Comment / Policy watch: Commissioning challenges

The government’s overarching ambition with GP commissioning is to align financial responsibility with clinical decision making. Its vision is of GPs who make decisions for both their individual patients and wider community that hinge on getting the best quality and value for taxpayers’ funds.

There are many challenges involved, including finding the right quality of GP leadership and level of management support for consortia, but getting the finances right will also be crucial.

The first challenge will be allocating money to the consortia. The coalition government has made clear that it wishes to see funds flow where need is greatest, based on the ‘prospective burden of disease’ and that practice level budgets will be calculated.

At present there are two broad methods of allocating resources for hospital and community health services in the NHS: to PCTs using a weighted capitation formula based on a PCT’s share of the population adjusted for age and need; and within PCTs to commissioning practices using a new person-based allocation formula introduced in April 2010.

Until now, commissioning practices have been given ‘notional’ not ‘hard’ budgets because it has been recognised that previous methods of allocating resources have not been accurate enough in predicting future costs.

For commissioning practices therefore, the PCT has taken on the financial risk of overspends on behalf of the practices on its patch. Furthermore, commissioning practices, and indeed PCTs, have always been cushioned from moving quickly to their targets by the ‘pace of change’ policy, which limited the amount of funding that could be redistributed between areas each year. It is not clear whether this pace of change will be accelerated for new GP commissioning consortia or the extent to which they will inherit the financial position of the host PCT, i.e. significant deficits in some cases.

The next challenge will be deciding what services the consortia take financial risk for and then ensuring sufficient scale, to mitigate the impact of rare, costly diseases or treatment. In the United States, physician groups that have taken on capitated budgets have also purchased stop-loss insurance against these sorts of random events. The equivalent in the NHS would be risk pools with other consortia, but it is not clear whether consortia budgets would therefore need to be top sliced to create this.

Another approach would be to exclude certain treatments or events from the budget, as happens in the United States. Physician groups have often handed the financial risk of transplants or caring for premature babies back to the health plan (the insurers).

The government’s consultation document on commissioning suggests that certain services might be excluded from consortia budgets, for example maternity or specialised services. Treatments that involve very expensive drugs also might fall into this category – the creation of a central cancer drug fund though the creation of a central fund partly suggests that consortia might not have to face the risk of paying for rare and expensive cancer treatments (but the fund will have to meet demand for this to be done equitably).

Getting the balance of financial risk right is crucial. Consortia need to be responsible for the financial risk that they can control, and this means all the healthcare that emanates from the GPs’ surgery or is within the control of primary care. There is nothing in the detail of the plans so far – beyond the fact of moving the commissioning function down a level from PCT to GP consortia – to explain how this will happen more effectively than it has happened until now.

There are examples of local PCTs and GP practices having successfully demonstrated that they can use data to help clinicians manage chronic diseases more effectively, manage referrals to reduce inappropriate outpatient visits and unnecessary trips to A&E. The difficulty has been to scale up these good examples across England.

Effective commissioning therefore needs to engage individual GPs, to persuade them to change their referring or prescribing behaviour. Part of the solution to this may hinge on using financial incentives within the consortia, but the details of this have yet to be worked out.

The successful physician groups in the United States have ensured that good primary care performance by individual physicians is rewarded and that the financial benefits of reducing referrals at the group level are ploughed back into the organisation, for investment in infrastructure and as bonuses for physicians.

Policy makers here face something of a dilemma: with NHS budgets so tight, it will be tempting to redistribute consortia savings more widely, but this will reduce the financial incentives for GPs to co-operate with commissioning. It remains to be seen how far GPs will respond to the non-financial incentives of good commissioning: better co-ordinated, good value care for their patients.