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Engaging with grace – creating local models

Will GPs succeed where PCTs have failed in getting trusts not to monopolise secondary care provision? Alisdair Stirling and Susan McNulty look at how clinicians can do things differently

At last month's NHS Alliance annual conference, commissioning supremo Dame Barbara Hakin candidly spoke of her ‘shame' at the way she and her colleagues behaved in their dealings with their acute trust as GP fundholders in the 1990s.

‘We took stuff away from hospitals simply because we could. We were immature in our decision making and I'm ashamed of that behaviour. Why on earth did we do that? Our secondary care colleagues were just as committed,' she says.

‘On the other hand, there were lots of consultant colleagues who tried to stop us – just because they could.'

‘We developed quite an adversarial relationship, but as it mutated we came to realise we had to collaborate.'

GPs are understandably frustrated at the way the NHS market has failed to shape up so far under PCTs and in some cases they are chomping at the bit to change the status quo.

Payment by Results reduced waiting times, but created the incentive for acute trusts to maximise activity and possibly charge the highest tariff price – plunging some PCTs into financial deficit.

A cosy relationship was often perceived as existing between PCTs and acute trusts, with the former often seen as scared of upsetting the latter.

So how will GPs succeed where PCT commissioners have failed?

Commissioning experts believe GPs need to be mindful of their local situation in terms of potential providers and competition. For this reason, it is envisaged a range of commissioning models will develop across the country.

GP commissioners also need to be mindful of the objectives of their acute trust and be informed about what their trust's strategy is.

The health bill

Ruth Thorlby, senior research fellow at the Nuffield Trust, believes the health bill's shake-up of the tariff system will facilitate new ways for GP commissioners to deal with acute trusts.

In particular, the accelerated introduction of pathway tariffs will see enhanced integration of primary and secondary care services.

‘The white paper said Payment by Results will be extended and this raises the question of pathway tariffs. There will also be a role for Monitor in price setting and we're not yet quite sure how that will work either. But some changes to the tariff system that work in favour of the consortia would certainly fit in with the direction of travel,' she says.

The white paper also promised to refine the basis of current tariffs and to accelerate the development of best-practice tariffs, introducing an increasing number each year so that providers are paid according to the costs of ‘excellent care' rather than average care.

Best-practice tariffs for interventional radiology, day-case surgery for breast surgery, hernia repairs and some orthopaedic surgery will be introduced in 2011/12.

But even without further detail on the tariff changes, consortia are already devising their own ways round the system.

Putting money on the table

Dr Peter Weaving, a GP in Carlisle and NHS Cumbria's commissioning lead for Carlisle, says they are already moving beyond the tariff.

‘The tariff doesn't work very much to my advantage. Take emergency care, for example. There's an incentive on the trust to admit patients. It would be much better to have an arrangement that doesn't maximise admissions. With the tariff in place I can't get that.'

‘Because of this, I can't just write a spec for a function of the acute trust and expect it to happen. So what we've begun doing in Cumbria is to sit down with the secondary care clinicians and work out what works for all of us. The decision – of both sides – then makes it happen and the contracting experts from both the PCT and the acute trust go off and turn it into a framework. Then everybody is signed up to the same direction of travel.'

‘It's much better than a lot of very detailed commissioning and contracting meetings, with 10 or 20 very highly paid managers sitting round a table bean counting but not talking about what happened to the patient coming through the door.'

‘Consultants have baggage, GPs have baggage, but the important thing is the clinical debate.'

‘We call it "Putting the money on the table". Both sides know how much is there and it's then just a question for both sides of how to work out the best deal.'

‘It's something we've evolved into after two to three years. We did it because we were in a mess financially and had to. People on both sides are attached to structures and organisations, but what breaks that down is good clinical reasoning.'

Unbundling tariffs

Dr Oliver Bernath, founder and managing director of Integrated Health Partners, a clinical consultancy currently advising consortia, believes unbundling tariffs will yield significant new commissioning scope for GPs: ‘Unbundling tariffs is the secret source – the trick – and there is scope for this. The white paper talked about other providers being able to use spare capacity in hospitals. So a consortium could commission one part of the pathway from one provider and another part from another. I believe the government has in mind for this to happen.'

Dr David Lloyd, a GP in Harrow, north London and medical director of Harmoni, a large out-of-hours provider, believes unpacking existing tariffs to be a viable strategy for consortia: ‘I think this can and should happen. The local hospital should become a sort of Debenhams stacked with brand names patients can trust.

‘I think in London, in particular, consortia will be able to negotiate with acute trusts and pick and choose who provides which part of which service. Fledgling commissioning consortia are already finding themselves very popular people with the private sector as the wind of change sweeps through the health service.'

