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Getting ready for real budgets

The prospect of real budgets is gathering momentum as policymakers recognise the power of primary care commissioning to create a more efficient NHS. Dr Shane Gordon sets the scene and considers some of the key issues

Around England, PBC clusters are engaged in detailed discussions with their PCTs about how to transfer control of ‘hard' budgets. For many of us, this has been a long-standing request with the Department of Health but never before has it seemed so tantalisingly close.

From the transfer of prescribing budgets in NHS Bexley to the ‘big conversation' about hard budgets in NHS Cambridgeshire, there are tangible signs that PBC is going through a serious shift in emphasis. However, there are many issues to be overcome before PCTs can transfer control – and before any sane GP would accept budgetary responsibility in the middle of the worst financial challenge the NHS has ever seen.

The looming financial crisis undoubtedly has much to do with a change in emphasis at the DH. There is now much more focus on the potential for GPs to act as gatekeepers to the health system plus an acknowledgement that current incentives and levers in PBC are poorly aligned to this task. The repeated exhortation from David Nicholson to ‘innovate now and ask forgiveness later' is also helping PCTs to think more broadly about this.

A second factor may be next month's general election. With Andrew Lansley's shadow health team talking frankly about making fundholding-like budgets available to every practice (probably at a cluster level) and PBC accountability a ‘mandatory' part of GMS, there is pressure on Labour ministers to keep up with the policy arms-race. It is hard to be certain how far these pronouncements will translate into actual policy after the election, but there is a clear direction of travel common to both parties.

So what barriers will have to be overcome?

• Taking on accountability for a budget that is often 10 times larger than GMS budgets presents a number of challenges.

• The PCT will remain accountable for the use of public money (short of future legislative change). The PCT, and its auditors, will want to know that this money is being well spent. Transparent accounting will be needed.

• There will need to be a balance between risk and reward. It is unlikely that PCTs will offer an ‘upside-only' deal to GPs. How do GPs take on some risk to ensure good incentivisation? And how does the PCT ensure that this does not destabilise the practice if the venture fails? It would be difficult, perhaps illegal, for PCTs to claw back funds from GMS payments. Security deposits and gearing of reward to the level of risk may provide options.

• Transferring large budgets to GPs may be difficult to explain to the media. Careful thought about acceptable levels of profit is vital.

• Contestability rules in procurement could impede GPs' ability to implement new services if they are applied insensitively. This issue alone could make hard budgets meaningless if a workable solution is not found. Carefully structured standing financial instructions may provide a framework to balance the tensions of rapid innovation and contestability.

• Managing a budget well is possible only if detailed, up-to-date information is available. SUS data is inadequate for these purposes and local agreements would be required with acute trusts to provide better data. These agreements would have to be robustly enforced by the PCT to ensure compliance.

Dr Shane Gordon is a GP in Essex and co-lead of the NHS Alliance's new Clinical Commissioning Federation

Dr Shane Gordon