McKinsey warns of GP consortia funding shortfall

By Gareth Iacobucci

GPs will have to pool resources to survive tough deals on their management allowance, says a report from consultancy firm McKinsey.

The discussion paper on GP commissioning prepared by the firm also advises that GP consortia may need to outsource some commissioning functions when they take over from PCTs from 2013.

The firm provides a summary of key challenges for consortia to overcome if they are set up successfully in the face of the Government's imposed 45% drop in management spend, with the scale at which they are established crucial to ensuring that they are able to manage financial risk.

The document advises that ‘increasing the size of consortia reduces risk' based on analysis of comparable data from Germany.

It says: ‘Our analysis of suggests that if English consortia each have 100,000 patients, about 4% of them would run a deficit greater than 2% of total budget. Across England, this implies 20 of the 500 consortia of this size would incur a deficit of £80,000 per GP each year, and about 20% (100 consortia) would run a deficit above 1%, or £40,000 per GP each year.

‘By contrast, at a size of 300,000 patients, only 6% of consortia would run a deficit above 1%, implying 10 out of the 160 consortia of this size would run a deficit of £40,000 per GP. At a size of 1 million lives, no consortium would be likely to run a deficit above 1%.'

The report suggests that provision could be set aside for financial difficulties, for example through a top-sliced risk pool to cover ‘the risk of financial deficit or a more specific risk, such a high-cost patient'.

But it says even large consortia would be ‘unlikely to be able to do everything in-house', and may have to outsource some management functions in order to ‘focus on what is essential to control, and areas you are excited about'.

McKinsey also advises new commissioners to tackle the variation in performance between practices, warning that ‘systematically tackling underperformance in primary care' would be vital in reducing financial risk for consortia.

It also suggests that consortia can develop risk-profiles to identify ‘high risk individuals and manage them in needs-based end-to-end-programmes, particularly for patients with long-term conditions.