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Opening up the market – understanding the changes to any willing provider

Miranda Griffin looks at how increased use of the any willing provider model might revolutionise commissioning.

Our expert panel:

David Stout (DS) - Director of PCT Network, NHS Confederation
Dr Johnny Marshall (JM) - Chairman NAPC and a GP in Buckinghamshire
Tom Frusher (TF) - Policy Director, Co-operation and Competition Panel
Bart Johnson (BJ) - Chief Executive of Assura Medical

How will the role of the any willing provider model (AWP) change according to the white paper?

TF In the past, AWP was on the table for various services, but the white paper makes it an explicit requirement that commissioners encourage and respond to an AWP market across more services. Commissioners will have to transparently demonstrate the AWP model is in operation and will have a duty to promote AWP, whereas before it was a loose expectation.

DS The white paper suggests that AWP will be rolled out to apply to the majority of health services by 2013. The impact of this is open to interpretation. It could be quite significant – the idea that you would be able to operate in any local health economy for services under AWP as long as you are covered by the CQC registration process/ Monitor, meet local accreditation and service-specific requirements within a certain price means we could potentially see lots of new provider organisations. How many and how fast is hard to know.

What's the thinking behind it?

DS The thinking is if you drive greater responsiveness of services, you better meet individual groups of patients' needs and you promote patient choice. But it's also about the impact the prospect of new providers has on incumbent providers in driving up responsiveness and quality.

BJ If patients become informed consumers of services and can differentiate between provider A and B, that makes sure that the providers are on their toes and delivering the best quality services for patients.

What's the criteria for being on the AWP list and who will manage the list when PCTs go?

JM It makes no sense for all commissioners to quality control the same provider, so the Care Quality Commission will vet providers on a central basis. But, when it comes to individual patients and quality issues over their treatment, that won't get picked up by the CQC, but by the practices and commissioning consortium.

For new providers there needs to be some assurance people are capable of delivering a service, the necessary quality of service and then some process of measuring whether they are actually delivering that or not.

TF Meeting NHS standards and prices is what will determine who is allowed on to the playing field. For standards, the top level will be about ensuring the CQC has signed the provider off as an accredited provider. Then there may be some local discretion about what criteria commissioning consortia might also wish to set out in terms of what they believe are the measures of a provider fit for purpose to provide to their patients.

There will also be the need for those AWPs to agree to NHS prices. If you want to be an AWP you are saying you are prepared to provide within agreed prices – whether the national tariff or local arrangements.

Won't big contracts still have to be tendered because of EU law?

TF There will always be the need with certain types of procedures for people to do a big procurement where they offer up a tender for a large contract. But what is seen as another benefit of a true AWP model is that by creating a market where you simply have a list of providers who meet NHS standards and prices, you are negating the need for set piece procurements of big contracts.

BJ Certain services don't lend themselves to be on an AWP basis but they're the minority. For example, with forensic psychiatry services – because of their very specialised nature, scarcity of qualified professionals able to provide those services and the low volumes involved – it doesn't make sense to have loads of competing providers. It would make sense to tender those services across whatever geographic area makes sense. But for most other services – normal urgent access services or planned outpatient or elective procedures – it makes sense to do it on an AWP basis.

The whole industry around contracting needs to be revolutionised. The key is not to have contracts with loads of different commissioning organisations. If you are accredited to provide you should be signing up to a standard contract so it isn't a huge bureaucratic exercise to get off the ground.

What are the potential pitfalls of AWP – for both providers and commissioners?

TF For the providers, there are no guarantees about volumes – you could set yourself up to be a provider and nobody comes through your door. This is why AWP is supposed to drive competition on quality – if you have a quality service you can be more confident that you will succeed in that market place.

For commissioners, the risk is that a diverse and active market doesn't develop and you don't have a range of providers competing on quality grounds so there's no incentive for providers who maintain or improve their service.

One of the potential downsides is that some evidence suggests that where you see competition on price, quality decreases and this would clearly need to be guarded against.

