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The nuts and bolts of PBC

Dr David Jenner presents a ‘rough guide’ to practice-based commissioning for busy GPs who haven’t yet had time to get to grips with the basic mechanics of the policy

Dr David Jenner presents a ‘rough guide' to practice-based commissioning for busy GPs who haven't yet had time to get to grips with the basic mechanics of the policy.

What is PBC?

PBC describes a policy introduced in 2004 to involve practices more in the planning and provision of local health services.

It draws on the lessons learned under the previous systems of locality commissioning and GP fundholding initiatives.

PBC went live in 2005 and is framed entirely within current legislation and ultimate budgetary responsibility remains with the PCT. This means practices are not individually liable for any overspends.

Securing and monitoring contracts for healthcare provision remains the responsibility of the PCT, unlike fundholding but similar to locality commissioning.

Why was PBC introduced?

It is generally perceived that PCTs did not effectively engage practices in the commissioning agenda. Instead, it involved GPs in the bureaucracy of NHS management and put them in the engine room rather than the driving seat as promised.

Health ministers and officials were keen to use PBC to reignite the enthusiasm and entrepreneurial skills of GPs and to follow the basic rule of business – namely aligning budgetary responsibility with the people who actually deploy the budget.

Through prescribing, referring and providing direct care, practices are involved in deploying the majority of NHS resources.

‘Practices are not individually liable for any overspends on budget. the pct retains ultimate responsibility'

Do I have to take part in PBC?

Officially, no. There is no contractual obligation to take part in PBC.

However PCTs can still challenge practices' use of resources – such as the way GPs refer and prescribe, if these are deemed excessive or inappropriate – through clinical governance clauses in the GMS and PMS contracts.

What's in it for me and my patients?

PBC offers practices the opportunity to become involved in shaping local services to meet their patients' needs. However, immediate tangible incentives for becoming involved have so far appeared limited to the £1.90 per patient available to practices under the Towards PBC direct enhanced service (DES) of 2006-07.

But from April this year, each PCT has to offer a local incentive scheme that at least matches the DES payment. This can be treated as income by the practice.

Practices can also invest 70 per cent of any savings made against the indicative practice budget in local healthcare services. The remaining 30 per cent can be used by the PCT at its discretion.

Practices can also make new income by providing extra services to patients and taking a profit from this, subject to PCT approval of the service.

Do I get to hold a real budget?

No. Legal responsibility for the budget remains with the PCT. It can devolve responsibility for the budget but not accountability for it.

The PCT board is ultimately responsible for the proper use of public money through PBC and achieving financial balance.

How are indicative budgets calculated?

The indicative budget for 2007-2008 is based on activity in the following areas during the period September 1, 2005 to August 31, 2006, charged at tariff price and uplifted to 2007 prices:

• elective day case and inpatient activity

• outpatient activity

• A&E attendances

• emergency hospital care.

Some specialised services (such as renal dialysis), mental health and primary care services are excluded from the Payment by Results tariff system (see and download the PDF of latest tariff information).

From 2008 the indicative budgets will move away from a basis of historical activity and be adjusted towards a ‘fair share' formula.

There is a tool on the Department of Health website (see, which practices can ask PCTs to use to calculate their fair share budget.

The department says the tool is only accurate to within 10 per cent, so when a practice is within a 10 per cent margin over or under budget, it will be deemed to be at target.

Until then, the budget may be adjusted up or down by no more than 1 per cent a year to bring practices towards target.

The prescribing budget is also included in practice indicative budgets, but should be based on previous local formulas, with appropriate uplifts for inflation. These are not definitively specified.

‘doing more in-house, such as minor surgery, can save money on referrals and provide an income stream'

Are there any ‘early wins' to be gained under PBC?

The easiest services to target are those over which you have direct control, namely:

Prescribing, by using generics where possible.

Outpatient referrals, which should be reviewed with colleagues if you have them. In our practice, by simply discussing possible referrals each day among ourselves, we have decreased new referrals by 10 per cent in six months.

