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New to commissioning? Read our quick guide

Read our quick guide to get up to speed on how commissioning works

Commissioning is a term only used in England. In other countries they simply call it ‘planning and funding'.

Commissioning is essentially making buying decisions about what services local patients need and deciding who you should buy them from.

This ‘guide' aims to give those of you new to commissioning a quick overview of how things work and some of the big issues you will come across.

The changes for how GP commissioning will differ in the future are still bedding down so it is a ‘story so far' if you like.

It is by no means definitive, but a useful read to get up-to-date with the big issues for GP commissioners.

Welcome to our world!

The NHS is a market

The NHS is huge. It is the biggest employer in the world after the Chinese army and Indian rail and has an annual budget of £102 billion. For a single PCT the cost of caring for diabetes patients alone is in the region of £6 million.

The NHS is a financial beast unlike any other for ministers and the treasury to try and grapple with.

In the 1990s a series of reforms were introduced to create a market within the NHS.

The idea was that if services were bought and sold it would stimulate competition, enhance patient care and help get a grip on where the money was going.

A national tariff was introduced that details how much every single operation, outpatient procedure, diagnostic costs. The latest version of the tariff is HRG4 and contains no less than 2,500 codes.
So in theory, services are bought and sold in the NHS just like the commercial sector. In practice however most services have continued to be provided in the acute sector and the status quo has prevailed.

Hospitals are too big

In recent years there has been something of an awakening by policymakers into how much secondary care costs and how efficient primary care is.

Hospitals are now perceived as big, impersonal, expensive places and part of a model that is unsustainable if the NHS is to remain free at the point of access.

As NHS chief executive David Nicholson, said last year: ‘We cannot have a situation where all we get are bigger and bigger secondary care organisations'.

The aim now is to shift care out of hospitals into community settings and to get patients out of hospital who do not need to be there. According to Matthew Swindells, the former managing director of health group Tribal, 30-40 per cent of patients in acute hospital beds should not be there.

Changing times

Until now, commissioning decisions have mostly been made by PCT managers.

The vision for the future in the new health White Paper, piloted by practice-based commissioning, is that GPs will control the budgets. The thinking is GPs' clinical knowledge will make for sophisticated commissioning decisions that will create a more efficient NHS.

Let's have a quick example of how clinical knowledge can enhance commissioning.

Patients requiring prostate cancer follow-up were going to the local hospital. A group of GPs put a business case together arguing the follow-up of such patients could be done by local GPs. This would cost less than sending patients for an outpatient appointment (tariff cost £70) and patients could access care closer to home.

It's doubtful this service redesign would have come about unless the initiative had come from the GPs. As clinicians, they were able to argue the follow-up care at the hospital wasn't as good as it could be and that a number of GPs in the area had the necessary skills to do the follow-up – those GPs that didn't could refer patients to the colleagues who had the skills.

This provision model suited these GPs but there are others they could have chosen. They could have employed their own consultant to hold an outpatient clinic once a week in one of their practices or commissioned a private oncology provider to lay on a follow-up clinic at a local community hospital.

Giving budgets directly to GPs also makes them more mindful of their actions and what they cost the NHS – for example, is that outpatient referral at £70 or that MRI at £600 really necessary? Could I send this patient for some physiotherapy to see if that helps their knee pain rather than referring them to a consultant who will no doubt operate costing the NHS thousands of pounds? why has patient Y been in hospital for 9 days now?

So each practice is given a budget, based on historical spend or using what is known as a ‘fair shares' formula developed by academics to take account of local need and deprivation. The budget includes prescribing, secondary and primary care costs.

The practice then tries to stay within that budget.

Under PBC practices were not given the budget for mental health or community services as no tariff exists for these. One of the big changes announced in the health white paper is that GPs will have the budgets for both these major services.

So that's the basic idea of GP commissioning – GPs control the purse strings, become more aware of their spending decisions and are more innovative about where services can be bought from and who can provide them.

Now let's take a closer look at how the commissioning process itself works.

1/ Deciding what services your patients need

A pitfall of PBC in its early years was that that the impetus for service redesigns,too often came from clinicians rather than patients. So a GP with a special interest (GPSI) in say, dermatology, would come forward and say he fancied doing some more dermatology work.

That's wrong because the commissioning process should always start with the consortium looking in detail at what patient needs are.

