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Salvage operation

Can the Conservative-Liberal Democrat coalition save commissioning in the NHS?

A superhero's chestCommissioning plays a crucial role in the NHS in England. Since the internal market was created in 1991, there have been successive organisations responsible for commissioning healthcare and separate organisations that provide it. In England, NHS commissioning budgets are held principally by 152 Primary Care Trusts (PCTs) who collectively spend 80 per cent of the NHS budget (some £85bn).

The commissioning process essentially entails a 'cycle' of activity that includes at its core: planning and needs assessment; resource allocation; purchasing services through contracts and monitoring and reviewing performance.

In planning and purchasing care, PCTs commonly work with other partners, such as local authorities (for services such as mental healthcare or learning disabilities) or other PCTs (for more specialist services). Hence, while the PCT remains the hub around which most commissioning decisions are made, a complex range of other commissioning arrangements exists.

General practices are particularly important in this system. The policy of the last Government directed that commissioning should be done in partnership with local general practitioners acting as 'practice-based commissioners'. This has, to date, largely failed to materialise, with only a few good working examples emerging. Nonetheless, GP-led commissioning is set to be given added momentum as one of the new Con-Lib coalition government's flagship policies for the future NHS.

The history of NHS commissioning
Commissioning health services within an internal market is peculiar to the English context, with very few comparable systems internationally. It was rejected as an approach by the Scots at the time of devolution, whilst the Welsh rejected the concept about two years ago.

Despite NHS commissioning nearing its 20th birthday, it is clear that it has never lived up to expectations. PCTs have been criticised for being overly passive, with spending patterns being determined more by historical precedent than an objective analysis of current needs.

In April this year, a government inquiry into commissioning by the House of Commons Health Committee concluded that PCTs were not adequately challenging the inefficiencies of providers nor insisting that high-quality care is achieved. Indeed, they concluded that NHS commissioning was not cost effective and that consideration should be given to abandoning it altogether.

In essence, the logic of the purchaser–provider split has been undermined because of weak commissioning: commissioners have remained ineffective in challenging the dominance of large acute hospitals, unable to create a more productive and cost-efficient health system or to enable a strategic shift of services into primary and community settings.

The problems related to current commissioning arrangements have been well documented through a wealth of research and commentary. This body of evidence leads to the observation that the commissioning function itself has never been allowed to reach full maturity. This has been due to a number of key factors, including:
• The lack of adequate management capacity and expert skills needed for effective commissioning
• The lack of data sources and IT systems on which to base sound commissioning decisions
• The inflexibility in the rules that allow PCTs to employ more than a basic skeleton staff, or the power to raise salaries to attract new managerial talent
• The lack of autonomy to commission services outside of national requirements and targets, particularly at the level of the practice-based commissioner
• The inability to secure adequate clinical leadership and involvement in commissioning to provide the necessary insight into service redesign, to influence negotiations with providers and to convince other clinicians to support change
• The impact of continual organisational reforms among PCTs in comparison to provider organisations rendering PCTs unable to establish long-term relationships with key stakeholders, including the local community.

Fundamental flaws
It has also been argued that commissioning itself is fundamentally flawed. Leading analysts, such as the chief executive of The King's Fund, Professor Chris Ham, have argued that inherent difficulties exist in the purchasing of health services in publicly-financed health systems that split commissioner and provider functions. Large providers easily dominate the relationship with PCTs due to the information 'asymmetry' between buyer and seller.

The difficulty in defining complex health services in clear contractual terms (and by implication, in terms of performance review) limits effective procurement practices. The power of commissioners is also limited by the weakness of their control over hospital referrals and the ability to manage demand. Indeed, it seems that the commissioning approach has never worked well in other countries, and yet the English NHS is banking on it to broker more cost-effective services as the financial crisis bites.

In a forthcoming study by the King's Fund, due to be published in early July, more and more PCTs have been turning to the private sector for support in developing their commissioning fundamentals, ie engaging clinicians in commissioning, using data to drive decision making, contracting and contract management/monitoring and market management.

This work has also unveiled more deep-rooted issues related to the way PCTs function as commissioners, for example, in embracing innovative and/or more commercially-minded thinking or having a more proactive vision for what they could achieve in terms of system redesign.

World class commissioning
That significant improvements in the effectiveness of commissioning are required has been well known by the Department of Health (DH) for many years. In 2007, the Labour government launched its policy of world class commissioning, the most concerted effort yet to create higher quality commissioning in the NHS.

Under the tag line 'adding life to years and years to life' the world class commissioning policy has aspired to change the focus of PCT commissioners from being passive contractors of services towards a more proactive role in securing the best quality and value care for the populations which they serve, while also promoting population health and well-being.

The policy represents a call to action for PCT commissioners to drive 'unprecedented improvements in patient outcomes' and to aspire towards 'the most progressive and high-performing health system in the world'.

The world class commissioning approach provides NHS commissioners with a set of 11 competencies that describe what best practice in commissioning looks like, while an assurance process holds PCTs to account each year for how much progress is made towards these competencies.

The assurance system is intended to be a developmental process enabling PCTs to identify gaps in their skills and areas for improvement or support. It combines self-assessment, external analysis by Strategic Health Authorities (SHAs), and a review day in which PCT board members are questioned by a panel of reviewers drawn from a mixture of backgrounds. In addition to being assessed against the 11 competencies, PCTs are assessed in terms of the health outcomes achieved, governance arrangements and potential for improvement.

The first results of the world class commissioning assurance process were reported in 2009 and despite examples to show that some PCTs had made 'real improvements' in the way they commissioned services, the majority of PCTs were rated poor to mediocre, confirming a sizeable gap between the aspirations for world class commissioning and what was currently being delivered.

In particular, weaknesses were found in the commercial aspects of commissioning, for example:
• Mapping and understanding the nature of the local provider market
• Using investment power to stimulate the market, such that providers develop their offering in-line with local health needs and community aspirations
• Managing relationships with providers, engaging in constructive performance discussions with them to ensure continuous quality improvement.

World class commissioning concentrates on investing in necessary skills and competencies. The approach implores commissioners to begin to address the problem of the lack of provider competitiveness through market management to help stimulate patient choice and contestability, as well as achieving value for money. However, most of this agenda remains foreign territory for 'traditional' NHS commissioners and it remains to be seen whether they can step up to the mark.

Facing the future
As Judith Smith, head of policy at the Nuffield Trust, recently pointed out, NHS commissioning has reached a 'fork in the road'. One direction points to PCTs 'limping on' in much the same mode as before, but another might follow more decisive action to encourage clinicians and care providers to take on both the responsibility and the risk in resource management with accountability for the health outcomes of a population.

Though the devil lies in the detail, the emerging Con-Lib proposals for devolving 'hard budgets' to GP-led clinical collectives accountable to local populations may provide this platform for change by creating hybrid 'commissioner-provider' organisations with greater responsibility for both financial and health outcomes. Such an approach might help rectify the fundamental weaknesses in commissioning by re-unifying it with the provider function and so giving it greater clinical leadership and ownership.

Since the NHS in England faces an unprecedented period of economic constraint, commissioners need to oversee a step-change in productivity and innovation in service delivery. The potential for a reactive 'slash and burn' outcome, where front line services and staff jobs are adversely affected, is high unless commissioners can somehow deliver better value-for-money... and quickly.

The Author
Dr Nick Goodwin is senior fellow at The King's Fund

To comment on this article, email

14th June 2010


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