For Dr Weaving, unbundling the tariffs will be easier in urban areas, where there is already competition between providers, than it is in his rural region of Cumbria, where there is only one acute trust.

‘If you're operating in an area with three DGHs and a vibrant private sector, then you'd be crazy not to take advantage of that and negotiate the best deal you can for each part of the service. It may result in some DGH's losing market share and some may even close. But in areas like mine we need to to support our DGH – so the same incentives won't be there for them.'

Ruth Thorlby agrees that GPs' ability to negotiate unbundled tariffs will depend largely on competition: ‘In areas where there are a lot of hospitals there will be much more competition, which will facilitate getting a better deal. The power of acute trusts is very variable and this could cut both ways. Some could be fighting for their lives.'

Vertically integrating

Dr Lloyd is exasperated by the difficulties posed by the current system and believes commissioning consortia should vertically integrate with trusts and circumvent them altogether.

‘The NHS is like a balloon. If you squeeze it, demand will pop up elsewhere. It's the same with Tier 2 [expanded primary care] services. Providing Tier 2 services in the community via specialist GPs will provoke a boom of referrals into Tier 2. But that also has knock-on effects into Tier 3. You get higher referral rates into Tier 3 the minute Tier 2 exists.'

‘These are very difficult pathways to manage under the current system. But now there is an opportunity to create a US-style health management organisation culture in the UK and get rid of these artificial tariffs between primary and secondary care.'

‘Anecdotal reports on vertical integration pilot schemes show they are going well. In Torbay, Devon [one of the Department of Health's 16 vertical integration pilots] they have vastly improved elderly care and reduced costly admissions.'

‘I think any self-respecting commissioning consortium should be looking to do the same to get maximum bang for their buck.'

Alliance contracts

Dr Bernath is at the front line of negotiations with trusts over the commissioning changes. His company is already working with one of the early pathfinder consortia to ‘re-engineer' their relationship with their local acute trust via a new type of contract borrowed from the construction industry.

‘I think visionary acute trust chief executives realise that hospitals can't always expect to have ever-growing income. It's a question of persuading them that they are going to lose income, but they are going to lose costs too.'

‘Now if GP consortia just set out to police the trusts and make sure they're not being gamed, I can't see them getting on top of that. The PCTs haven't, so it's probably fair to say that GPs won't be able to do it either.'

‘What we're trying to do is to find ways of getting things under control before they get much worse.'

‘We're working on an alliance contract with trusts – a term borrowed from the Ministry of Defence, which uses such contracts for shipbuilding deals. It says to all the suppliers in a project: you won't get paid a certain rate unless the whole thing stays within budget.'

‘If anyone over spends, then everybody loses. You can also build in incentives – a gain-sharing arrangement. If GPs under-spend, for example, then a good chunk goes back to the providers.'

‘With an alliance contract, though, there is the disadvantage that it's cosy. Anyone trying to break in will be at a structural disadvantage so you also have to have measures in place to deal with that.'

Managed Care Organisations

Another solution Dr Bernath is working on for getting rid of the old adversarial relationship between commissioners and providers is integrating the two within the consortium.

‘If GPs were to set up a second organisation on the provider side – effectively a managed care organisation (MCO), they could take the commissioning budget over to that other organisation and then subcontract to the other providers via an alliance contract. Then all the negotiations are between providers, so the whole tariff thing just doesn't apply.'

‘This would provide real incentives for consortia. Consortia stand to lose the right to commission if they mess up but can't take any profit; the commissioning premium the government have mentioned will probably amount to QOF points. But with an MCO, if it under-spends, it can reinvest the profit. So consortia can lose, but they can also win.'

‘With an MCO formed between consortia, you'd have size and strength and the alliance contract could be three-way between primary care, the hospital and community services with everyone having an incentive to stay in budget.'

‘It's not clear whether the health bill will shed any light on what's going to be possible, but taking it a step further – what if the commissioning consortium was allowed also to be the provider organisation?'

‘The concept of having the two sides separate is a dated one. Of course, you'd have to make sure there was no conflict of interest, have a suitable scrutiny framework and so on, but I can imagine the bill might make that possible.'

‘We believe that [commissioning tsar] Dame Barbara Hakin is sympathetic to the idea, so we'll see. If the two sides really remain separate, you're just recreating PCTs with a more powerful professional executive committee.'

GPs need to be mindful of the local situation in terms of providers, competition and the acute trust's strategy GPs need to be mindful of the local situation in terms of providers, competition and the acute trust's strategy