The Privatisation of NHS Commissioning

(I originally wrote this article for the Drop the Bill campaign website.)

What is Commissioning?

Healthcare commissioning is often described as "purchasing healthcare" but it is far more than that. In this article I want to explain what commissioning is, and how it will change under the government's Health and Social Care Bill.

NHS commissioning is designed to ensure that we have a comprehensive and universal healthcare system. To do this commissioners must understand the needs of the population and ensure that these needs are met by the NHS. Commissioners need to determine demographics like the age of the population and prevalence of smoking, alcohol misuse and obesity; they need to be aware of local issues like the local industry and the implications of this on employees' health and they also need to be aware of levels of deprivation. All of this data enable commissioners to predict the healthcare needs for the population, and determine if the local healthcare providers can meet these needs.

Commissioning healthcare means that the NHS guarantee of care according to need is met: commissioners know that when a patient has a healthcare need, there is a provider with the capacity to treat them. Commissioning also helps the providers, because when commissioned – and contracted to do the work – they can plan to ensure that they have the appropriate resources (facilities and staff) to fulfil the contract. A pledge to provide a comprehensive and universal system means that everyone, regardless of medical need, gender, age, ethnicity or disability gets appropriate treatment. This means that commissioners also have a responsibility to monitor providers to ensure that there is equality of access to healthcare. Commissioners also have a responsibility to ensure that the care is high quality and value for money. All of this means that commissioning is complex and requires skilled commissioners.

Commissioning and the Coalition

In 2010 around 80% by value of NHS healthcare is commissioned by Primary Care Trusts (PCT). There are 152 PCTs in England covering, on average, about 300 thousand people each. A population of 300 thousand can be considered "local" enough to be aware of the needs of the area, but large enough to be able to commission for the majority of healthcare needs. The other 20% of NHS healthcare is more specialist commissioning – for example, organ transplants and rare cancers – where there will be too few patients within a PCT area to justify commissioning at the PCT level. In 2010, this 20% was carried out by the ten Strategic Health Authorities (SHAs) and the Department of Health.

Since the 2010 election, and without any Parliamentary approval, the government has restructured these NHS organisations. The PCTs have merged into 51 "clusters" (each covering around a million people) and the SHAs have merged from ten into four. These new organisations are only temporary because the Health and Social Care Bill has clauses that will abolish them. The Bill says that an independent super-Quango called the NHS Commissioning Board (NHSCB) will be created and will take over much of the work of the Department of Health and the SHAs. PCTs will be abolished in April 2013 and local commissioning will be carried out by statutory organisations called Clinical Commissioning Groups (CCG).

When, earlier this year, Andrew Lansley was pressed about the budgets of CCGs he admitted that they would have access to 60% of the NHS budget and not the 80% that is handled by PCTs. That is, CCGs will do three quarters of the commissioning that PCTs do now, the other quarter will be centralised and carried out by the NHSCB. Some of this is understandable: since CCGs will be made up of local GP practices they cannot commission the primary care carried out by GPs because this would present a conflict of interest. However, the NHSCB will also commission other areas of primary care: optometry, dentistry, pharmacy. This is care that is currently commissioned locally by PCTs but in the future will be commissioned by the NHSCB super-Quango (possibly on a regional basis, by one of the four merged SHAs that will be subsumed by the NHSCB). This is not localism, it is centralising. A quarter of commissioning will be centralised into a remote, national organisation, taking primary care decision-making further away from the patient.

GPs "In Charge"?

Every GP practice has to be a member of a CCG, but this does not mean that GPs will be "in charge". In England there are 8,200 GP practices and 40,000 GPs (roughly five GPs per practice); there are 266 "pathfinder" CCGs, so on average there will be 31 practices or 150 GPs per CCG. Is it likely that all 31 will have a representative on the CCG board? Will the 150 GPs who work for those practices sit on the CCG governing board? The answer is a very clear: No.

For a board to be effective it will be small, and since the primary aim of a CCG will be to keep within budget there will have to be places for non-clinical directors like the finance director, a chief operations officer and a chief executive (the latter is the statutory accountable officer). The few places on the board for clinical members will hardly be representative of all the GPs in the practices part of the CCG. Some CCGs may try to solve this issue by having an additional governance council made up of practice representatives, but effectively such a council will delegate most of its powers to the governing board and rubber stamp their decisions. Such a solution will result in superfluous management at a time when the NHS has to cut management by a third. It is interesting that the number of "pathfinder" CCGs is similar to the number of PCTs in 2006 (303). The NHS was re-organised in 2006 – merging the 303 PCTs into 152 – because it was then thought that smaller primary care commissioning groups would have higher management overheads and it was hoped that the merger would cut management costs by 15%. We are moving back to the situation in 2006.

