GPs need an overview of how PCT finances work to ensure a smooth handover to CCGs. Helen Northall provides her guide
One of the many myths marking the Health and Social Care Bill’s tortuous progress through Parliament is that GPs will suddenly require detailed knowledge of all areas of health budgets and NHS finances.
In reality, most GPs will not be bogged down in detailed financial analysis and planning, but will instead be providing clinical perspectives for the financial planning undertaken by clinical commissioning group (CCG) managers and finance support.
CCGs, which until now have been concentrating on structure, leadership and governance arrangements, will need to be seeking some certainty around the financial situation they will face as they inherit commissioning responsibilities.
It remains unclear just who will be commissioning certain areas of healthcare. GPs should focus their attention on those areas where it is certain they will have responsibility for commissioning services.
But although the legislation is still to reach the statute book, the reforms are well down the road to implementation. CCGs should be ensuring by now that their local PCT is providing them with regular financial information.
PCTs can currently hold a variety of different contracts, including many using tariffs, others through block contracts, and long-term contracts set nationally.
One result of the reforms will doubtless be a further move away from the dominance of the acute sector in terms of spend. In a fairly typical local health system, the acute sector accounts for 67% of spending compared with 20% in primary care and 12% in community services.
Make contact with PCT finance managers
GPs need as much clarity as possible on the financial position they are likely to inherit. They need to identify the people who have that information now and work with them to understand the current position and cost pressures.
They also need to identify who can support them in the future to manage finance – after carefully considering the skills, background and model of support that will serve the new organisation best.
The pool of existing PCT finance staff is an obvious starting point as they will have invaluable knowledge, but CCGs will want to ensure those making the switch have the flexibility to adapt to the new world. CCGs can also look to draw on the knowledge and experience of previous practice-based commissioning leads and practice managers or others with relevant expertise.
Ask about overspends
It is likely most GPs and CCG managers will have a general idea about the current overall financial health of their PCT.
However, GPs should be asking their PCT to identify areas where there are or have been cost pressures or overspends – areas where there has been over-referral to the acute sector, for instance.
PCTs should be guiding CCGs through this information, but in any case CCG managers and GPs can gain a fairly full picture through studying the PCT’s QIPP programme – and achievement against it.
Focus first on the areas where the CCG can make an impact and where there is an overspend or expected pressure. Has the PCT done any work to identify new cost pressures? What are the processes in place to give early warning of potential pressures? How will CCG members gain this information?
CCGs should seize the opportunity to work with colleagues from the acute sector and public health to address specific pressures or overspends, particularly regarding emergency admissions for chronic diseases.
There is also a series of further questions GPs should be addressing to the PCT. What areas of spend can CCGs easily influence and which are more difficult to control? Who is making funding decisions now? What is the current process to ensure CCGs understand and participate in what is being agreed where and why? Which areas are outside CCG influence and why?
Until 2013/14, PCTs will retain statutory accountability, which means they will receive and allocate funding. CCGs will be encouraged to have delegated responsibility and PCTs should be making indicative allocations in 2012/13.
Therefore, CCGs will need to understand the allocation process through working with their PCT counterparts. They need to understand any reserves, what these are for and if the money allocated for a particular service is made on the basis of existing budgets, actual spend or population. A CCG receiving an indicative allocation for a particular service based on the previous year’s budget will find itself in difficulty if that service overspent significantly the previous year, or if there is an anticipated increase in demand for the service.
With uncertainty at a national level over where commissioning of some specialist services will sit, CCGs also need to be clear just which services their allocation covers – and which it does not.
Know your distance from target
Department of Health funding for PCTs is primarily based on the relative needs of their populations. However, this has not proved an easy formula to apply in practice – resulting in gaps between an area’s actual need and the funding it has received. This is known as the distance from target – with some PCTs historically receiving less than their demographics and other factors suggest they should, and others more. These variations are being ironed out over a number of years, but the process is far from complete.
An early key question for any CCG, therefore, is to know how close their PCT is to target funding and whether it is receiving more or less funding than it theoretically should be. This will be an important factor in the financial landscape the CCG will inherit and could sound alarm bells about future changes in its allocation.
Analyse data to identify referral issues
Data on local spending on acute services is obviously crucial to any CCG financial plan, and the PCT should be making this available at practice and CCG level. GP commissioners should also be identifying independent and reliable sources of advice and support for assessing current performance, and identifying potential issues or individual practices that could threaten the CCG’s finances.
There is a swathe of tools and resources available (see box). By using some of these benchmarking tools, CCGs can identify outliers in, for example, referral or prescribing.
Set up risk-sharing arrangements
CCGs will need to work through how complex cases can be handled. These can pose a real financial risk to a budget. The funding arrangements need to be clear and the CCG should consider risk-sharing arrangements where appropriate. Complex cases are not included within the nationally defined specialist services, and therefore the commissioning of them is likely to sit with CCGs. Risk sharing stretches back to the days of GP fundholding where practices pooled risk – notably around low-cost, high-volume elective procedures. Practice-based commissioning groups extended its use, and CCGs will need to draw on this past experience.
Consider pooling budgets with local authorities
Some funding may be managed jointly with local authorities or the local authority may be responsible for the assessment processes determining access to care, so CCGs will need to understand the financial implications and legal requirements.
Gaining an understanding of the finance streams – and identifying those that CCGs will be able to manage and can influence – is important. For example, services provided through social care and continuing healthcare funding streams are often crucial to ensuring timely discharge from hospital and reducing emergency admissions or re-admissions. These benefits make partnerships – including pooled budgets – with local authorities and other social care organisations attractive to health commissioners.
Helen Northall is chief executive of PCC, formerly known as NHS Primary Care Commissioning
Analytical tools to support commissioners
• Department of Health budget public guidance toolkit: http://tinyurl.com/64rp8g6
• ONS neighbourhood statistics: http://tinyurl.com/2cbufz
• Primary Care Commissioning application: http://tinyurl.com/6baxyx3
• APHO general practice profiles: http://tinyurl.com/625czz2
• NHS atlas of variation in healthcare: http://tinyurl.com/6a4lbwb
• Programme budgeting benchmarking tool: http://tinyurl.com/67ldq5h
• Programme budgeting atlases: http://tinyurl.com/3t7zf8f
• Spend and outcome tool (SPOT): http://tinyurl.com/3mg2glf
• NHS comparators: http://tinyurl.com/3vb9tcw