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Life under the new market model

Practical Commissioning editor Sue McNulty asks one of the health bill architects, Dr Paul Charlson, about the opportunities ahead and what differences the new market will make

What's the biggest benefit of the new market model?

It will put clinicians in the driving seat and cut bureaucratic hurdles so that redesigning services will be a simple process that allows innovation. This is particularly so of low-cost services, which are often the most important and first services GPs will want to change – such as counselling, physiotherapy and dietetics.

The point to remember is that this isn't fundholding. This is much bigger. GPs will be ensuring that the services are redesigned by working with other clinicians and local authorities to provide a more efficient and high-quality service for a much larger population. Fundholding was about single practices buying services from a range of providers with no risk or penalties or reference to other local practices.

The current reforms are about redesigning services and there is a risk involved – if we don't make the books balance, we will lose the opportunity to commission.

We have to remember we need to make a 4% cost saving per year for the next few years, so huge efficiencies have to be made.

Can you give us an example of how the market will work effectively in practice?

Say you're in an area where diabetes isn't up to standard, GPs can sit down and plan how to make it better using knowledge about patient flow, obtaining data about outcomes and looking at what people do elsewhere that's successful. This process won't involve just GPs but nurses, consultants, pharmacists and local authorities.

If the service is made more efficient, it will reduce hospital admissions and ultimately costs.

Some of this is not going to be that scientific. If we spend too long on information gathering we will run out of time. I think we will to an extent use information to work out what will reduce admissions or what preventive care can achieve, but it might be quite difficult to do the sums accurately. The information is simply not out there.

Health economists are going to be a crucial part of planning.

It's about local knowledge. Often we know as clinicians that if X and Y happens Z will follow. But to do the maths to back that up is quite difficult and sometimes the savings will be a long way off in the future. If doctors concentrate on understanding what their patients need from a pathway and what the potential pitfalls are with a particular piece of care or disease then it will work.

These are the discussions GPs need to be having at the moment – not who will get the most votes in their consortia. Of course mandate issues are important, but not as important as improving care.

But couldn't such focus on pathways have been done by bringing back, say, Primary Care Groups?

It could, but they didn't work. It is not an option any longer to make no change. We need a large cultural shift in the NHS and we need it to happen at a fast pace. A more transitional approach could have been adopted but I have my doubts that this would have made enough of a change to achieve the 4% savings.

I know it's controversial to say this but unless some pressure is applied things will not happen. There is too much invested in maintaining the status quo. Self-interested groups exist in all public services, including the NHS.

The NHS is unusual. In most other EU countries there has always been an element of competition in their healthcare systems – which does drive up quality.

At the moment there isn't going to be price competition for hospital services where national tariffs will apply. For community services, some price competition will be possible but quality and access are going to be the key factors.

There is always going to be tension against price and there comes a point where people cut services to keep the cost down. It's up to commissioners to purchase services in such a way that ensures quality standards can't drop.

I am not clear how price will be set but I suspect that there will be a minimum price set by a commissioner for a service.

This will need to be realistic. If you take into account training, supervision, audit and other things, operating a service much below 85% of national tariff is difficult to sustain and quality will suffer. Some small services can manage on less but these will be quite specific.

The role for Monitor seems so huge – is there a question over whether it will really reduce bureaucracy?

I agree there's a big role for Monitor in setting prices and ensuring fair competition and financial probity.

For example, currently there are consultants on contracts that do not allow them to work with other organisations, and this is an issue that stymies the private sector.

I can see the day when consultants will be in chambers providing services to trusts, possibly in chambers with GPs and nurses and selling their services to any provider that wants to have it. I can see that happening within the next 10 years.

Hospital trusts will become provider hubs and contract services rather than the all-encompassing model they are at the moment, which employ lots of staff.

Again this is controversial and a big issue is TUPE. Many private provider organisations will not be keen to take on the risk of pensions and of course clinicians will not be keen to put their public-sector pensions at risk.

Are there enough private providers willing to provide services?

There's going to be a plethora of providers under the any willing provider model.

I foresee there will be several large organisations doing this, with perhaps a few niche ones. There will be a small number of large providers rather than a large number of small providers. There will also be niche providers that will be national.

And then for community services there will be local niche services, say physiotherapists, and secondary care will be provided over a number of sites.

Pathology stands out as one service that lends itself to being provided at an almost regional level.

GPSIs have a unique position in these reforms as sending patients to them would allow consultants to take on more complex work.

A lot of people are scared by the word ‘market'. What would you say to reassure them?

Well GPs themselves are private contractors, so they are no different from any other organisation that is providing services. The market is a proven way to improve quality and it works elsewhere in healthcare around the world.

I think people hold on to this idea that ‘private' is going to be worse and that ‘markets' mean we will have a US system with people going without. However, there is competition among private providers in continental Europe. Those countries spend much the same as us and their results are better.

In a new NHS market system it will often be the same clinicians providing the service as those currently working in the local trust. Patients will still have a service that is free at the point of delivery, so it won't seem different to the consumer, except it might be more accessible and better run.

What patients want is a good accessible service and we don't need to be fearful of that, provided the tariff is set in such a way that it doesn't allow providers to cherry-pick which services they will offer.

Having a market will also illuminate how certain services currently cost far more at some hospitals than others. This does not necessarily mean in a clinical context – management costs also vary enormously.

So if you have two neighbouring hospitals and one is running a service at half the price you can go to the other and ask ‘why is yours so expensive?'.

I also think GPs are worried about a lack of guidance from the centre about what needs to go on. Well, that's deliberate as the plan is to let clinicians lead this.

We've been moaning for so long about PCTs and many GPs have said they can do better – well here is the opportunity.

I appreciate it seems a daunting task but the Government is not expecting GPs to be accountants. It is relying on their ambition to provide better services for patients and so drive change.

Doctors are very competitive and like to do things well. One of the strengths of the NHS is its staff, who want to do what's best. This is what will make this market so vibrant.

The people involved in this are professionals who want the best for the health system they work in.

Dr Paul Charlson is a GP in east Yorkshire and chair of the Conservative Medical Society

Dual licensing in the new NHS market

- Providers will have to prove they can meet safety, quality and economic standards.
- Consortia identify the service they wish
to commission
- Care Quality Commission ensures that
a service provider meets quality and safety standards
- Monitor sets the price tariff (secondary care services likely to compete not on price but quality and access)
- Consortia then commission the service, specifying the quality benchmarks and price as a result of the above process
- Monitor and CQC license provider

Life under the new market model