Going back to the dermatology example it may have transpired that having looked at patient needs in the consortium there were extremely long waiting lists for dermatology and it did in fact make sense to commission this GP to see some patients. But patient need has to be the starting point.

Data is really important here. You need to build a picture of what services patients have been accessing so far, what number of patients have X disease, how demand is set to grow etc.

Data has been something of a thorn in the side for many practice-based commissioners for a number of reasons:

- Data has often been of poor quality

- Practice-based commissioners have had to rely on PCTs to provide the data for them

- GPs tend to be very scientific in what they want from data rather than accepting data that is ‘good enough' to make a commissioning decision


Another big problem under PBC was the incorrect tariff code being used in hospitals.

For example a patient is admitted to hospital. The paperwork is sent down to the admin office and there a clerk – sometimes a temporary agency worker – has to decide which code they should use to classify that admission.

So say the patient has a urine infection that is aggravating their dementia, should the patient be coded under a urology code or a mental health one? If the latter is twice as expensive as the former that's going to make quite a difference to local practices' budget. The Audit Commission has estimated such coding errors to be running at 9 per cent.

Where PBC groups have taken a close look at the coding of patients in hospitals they have often uncovered thousands if not millions of pounds worth of miscoding and successfully challenged this.

One of the very good things about fundholding- the policy that preceded PBC - was its grip on the patient trail. Practices kept a clear record of what patients were admitted for, what treatment they received and what they were eventually invoiced for.

There is lots of room for improvement here. Many GPs say they fail to receive discharge letters from hospital or if they do they come weeks or months later. This severely affects patient care – we hear storiees of patients going to their GP to discuss the side effects of their cancer drug and this appointment is how the GP learns their patient has cancer.

2/ Setting outcomes

So you've decided to move X amount of dertmatology outpatients out of the hospital and refer patient instead to the local derma GPSI or set up your own clinic employing dermatologists. But why are you doing this?

To cut waiting lists, improve patient care, cut travelling times?

Good commissioning meets patients needs, sets outcomes and proves those outcomes have been met.

It might seem obvious to you that the service you're commissioning will be better for patients but you need to prove it – particularly in these austere times when the value of services will be questioned.

The lesson to learn is don't assume. One PBC group decided to move a pain clinic ‘closer' to the practices in their cluster. But when they spoke to patients the patients were up in arms about having to catch two buses to this new clinic instead of one to the hospital.

Some PBC groups have used local academics from universities to help analyse the value of their services and how outcomes were met.

3/ Procurement

This is the buying bit, the awarding of the contract and is mostly done my managers rather than clinicians.

In the NHS market, a service is sometimes tendered so that several providers bid to provide a service and only one wins the contract.

But another model, that is set to become even more popular post-white paper, is the Any Willing Provider model.

AWP means that, there will be several providers a GP can decide to refer a patient to. Rather than being awarded a block contract, any willing providers are paid on a per-patient basis.

The PCT is currently the gatekeeper of the AWP list and ensures the various providers meet the required quality standards.

For the providers there is no guarantee of volume of work – they could have one patient referred to them or there could be 1,000.

The provider is simply on the list and must wait and see how many patients are referred to them. Many GPs are interested in being providers themselves. This has again been another bug-bear for PBC as PCTs are very concerned about conflict of interest – GPs commissioning services from themselves. Transparency is key here and many GP providers remove themselves from the commissioning process to facilitate openness and fairness.


The plan for PBC was to move more services out of hospital into the community.

What often happened was that the services set up under PBC would co-exist with the original one still going in the hospital.

Economics often – though not always - dictates that there must come a tipping point where both services cannot exist for financial reasons and one must be decommissioned.

What seems to have worked in many cases is the new community clinic will see run-of-the-mill referrals and the hospital consultants will see the more complex cases, though that does still mean the hospital is seeing fewer patients.

PCTs were very poor on decommissioning and mostly continued with the status quo of the local hospital providing most services.

To grapple with the financially challenging future, consortia must be bolder and decommission those services that are not meeting patients' needs.

Last word

I hope this quick update has been of help.

Do take a look around the Practical Commissioning website which has a archive of features on all the above points. Registration is free and anyone can sign up.

Susan McNulty is editor of Practical Commissioning magazine

Copyright – UBM Medica

Your practice or consortium is free to copy and distribute this guide to colleagues but please acknowledge the source –

Reproduction in another publication or by a non-NHS organisation requires permission from UBM Medica via the author, Susan McNulty.