DS For commissioners, there's a real challenge around devising local prices. This is a skill commissioners haven't had to develop in the past and that's quite technically challenging, particularly in community services where there's an absence of very strong data or benchmarking for pricing.

Secondly, if commissioners lose control over demand for AWP services and demand for services exceeds available funding, they run severe inflationary risks. There will have to be very clear clinical criteria for acceptance of patients – something commissioners have found difficult in acute settings.

On the provider side, existing ones may lose market share if new providers come in and start cherry picking the attractive profitable services, and for new providers, AWP will only work if inherent barriers to entry in health care markets are addressed.

The fact that you have an AWP model doesn't automatically mean that there are multiple providers willing to provide. Community services potentially have fewer barriers to entry in the sense of big up-front capital investments – you don't have to build a new hospital to meet demand, they tend to be much more peripatetic and low tech. But you still have to invest up front and employ staff for a service you may not win.

JM AWP may not work everywhere – in areas with dense population that could support more than one provider, then you would hope that would be beneficial in increasing choice. In remote areas with a more diverse population, it may be quite difficult to sustain more than one provider – so it will inevitably be whittled down to one and you'll be in a monopoly provider situation again.

BJ Providers will have to be the best. If you're not good the information will be available pretty quickly and patients will choose not to go to your services. If commissioners are good at their job there's no downside for them.

How will providers take the ‘leap of faith' to invest in providing services if there's no guarantee of work via AWP?

TF For an entirely new start up, there's a huge risk if you don't have a track record or history in that market, so it's a leap of faith based on your own confidence in your abilities and being able to demonstrate the quality of your service offering. A lot of it will come down to information and data. If you can demonstrate your track record to the commissioners or provide an evidence base of improvements in outcomes that you believe you'll be able to offer, then it's more likely that as a potential entrant into the market you will feel confident putting your toe in the water.

But to have that confidence, you need to demonstrate what you've already been doing or show through robust evidence of initiatives elsewhere what you think you'll be able to achieve in partnership with the commissioners.

JM NHS organisations are not used to taking a risk and investing on the basis that you might win business – it's not in the NHS culture. But Foundation Trusts are having to be financially independent and potentially compete with each other. The commercial sector coming in is definitely prepared to make an investment if it believes it will get a return on that in due course.

BJ It's the same as in any industry – if you want to get in, you have to be prepared to invest what it takes to get there. However, it is important for all that there is a level playing field for all participants. We know that the Department of Health is currently looking into a number of issues surrounding this and we support that process.

What levers can commissioners pull to encourage new providers into the market?

JM Commissioners could look at creating a market by contracting someone to come in and do something innovative just to get the service up and running, then when you've established that it does work – after a fixed period of a contract – you could move to an AWP basis and bring in other potential providers. You could test it out and then look for the competitive element so you know you're getting the best quality and the best value. This would mitigate the risk.

DS It's potentially a legitimate commissioning approach to invest in development of the market, especially where there's an absence of choice, so commissioners could encourage new providers to enter by supporting their development – financially or in other ways.

TF It's about relationship building and for commissioners that means demonstrating you'll conduct yourselves in a transparent, non-discriminatory way and work with providers who are best placed to deliver the needs of your patients and populations. Commissioners must be ready to say that they will offer all providers a fair and equal opportunity, and explain how they will work to ensure decisions are appropriate in terms of delivering quality and value for money, that it's their duty to promote competition and act transparently. And, of course, they will need to show they know what services they want to commission.

BJ The key thing that commissioners have to do is focus on what outcomes they want and what price they are prepared to pay to achieve that. The nightmare for providers is when commissioners start to define care pathways – this is not part of the commissioning remit and providers will stay away. The commissioning function is clarifying what outcomes are required within the service specification. The keys are clarity of outcome and information made available to the patient. If you get those right, you've got a successful environment for commissioning.

Miranda Griffin is a freelance journalist.

Commissioners will have to transparently demonstrate the AWP model