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What will PCTs bequeath?

When PCTs are abolished in 2013, what else will GP consortia be taking on apart from budgets and commissioning responsibilities? Alisdair Stirling investigates

When PCTs are abolished in 2013, what else will GP consortia be taking on apart from budgets and commissioning responsibilities? Alisdair Stirling investigates

PCTs were a full 10 years old when their death sentence was passed in the Government's white paper on the NHS earlier this year. In the decade they have existed, they have grown enormously – both geographically and in terms of their function within the health service.

With the lion's share of NHS funding pouring through their coffers for much of that time, they have become far more commercially astute, better managed and more business-orientated – but has their power corrupted them as some critics suggest, leaving behind bloated and failing organisations riddled with debt and dead wood?

Of particular concern is the inheriting of PCTs' debts, leaving GPs wondering what else they might be taking on in terms of staff, contracts, management consultants and premises that were initiated by PCTs but do not necessarily fit with their consortium's future plans.

Debt

Many PCTs are in serious financial difficulties. Trusts that recorded surpluses last year are now in the red and – according to a recent survey by our sister publication Pulse – some 15% (six out of 40 trusts questioned) predict they will be in deficit by the end of 2010/11, breaching their legal duty to break even. A further third (14) are implementing emergency packages to avoid slipping into deficit, with two of those already in the red. Many have already begun to slash GP referrals and re-examine drug budgets, mental health services and public health programmes in an effort to make ends meet.

Dr Nigel Watson, a GPC member and chief executive of Wessex LMCs, believes PCT debts could pose significant problems: ‘If you inherit a deficit you have got to give it back. If you've got debt in a family context, you can budget to pay it back but the concern for GPs is that they can't trust secondary care data. There's a huge error rate, things are miscoded and tariffs can change just like that. The prices are arbitrary. So where there are deficits, they are going to be very difficult to budget for.'

But there is hope, he says. ‘It's not a forgone conclusion. The Government must find a way of creating a level playing field. The current formula for allocations isn't necessarily equitable and around 25 out of 150-odd PCTs are in deficit while others are investing like mad to cut the surplus. But the cost pressures on consortia are going to be such that something must be done.'

NAPC chair Dr Johnny Marshall, one of a team of GPs selected to advise NHS chief executive Sir David Nicholson on the reforms, believes there is time to get the spreadsheet balanced.

‘We've got two and a half years to get the debts out of the system by 2013. It requires everyone to be working on this during the transitional phase. And you have to remember the debt is attached to the population. It comes with the territory and can be reduced through cutting back on the acute sector and caring for more people in the community. It's absolutely long enough – providing we start now.'

Julie Wood, director of the NHS Alliance's clinical commissioning federation, agrees: ‘Financial deficits aren't the best start, but there are a couple of years in which to begin reducing them. Find out if the debts are recurrent and if they can be dealt with in-year. It's really about understanding the reasons for the debt – is it a one-off big spend or something more permanent?'

Contracts

GPs fear they could be burdened by long-term contracts with providers and external management consultants the PCT contracted to use, but Dr Marshall dismisses claims these would be a burden on consortia.

‘I'd be surprised if any PCT is contracted beyond 12 months for provision of care. We'll be moving into the any willing provider model and there won't be room for long-term deals which tie consortia down to a single provider,' he says.

Dr Marshall also dismisses long-term contracts with consultancy firms as an ‘urban myth'.

‘The last time I spoke to a consultancy they said there appeared to be a moratorium on employing management consultants in the NHS. Again, I'd be surprised if PCTs have been able to employ any.'

Dr Watson, however, believes pre-existing contracts between PCTs and providers could pose concern for consortia. ‘Contracts such as those with Independent Sector Treatment Centres (ISTCs) are generally for five years and could conceivably be inherited by consortia who did not want them,' he says. ‘However, it is not yet clear whether responsibility for primary care premises is one of the functions consortia will inherit from PCTs.'

Julie Wood believes consortia should really get to know what they're taking on.

‘As commissioners, you'll need to know about the ongoing running costs, so as you move through 2011, you should be looking at the underlying financial health of your PCT and its legacy of commitments. PFI deals entered into by secondary care will be reflected in prices and tariffs so you need to be aware of those.'

Ms Wood says it is not yet clear whether current contracts will still be legally enforceable – given that PCTs will no longer exist as a legal entity – but she advises consortia to check them out in any case. ‘The length of contracts can vary from one to five years typically, and consortia should be taking on more of a role in monitoring those so that they know what might be in force when they take over the reins.'

Expensive contracts with management consultants such as KPMG and McKinsey could also still be in force under the Framework for Procuring External Support for Commissioners (FESC), she adds.

‘This wasn't as widely taken up as was supposed, but the issue is, will the contracts be transferred to consortia? Consortia need to be aware of what's out there,' she says.

Staff

The question mark over PCT staff is a big one. Will consortia be able to cherry-pick the ones they want, or will stringent employment regulations mean they are saddled with staff they do not require? (see box, right).

The new Department of Health Human Resources Framework, due out by the time you read this, should provide further clarity on this. It is being prepared by Sir Neil McKay, chief executive of the East of England strategic health authority, in consultation with staff and unions.

Ms Wood says: ‘The document should make it clearer whether TUPE does or doesn't apply. The consultation document [Liberating the NHS: Commissioning for Patients] says GPs should have the freedom to get resources from wherever they want, so we'll have to see whether the legal position makes that possible.'

Dr Jonathan Shapiro, senior lecturer in health services research at the University of Birmingham and adviser to Humana Europe, an independent commissioning support organisation, believes consortia will have choices about staff.

‘There's no reason why they can't contract out some functions. Things like planning and management roles can be done by an outside agency and might be cheaper that way than by transferring over PCT staff. You might find competition for the payroll function – for example, between NatWest and Barclays,' he says.

According to Dr Marshall, consortia will not be saddled with unwanted PCT staff: ‘Clearly, faced with the drop in management costs there will be a drop in staffing levels. There's an inevitability that commissioning consortia will recognise the job for which they're being held to account and employ staff accordingly.'

Even the TUPE regulations need not pose a barrier, Dr Marshall says: ‘If you can show that the job the person is moving into is genuinely different, TUPE won't apply.'

Dr Watson says legal advice is being sought by the BMA. ‘If there are similar posts within consortia, TUPE may well apply. But, for example, if you set up a federation of consortia supported by an external body, the roles will arguably be different. We need guidance on that.'

Alisdair Stirling is a freelance journalist

The TUPE regulations

The rights of employees who become employed by a different employer following the transfer of a business are covered by the Transfer of Undertaking (Protection of Employment) Regulations 2006 – TUPE.

The regulations are designed to protect the terms and conditions of any employee who is transferred. Terms protected include continuity of employment, pay and holiday entitlement. A transferring employee cannot be employed on inferior terms and conditions to those they enjoyed prior to the transfer.


Where a transfer is regulated by TUPE, the new employer takes on responsibility for all of the previous employer's employees, as well as those employees who would have been employed by their old employer but for being unfairly dismissed before the transfer. So the new employer could find itself liable in an employment tribunal to employees it knows nothing about.

The new employer will also be liable for any dismissals caused by the transfer whether the dismissal occurred on, before or after the transfer. GP consortia will need to make appropriate enquiries into all of this and may need to take out appropriate insurance.

What will PCTs bequeath? What will PCTs bequeath?

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