get business to survive). I fail to believe that opening up the "healthcare market" will improve the patient experience, and I am convinced that the market is more likely to add extra stress to the patient as they move from provider to provider.

This is one reason why I was so happy that our FT decided to take over the PCT community health services (in spite of the risk of taking on an organisation roughly half its size in the number of staff and income). There is real potential for the trust to integrate community services with the acute service, and perhaps remove the "artificial division" (as mentioned above) entirely.

I am also glad that as a rural trust we are the monopoly provider, and so the trust can concentrate on its real purpose, which is providing seamless, high quality care, rather than having to compete as a business.

Jonathon Tomlinson

Comment date
01 February 2011
Many providers will be considerably bigger than commissioning cosortia. "GPs in control of the NHS" needs to be added to Cameron and Lansley's myths. And someone had better let the pathfinders know.

Red Dolphin

Comment date
01 February 2011
The new reforms have missed an opportunity and the elephant in the room remains. The entirely artificial division of 'providers' (largely meaning secondary care) and 'commissioners' (also of course providers in primary care) serves no one and simply fosters the old antagonisms.
Patients of course is not concerned with these politically driven boundaries when it comes to rapid, effective and joined up treatment. They simply want to see the correct health care professional with minimum wait. Applying free market principles in a closed market has not worked but the ideology continues to be pressed.
Whilst we welcome the abolition of SHAs and PCTs as mountains of needless bureaucracy we are concerned that, at least the latter, will be replaced by something very similar under a different name.
The much needed simplification of the administration of the Health Service is still a long way ff.

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