The NHS Commissioning Revolution

The 2012/12 financial year has been a tough one for the ‘shadow’ clinical commissioning groups (CCGs) as they got ready to replace primary care trusts (PCTs).  But their job will get much more difficult as their commissioning role goes live in April.


Not the least of the challenges facing CCGs will be in managing their budgets.  Michael Schofield FCCA is director of finance for NHS Sussex – the name for four PCTs that joined forces to operate as a single body.  From April he becomes chief finance officer for both Brighton and Hove CCG and High Weald, Lewes and Havens CCG. 


Schofield says that although former health secretary Andrew Lansley promised CCGs would not inherit deficits from outgoing PCTs, they are inheriting service provision that is not financially sustainable and is likely to generate ongoing deficits.  “It is not quite as clear cut as it seems on paper,” he explains.


Unless the new CCGs take tough decisions to change the health spending patterns and structures of healthcare delivery they inherit, they will not be able to break even as legally required, argues Schofield. 


Equally important, CCGs will have to work together and achieve cross-boundary co-operative commissioning approaches, he says.  “CCGs can’t survive on their own.  You can’t work as a commissioner unless you build relationships.  CCGs need to work collaboratively, commissioning with other CCGs.”


One fundamental difficulty is the continued use of Payment by Results (PbR), says Michael.  “We are in an environment where there is no more money.  PbR was designed when there was growth in the system.”  At a time of reducing budgets, PbR is the wrong approach and does not incentivise the most optimum and cheapest use of service capacity, he argues.


The overarching problem is both structural and organisational.  “There is no systems management in the NHS,” Schofield explains.  “So who the hell is going to fix problems?  That was the role of PCTs.  CCGs are not being told to do that and they do not have the powers to do it.  I am being told that the legal position is that we cannot move finances around between CCGs.  I need more guidance on how to fix this.”


According to the responses to a Health Service Journal survey, some PCTs only survived through financial support from neighbouring PCTs – underlining the dangers for CCGs if the legal advice provided to Schofield is confirmed.


Related concerns were raised by the National Audit Office in its report, ‘Progress in Making NHS Efficiency Savings’, published late last year.   It acknowledged that CCGs had been working closely with PCTs to produce an efficient handover of responsibilities at the end of the financial year. 


“It is not clear, however, who will take over the role of strategic health authorities in overseeing savings plans and providing strategic direction for local health economies,” warned the NAO.  “Neither is it clear who will make strategic decisions, for example on transforming services, that will benefit wider local health economies rather than individual NHS bodies.”


The NAO concluded:  “The Department [of Health] should clarify the arrangements for oversight of efficiency savings in the reformed NHS from April 2013.”  Without that oversight, the NAO warned that the move from PCTs to CCGs could cause significant problems for the NHS as a whole, given that 20% of the Government’s total efficiency savings of £20bn by 2015 are to be achieved through commissioning. 


Savings of this scale can only be achieved, said the NAO, through commissioners and providers working together to redesign services.  Moreover, the report added, the efficiency programme is intended to improve the quality of care and patient experience, while making cost savings.


The King’s Fund stresses that it is essential that a collaborative role is adopted by CCGs, to remodel the provision of healthcare and to integrate services.  It warns that this approach is put at risk by what it refers to as “the scale of the financial challenge” faced by CCGs.  This risks CCGs not having the scope to operate independently in the way that is needed.  It is also likely to undermine the commitment to innovation that has been shown by GP consortia during preparations for the CCG structures.


Chris Naylor is a fellow in health policy at the King’s Fund.  He says: “It will certainly be a concern to CCG leaders if they feel if their hands are tied.  There are various different ways they can contract with providers and commission with providers including competitive tendering and other ways as well.  I think commissioners are open to various systems.”


But even if collaborative commissioning will remain on the table, the next few months will not be easy for CCGs.  “It’s certainly going to be a very challenging year for them,” says Naylor.  “They will take control of budgets just when the NHS feels the effect of the productivity drive.    In some areas this is compounded by a couple of things.  Some are having to redo their financial planning at the last minute because budgets are smaller than they expected.”


While it was known that the NHS Commissioning Board would be responsible for specialised services, the definition of these was only recently clarified – and is much broader than many CCGs anticipated.  As a result, CCGs have less funds allocated to them than they planned for. 


There has also been uncertainty over the new allocations formula, adds Naylor.  A new formula was to have been put in place for the 2013/14 financial year, which reduced the financial loading for deprivation and increased it for older age groups and larger populations.  Just before Christmas the Commissioning Board decided to reduce the amount of simultaneous change and stuck instead with the old system for this year.  But again this meant that financial plans had to be reformulated.


The introduction of CCGs is not the end of the reforms, then, with a change in the funding formula. The age of permanent revolution in the NHS is not at an end.  No doubt many NHS managers will groan when they recall the pre-election phrase ‘no more top down reorganisation of the NHS’.



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