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Provider arms and their future in PBC

Dr Michael Dixon, chair of the NHS Alliance, explains the opportunities for PBC as PCTs hive off their provider services

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Dr Michael Dixon, chair of the NHS Alliance, explains the opportunities for PBC as PCTs hive off their provider services.

PCTs must have their final plans for the devolvement of provider services – splitting the commissioning and provision functions of the trust – in place by October, with a view to implementation during 2010. This once-in-a-lifetime opportunity will change the primary care landscape forever.

Why does it matter to PBC groups?

The future of community services should be the concern of practice-based commissioners every bit as much as the future of secondary care services. Radical redesign involves both.

GPs across the country often express a great deal of frustration about how badly they feel community services respond to local needs. Perhaps your local services could be better integrated and co-ordinated. Maybe single management structures would lead to better-organised and more cost-effective care. Or do your local community services need a good shake-up and the introduction of a little competition? Alternatively, there may be the danger of fragmenting community services and creating provider-led demand, which could challenge local budgets at a time of financial hardship.

How should we get involved?

Each cluster or group will need to engage with their PCT. You should discuss the thinking so far and then work with them to come up with a high-level specification – how they wish to see services commissioned.

GPs may also have a view about the best structure for those services. You may even want to play a part in delivering community services. Any right-minded PCT should welcome such involvement.

What options do PCTs have in setting up a new provider arm?

There is no prescribed ideal form. PBC groups, working with your health communities, will need to decide what organisational form best suits their local circumstances.

There are many different structures to choose from, including:

• creating a PCT provider arm at arm's length

• transferring services to the local foundation trust

• establishing a community foundation trust

• using private providers

• bringing in GP practices (normally as a collective)

• commissioning a social enterprise or a not-for-profit provider

Arm's-length services

Many PCTs are setting up arm's-length provider services. In some cases this is

a reasonable holding solution, which allows more time for the evolution of services, especially as PBC groups and practice provider collectives get on their feet. It may also ensure that less marketable services, such as learning disability, get a good home.

But you will need to challenge the PCT if you suspect it is going for an easy solution and exerting its monopoly commissioner status – or if you can spot an opportunity for leaner, more cost-effective services by going down another route.

Foundation trusts

In some cases foundation trusts are taking on PCT provider services. This may be legitimate but if you feel it is simply about capturing the market, you should challenge this. It's hard to see what expertise many foundation trusts have in primary or community care, or how they would encourage the development of services that prevent avoidable admissions and encourage self-care as far as possible.

Community foundation trusts

Community foundation trusts are unlikely to become very common. Monitor – the independent regulator of foundation trusts – has stringent financial requirements which means they would have to be very large organisations, often covering two or three PCTs. The danger is that they would then lose local flexibility and focus and create powerful, unresponsive monoliths.

Private providers

It's possible that some private companies may be interested in providing community services, but in the light of the recession, business opportunities will be limited. My own view is that experience in other countries, such as the US, suggests large corporates are unlikely to deliver value for money in this field.

GP practices

Where local practices come together in PBC groups, they are likely to want to extend their role as providers into services currently supplied by PCTs. This is good for the NHS and patients, delivering services faster and more locally.

There are a number of different ways PBC could operate community services. Individual practices might extend their services through PMS Plus, or the group or cluster might offer an extended service, including some specialist services, as a specialist PMS bid. This might involve drug treatment services, or covering nursing homes, for instance.

Most, however, are developing a provider organisation, including the same practices that are in the PBC consortium. This grouping may take a number of forms, such as registered company (for profit or not for profit), social enterprise or partnership. Some practices might also take on a limited extended provider role by agreeing a LES with their PCT.

Social enterprises

A social enterprise has a lot of advantages. Many of the fears about GPs being both commissioners and providers, creating a conflict of interest, disappear if a PBC consortium creates a social enterprise provider arm. This argument is even stronger where the board of directors includes local residents and other professionals as well as GPs. In a social enterprise, nobody can be accused of profiting. Local ownership also means it is logical for you to be offered first refusal for developing any new community services.

This model should be attractive to the NHS. Improving cost-effectiveness in a cold financial climate will require a greater emphasis on co-production between patients and clinicians of more effective self-care, a greater drive on personal health and improved community health.