Reducing follow-up outpatient attendances. It can be simple to reduce these with patients' agreement, such as by doing more diabetic care in-house, which can save about £100 per attendance.

Doing more in-house. Practices can undercut the tariff price, when it is safe and reasonable to do so, by providing more procedures such as minor surgery. This can help save money on hospital referrals and provide an income stream for the practice with a margin for profit.

Remember though that the big money (about 66 per cent of the indicative budget) is spent on emergency admissions. In my practice only 25 per cent of these originate from us, with the rest coming from out-of-hours providers, NHS Direct and direct A&E attendances. These are harder to influence but cannot be ignored. They are also a key PCT priority and it is difficult to achieve any savings unless they are well managed.

How do I get the PCT to back my proposals?

Quite simply, make sure your proposals hit the PCT's major priorities too. Ask your PCT what these are, but also be aware that all PCTs have this year been told to prioritise the 18-week referral to treatment target and financial balance.

If you are considering providing extra services, make sure you have a commissioning plan to produce the savings that will pay for the new service.

Write simple proposals to provide or commission new services, clearly outlining benefits to patients and how they will hit local and national priorities.

Such proposals have to be considered and agreed or declined by the PCT within eight weeks but are likely to be approved as long as they are safe, increase patient choice and represent value for money.

Demonstrating patient and public support for any proposal or hitting an identified public health need will also help hit the spot.

Can the PCT keep PBC savings to pay off wider deficits?

See my comments above about incentives. Profits from provision and incentive payments should be guaranteed to you.

Watch out though for clause 3.29 in the guidance Practice-based commissioning: practical implementation (November 2006), which means that in special circumstances, strategic health authorities (SHAs) can apply to the Department of Health to suspend the rules around savings. Clause 4.13 also suggests incentive monies could be suspended in these circumstances.

My tip is to make sure local incentive schemes are legally binding (your LMC can help with this).

Savings against your indicative budget can only be snaffled by the PCT if they ask the SHA to invoke clause 3.29, but this may not stop them trying through other means.

Unless they do invoke that clause, you should be able to reinvest 70 per cent of any savings into local health care. You will have to follow PCT priority areas for those savings if your PCT is in ‘special circumstances'.

Clause 3.25 states that simply working to restore financial balance is not a reason to withhold savings.

How quickly should we be making progress?

So much of this depends on your PCT as well as you. PCTs have been the rate-limiting step in many areas and now, following the reconfigurations of October, are often short of staff as well as money.

You should, though, expect the following from your PCT by 1 April this year:

• An indicative budget, following the rules for budget setting, with no top slices for deficit, unless the SHA has invoked clause 3.29.

• Benchmarked activity data for all PBC activity as defined above on a monthly basis, with details of expenditure at hospitals for you to check down to individual patient level if necessary.

• An agreed local incentive scheme that offers at least £1.95 per patient in the 2007/8 financial year.

• Some management support from the PCT, either in money to fund clinical and administrative time or people to help you analyse and interpret data and advise on contracts. You will be asked to feed back quarterly in an independent survey how well PCTs are supporting you, so remind the PCT of this when you are negotiating support, but please recognise their position as well.

In reality a combination of money to fund GP/practice staff time and support personnel employed from the PCT would seem most appropriate. Seek to capture your mutual obligations to each other in a service level agreement to avoid misunderstandings.

When will we see success?

Be patient. So much depends on others, including the PCT, SHAs and central government.

In most cases, it takes a year to really understand the data and expenditure patterns, with savings and service redesign being evident in the second year.

Success should be measured as better services for patients while managing within budget and at no extra cost to your practice.

If you feel your PCT is not playing by the rules, raise this with them and if you cannot agree, appeal to the SHA or ask your LMC or the NHS Alliance for an opinion.

The NHS Alliance provides members with newsletters and offers mutual problem-solving with PCTs. For membership enquiries, email

Dr David Jenner is a GP in Cullompton, Devon, and PBC lead for NHS Alliance

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