The government argues that since there are more "pathfinder" CCGs than PCTs this will mean that the decision making that CCGs do will be "closer to the patient", but a quarter of PCT commissioning will be moved to the remote NHSCB. Further, the figure of 266 CCGs is not significantly larger than the number of PCTs in 2010 and is unlikely to make services any more "local". Since the smaller CCGs will find it difficult to meet the government's new financial constraints we will see them merge with neighbouring groups over the next few years: more instability in the NHS. The "localism" argument is merely an excuse; in four or five years time what little commissioning carried out by CCGs will be no more "local" than it is now.

Will CCGs Actually Commission Care?

This raises the question of whether CCGs be able to commission services? Under the last government Practice Based Commissioning (PBC) groups were set up and some of these produced good results (Lansley frequently uses these PBC groups as examples when justifying his policy). However, the significant difference is that PBC groups could always get expertise and support from the local PCT. In the areas where PBC was successful it is significant that the PCT remained intact, and was not closed down. Since CCGs will completely replace PCTs the new commissioning groups will have to take on all the commissioning responsibilities and it is questionable as to whether they are able or in a position to commission effectively.

The re-organisation of primary care is occurring at the same time as big changes in secondary care. The government has essentially told our NHS acute hospitals that they are responsible for their own debts. Trusts are also told that they are "autonomous" so if a hospital trust's debt means it will go bankrupt, the government will accept no responsibility and will not bail it out. Some of England's NHS hospitals have large debts and are not viable as free-standing businesses, so this has resulted in a slew of mergers with the more powerful hospitals taking over the weaker, debt ridden trusts. Consequently, the competitive, market-driven healthcare system designed by Lansley will be dominated by large providers and healthcare will be purchased from these trusts by the CCGs.

Some CCGs are the same size as the PCTs that they replace, but many are much smaller. A quarter of "pathfinder" CCGs cover populations less than 100 thousand; 60% of the "pathfinders" are under 200 thousand. In a competitive system, the smaller CCGs will be at a disadvantage when negotiating contracts with the much larger and more powerful acute trusts. As a result, to be able to effectively negotiate with acute trusts, the smaller CCGs will have to share some commissioning with neighbouring groups, or buy in the expertise from the private sector. The Bill says that a CCG will not be authorised unless it can show is has made "appropriate arrangements" to fulfil its commissioning responsibilities, however, it does not say that the CCG must perform commissioning. Purchasing commissioning support from the private sector is a sensitive issue, and was highlighted by the Future Forum report in the summer of 2011. In response to this report, the government said that CCGs "will not be able to delegate their statutory responsibility for commissioning decisions to private companies or contractor". In practice, something very different is happening.

The Privatisation of Commissioning

PCTs will be abolished in April 2013, and since this was announced in August 2010 PCTs have haemorrhaged skilled commissioners, with some moving to "pathfinder" CCGs and others taking up jobs with private sector companies. This loss of commissioners prompted the government to order the clustering of PCTs, since there was a danger that individual PCTs would no longer have enough staff to carry out their duties until their abolition.

A recent draft document from the Department of Health on commissioning identifies the services that need to be performed and it introduces the term Commissioning Support Organisations (CSO) to describe the companies that will carry out this work. The document is clear that CSOs are private companies and not NHS organisations. The draft document says that commissioners in PCTs will be re-organised into CSOs and as an interim they will be "hosted" by the NHSCB (that is, the commissioners will be employed by the NHSCB). Significantly, the document says that these hosted CSOs will have to "operate on commercial lines" and that hosting will only last until 2016 when they will be expected to be "freestanding".

There is no NHS solution to commissioning; the government's decision to make PCT CSOs "freestanding" and "commecial" means that they will be privatised by 2016. The Department of Health’s draft document admits that only the larger CCGs will attempt to perform commissioning themselves and that the smaller CCGs will have to "secure support from external suppliers" – the existing private CSOs and the privatised PCT CSOs.

The Government’s plans for NHS commissioning are inconsistent and ill-thought out. The new, untried clinical commissioning groups will deliver neither more localised commissioning nor are they likely to be any more financially viable than the PCTs they replace. The smaller "pathfinder" CCGs will have to merge with other groups, resulting in instability at a time when the NHS needs more stability. Commissioning will be carried out by private companies like KPMG, UnitedHealth and McKinsey, and a collection of CSOs made up of former PCT commissioners. Since there will be no NHS solution to commissioning, it is reasonable to assume that the new private commissioners will not look to the NHS for the provision of healthcare. The result will be the eventual privatisation of all that we regard as being the NHS, leaving the NHS as solely the source of funding, and even that will eventually morph into a healthcare insurance system.