It is likely that resources will be better used where patients, clinicians and managers run local services as equal owners of the process. There is no incentive to increase turnover and cost as there may be for a stand-alone provider.

For GPs and managers, acting as a social enterprise means they will not be seen as potentially profiting from community services, but will simply be remunerated according to the hours and effort put in. Social enterprise is a logical step for clinicians and managers wanting to keep faith with their local population and be properly remunerated but who feel uneasy about the private option.

Developing a local social enterprise provider organisation will also lock in NHS assets and prevent any future takeover by private corporates. Nobody wants to see their local community services taken over by an external private company that might not even have been in health before.

It is a short step from this to the PBC consortium itself becoming a social enterprise, providing as much as it can in-house, and commissioning the rest. This should lead to rapid and radical redesign.

The social enterprise would not face the same difficulties that currently afflict PCTs running their own provider arms. In the new set-up, the local PCT would act as a disinterested guardian of the public purse. This would then allow a mix of commissioning and provision at the frontline. Indeed, GPs could argue that they have always effectively been both commissioners and providers.

Won't staff lose their pension if they ‘leave' the NHS?

Nurses and other members of staff may be reluctant to move to a new form of provider if they fear losing their NHS pensions. However, this is not an issue if services are provided as a LES, PMS Plus or Specialist PMS. In a social enterprise, employees moving from the NHS will also keep their pension. For registered companies, pensions may be a problem and you will need to seek advice on this issue.

How should the conflict-of-interest issue be handled?

The question is how to separate the role of the commissioner from that of the provider, who has a financial interest. The simple solution is to separate these roles entirely so that PBC groups stick to commissioning. Then, when the same practices are involved in bidding for provision, they apply and compete like any other potential provider.

However, the two functions have always gone hand in hand within PCTs – it would be going from one extreme to another to create an iron wall between them. This is not in the patients' interests.

For instance, tendering takes from six to 12 months to complete and costs on average around £100,000. If there is a good, well-proven potential provider such as a PBC consortium, it makes sense to work up proposals with them and tender if they are not sufficiently amenable.

Commissioning should be about leverage to get the right service, not arm's-length beauty contests.

In practice, individual PCTs are likely to handle the division of the commissioner and provider roles differently. Where PBC is effective, has a good relationship with the PCT and a reputation for managing and providing current services, then it should be in the patient interest for the trust and local groups to work closely together. If PCTs are to fully engage practices and PBC groups, they should forge strong relationships on both levels, commissioning and provision, where they have good and ethical ways to work within the guidelines of the competition and contestability standards.

The current rules around competition are actually more flexible than some PCTs have realised. Where the contracts are relatively small – especially if the PBC has made savings – bona-fide proposals from practices should be given serious consideration with minimal bureaucracy.

Conflict of interest also affects PCTs. However arm's-length the PCT provider service becomes, its corporate governance will ultimately be the responsibility of the PCT board. PBC groups will need to challenge PCTs when they feel that proposals are cosy rather than in the best interests of cost-effectiveness and patient benefit.

Where do you see things going?

As GPs, other clinicians and managers become increasingly involved in PBC and look to develop as providers, I expect to see groups of practices coming together as virtual supersurgeries or practice federations. The first was proposed by NHS Alliance and the Small Practices Association, the latter by the RCGP. These may develop spontaneously and organically but, in many cases, they are likely to be the direct result of relationships formed between practices, clinicians and managers as working in PBC groups.

Those who argue that PBC has been slow to develop suggest that having a provider element would attract more interest from GPs. Collective provision by practices is seen as the next stage, with groups of practices holding a budget from which they can either commission or provide services. PBC could become part of an organic developmental process towards integrated care organisations.

These would be based in primary care with the PCT taking on a loose monitoring role, which safeguards against restrictive or sharp practice.

In the meantime, PBC groups, as guardians of the health services available for their local people, need to be closely involved as PCTs prepare to devolve their provider services. They can play the role of disinterested broker against the vested interest of the PCT, or accelerate local service redesign by doing the job themselves. There are real opportunities for those prepared to seize the chance.

Dr Mike Dixon is chair of the NHS Alliance and a GP in Cullompton, Devon

Dr Mike Dixon - chair of the NHS Alliance Dr Mike Dixon - chair of the NHS Alliance

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