[DAYS_LEFT] days left of your Medeconomics free trial

Subscribe now

Your free trial has expired

Subscribe now to access Medeconomics

Good Practice: Commissioning - Dealing with a hard budget

Julie Wood discusses the implications while, below, Mo Girach lists the steps involved for PBC groups.

Julie Wood says GPs require flexibility and freedom to work well (Photograph: Joe Mills)
Julie Wood says GPs require flexibility and freedom to work well (Photograph: Joe Mills)

With the NHS facing the greatest management and financial challenge it has known for decades, it is crucial that those who, through their day-to-day clinical practice commit the vast bulk of NHS spend, are fully and actively engaged in taking decisions about how patient services are designed, delivered and transformed.

To do the job properly, GPs need to have the right tools as well as flexibility and freedom to be able to make change happen quickly. They also need to be responsible and accountable for the decisions they take to re-design services that meet their patients' healthcare needs within what will inevitably be very constrained resources.

Policy formation
Health secretary Andrew Lansley and his team need to form their policy quickly about how to enthuse and empower local clinicians to take this on - particularly when many on the front line may feel frustrated that they were not given 'their heads' in the times of plenty, yet are now being asked to do more in lean times.

Some of the questions that need to be addressed are:

  • What do we actually mean by a hard budget and how 'hard' do the budgets have to be to have the desired effect?
  • At what level in the system does the hard budget need to be held and managed, and by whom?
  • What might be the practical and fiscal implications for the jobbing GP, the practice and the PCT?

The evidence from our past forays into giving clinicians power and control over healthcare resource decisions, both within this country and internationally, points us towards a number of opportunities. It also gives strong clues about what we need to avoid if we are to pull this off in a very different healthcare and financial environment.

According to a recent Nuffield Trust and NHS Alliance publication, Beyond PBC - the Local Clinical Partnership, there are a number of critical issues that must be dealt with if we are to move forward from practice-based commissioning (PBC) to 'clinically empowered commissioning'.

Remember the 'R' Words
  • Rewards: will these be financial or non-financial?
  • Recognition: will you be seen as doing a good job?
  • Risk: what if your group/consortia overspends?
  • Remuneration: what will lead commissioning GPs be paid?
  • Reinvestment: will this bring more services int

Resource envelope
First and foremost, GPs must take responsibility for commissioning healthcare within an agreed resource envelope. GPs and practices must decide on the level of direct involvement in commissioning they wish to take up. At the same time, it is not an acceptable option for GPs to say that helping make ends meet or making decisions on how to improve the quality and cost effectiveness of local services has nothing to do with them.

However, if GPs do not wish to take on an active role themselves, then they would be able to delegate that responsibility upwards to a clinician-led commissioning group or clinical partnership.

By having a hard budget, GP practices - most often working together in clusters/consortia - would have direct control over health budgets beyond primary care expenditure. This could mean either having executive responsibility for funds held by the PCT or for funds transferred to the practices or commissioning consortia/cluster.

Key decisions
Whether the budget is made up of real cash or not, what is absolutely critical for this to work is that clinicians, through their local clinical partnership, work within the agreed budget to take the necessary make (themselves) or buy (from others) commissioning decisions.

But, how do we make this happen? What are the key issues? Please consider the five 'R' words - rewards, recognition, risk, remuneration and reinvestment.

What are the rewards? These could be financial. For those who would wish to receive financial reward for good commissioning performance, then there would likely be an element of risk for non-performance. If this is linked to GP pay, it may not be considered as acceptable to some GPs.

It is however not just about financial rewards. There are also non-financial rewards that should not be underestimated, such as recognition of doing a good job and also having an increased sense of control over quality improvement.

Risks
What about risk? The risk to a GP/practice/locality of not performing against the budget - not just in the absence of a reward payment - also needs to be carefully thought through and understood by all.

It is not likely to be something to excite many GPs if they were personally accountable for the commissioning spend, with their core take home pay affected where their ability to directly control the spend was limited, for example, because new NICE guidelines or other imperatives had to be delivered.

What about remuneration to do the job? This is not going to be a job for every GP and we need to therefore ensure that those who can step up to the mark are suitably paid for doing so.

Re-investment is also key. Can we, through clinically empowered commissioning, find ways to re-invest funds, however limited, in bringing care closer to home with primary care clinicians providing more care themselves? If we can, this brings both more rewards and additional funds into primary care.

This is really important if we are to incentivise the front line to take on hard budgets.

Co-operative model
Finally, it is critically important to remember that this is not about primary care clinicians doing their own thing.

Our model of clinically empowered commissioning with hard budgets is a co-operative one where GPs work with a wide range of other clinicians, across primary and secondary care, to decide on the range of services to be delivered and where the locus of care would most sensibly be.

If we do not align the incentives for working together, then we will not create the right environment for clinicians to do so.

Maintaining the status quo or seeing this model of clinical commissioning as an optional extra is simply not good enough.

Our patients, quite rightly, expect us to rise to the challenge and GPs' survival through the turbulent times ahead depends on it.

  • Julie Wood is national director of the NHS Alliance's Clinical Commissioning Federation. She is also an independent healthcare policy consultant
  • The NHS Alliance 13th annual conference, The Cutting Edge, takes place at the Bournemouth International Centre on 18 and 19 November and GP newspaper is pleased to be the media partner for this event: www.nhsalliance2010.org.uk

Mo Girach is NHS Alliance's special adviser on social enterprise and cooperatives and an associate at the King's Fund.What must PBC groups do?

  • Set up a 'PBC hard budget group' with PBC representatives, senior PCT representatives and other stakeholders, to include key areas such as finance, IT and others. Agree collectively objectives, including the pilot period, for example, one year, and identify all the areas that need to be discussed, evaluated and agreed with a clear definition of what everyone means by hard budgets.
  • PBC groups need to be 'incorporated PBC' and become a legal body such as a company where possible. Unless the PBC group is incorporated, the budgets can only go to the practices and then pooled. A number of PBC groups already work as incorporated organisations.
  • The PCT should, in an agreement with the PBC group, define a financial risk formula so that risks can be collectively managed and reduced. Remember that there are no risks to GPs' PMS/GMS budgets when the PCT has hard budgets.
  • Agree incentives. These need not all be financial. The higher the financial risk, the higher the incentives must be. Incentives could be based on quality, reinvestment of savings into new or additional services, for example.
  • Work closely with the PCT and acute services to ensure they provide and support accurate and quality data/activity. Initially, focus on easy budgets with no or reduced risks.
  • Identify and agree with the PCT how unforeseen events/circumstances will be dealt with.
  • Budgets should be based on at least two/three years of data and calculated for a population of at least 100,000.
  • Agree with the PCT at the onset how hard budgets will be established, both in terms of methodology and level of calculation, for example, a group could opt for fairshare or risk-based capitation.
  • Agree on ongoing support, both at practice and PBC group level.
  • Mo Girach is NHS Alliance's special adviser on social enterprise and cooperatives and an associate at the King's Fund.
  • Have you registered with us yet?

    Register now to enjoy more articles
    and free email bulletins.

    Sign up now
    Already registered?
    Sign in

    Would you like to post a comment?

    Please Sign in or register.