healthcare update - issue 14
Tightening the NHS purse strings
What to expect, will it be the 'big change' and how to prepare
As the dust of the General Election settles with the launch of
the full coalition agreement and emergency budget the new Health
Secretary, Andrew Lansley, has already announced that the NHS’
efficiency savings will have to be “bigger” than the £20bn already
expected and that the cost of NHS administration will need to be
cut by a third.
This increased impetus on the efficiency agenda inevitably
raises the question as to which policies will shape the NHS and its
partner organisations going forwards, specifically what
arrangements NHS organisations can make in preparation.
The Coalition is in agreement that structural change is needed
to reduce centralised targets and increase accountability and
transparency. This has been supported by the revised Operating
Framework for 2010-2011 released last week. For the first time this
is to include the Department of Health as well as primary care
trusts and SHAs. The policy for the future of these organisations
is not yet clear, it is anticipated that the White Paper will give
more direction but the election of individuals to PCT boards and
the appointment of the rest of the board by the relevant local
authority have been proposed.
These new PCT boards would have the freedom to commission those
residual services best undertaken at a wider level for local people
from different providers including the Third and Private Sector; it
having been confirmed that NHS organisations are to lose their
“preferred provider” status. It is intended that this will clarify
the relationship between providers and commissioners opening the
field up to mutual’s, co-operatives and social enterprises. There
is also a promised new emphasis on tackling public health issues
such as obesity and alcohol with responsibility being given PCT’s
to tackle these issues locally in collaboration with their local
authorities and other local partners.
Getting communities to deliver more health services is central
to the Governments policy of reducing public spending and this
empowerment is also a fundamental part of its recently launched
‘Big Society’ initiative. Increasing the diversity of provision and
giving more power to GPs to commission some services on behalf of
patients may encourage greater competition and, it is hoped, have
the knock on effect of improving standards and value for money, but
devising a contractual structure and procurement framework that can
demonstrate the delivery of better standards of care and quality
for less money will be the single challenge that the new
commissioners – PCT, GP, public partnership, outsourced
commissioning by the private sector – will have to address.
The Coalition has endorsed the Total Place agenda, which aims to
take a ‘whole system’ approach to commissioning and delivering
public services, by announcing that they are keen to continue to
support the full integration of health and social care budgets. It
is unlikely that there will be further forced integration of public
services for some time but the revised Operating Framework
acknowledges that, “Joint working and commissioning will be
increased in order to deliver better outcomes for patients service
users and their carers”.
The full Coalition Agreement focuses on improving quality and
accountability at the same time as reducing spending and realising
significant savings. Now that the revised Operating Framework has
been launched NHS organisations should begin examining their
operations to identify opportunities to do this now.
Do you know whether your existing providers are
performing effectively and efficiently?
NHS bodies should examine their existing contractual
arrangements with providers in order to assess the effectiveness of
the services being commissioned, whether they are delivering value
for money and identify any performance or financial risks.
Review dates which have been agreed in the contract can provide
good opportunities to address matters jointly and engage with the
provider.
Where problems are identified contractual mechanisms should be
invoked to rectify the problem and manage the risk and / or
terminate the arrangement. Where contracts are terminated this may
provide an opportunity to review the effectiveness of current
contracts in anticipation of a wider market for services which can
be soft-tested prior to any procurement of new services whether in
conjunction with partner organisations or as part of a wider
services review.
Can you justify your commissioning approach and have you
involved the public and patients?
Recent Department of Health guidance which focussed on
developing commercial skills in the NHS mandates that NHS bodies
should be able justify their approach and demonstrate, by reference
to their actions and supporting documentation, an audit trail of
decisions which transparently demonstrate an effective
decision-making process, which of itself illustrates that they have
secured the best value and quality available for each service.
PCTs are challenged to achieve increased value and quality in
practice actively demonstrating that this is reflected in
commissioning strategies and annual reports.
The quality and effectiveness of any commissioning strategy is
likely to have a direct effect on the allocation of resources by
the soon-to-be created independent NHS Board which will have the
power to allocate resources as well as provide commissioning
guidelines. Organisational memory will be a key element to
commissioning in the future and all commissioning bodies should
look to preserve and retain that memory so that it can be
transferred or retained by any new commissioner.
In line with the Total Place idea of assessing public services,
partnership working is likely to be refreshed and the new Operating
Framework has reinforced that expectation.
In the case of large scale procurements affecting whole
population cluster commissioning is beginning to emerge so that
PCTs can secure better, more effective outcomes for their budget by
sharing their commissioning intentions (based on their GP’s
practice populations) for the year with surrounding PCTs.
The existence of a robust commissioning strategy and a
governance structure to support devolved “cluster commissioning”
without diluting the statutory duties of individual PCTs, their
Board and their CEO, as the Accountable Officer, and evidence of an
effective consultation process are fundamental in relation to PCT
decisions to decommission or reconfigure local services.
The mandatory criteria issued by the Department against which
all new reconfigurations will be assessed and existing “in-plan”
services configurations reviewed make it clear that there must
be:
- Support from GP Commissioners
- Strengthened arrangements for patient and public
engagement
- Clarity as to the clinical evidence underpinning the new
services
- Demonstrable development and support of patient choice
This will tie in the proposal that local authorities will have
the right to formally review and challenge these decisions and
refer them to the Independent Reconfiguration Panel, whose Terms of
Reference will be changed to reflect such reviews.
Do you know what property rights you have?
The Government has announced that it intends to strengthen the
roles of the Care Quality Commission and Monitor so that they are
an “effective quality inspectorate” and an “economic regulator”
respectively. This news in addition to the recent introduction of
the premises assurance model and impending Care Quality Commission
registration means that NHS bodies will soon be expected to
guarantee that all of their premises are suitable in terms of
safety, effectiveness and patient (user) experiences.
This is aligned with the NHS Constitution right to a treatment
in a “properly approved or registered organisation that meets
required levels of safety and quality and the pledge that services
are provided in a clean and safe environment.
The need to ensure that services are accessible to the community
means that NHS organisations may have a number of different
property arrangements making up their estate. These may include
leasehold and freehold properties and licences amongst others and
will mean that property rights such as the length of the term,
break rights, termination rights, rent and rent reviews may vary
too.
Having a comprehensive estates strategy which identifies the
full extent of the estate will enable NHS organisations to assess
the suitability of its premises, examine opportunities to make more
effective use of the space available to it or (depending on the
break or termination rights) commission suitable and compliant
alternatives.
Have you got effective governance arrangements in
place?
The government's political agenda for health reflects awareness
that increased levels of governance, transparency and regulation
are necessary and these issues will undoubtedly be placed at the
top of the political agenda.
The Coalition’s commitment to implementing changes to making
this happen have already begun with their pledges to introduce
local representatives and local authority appointed non-executives
to PCT Boards and increase regulator intervention from the Care
Quality Commission and Monitor.
Corporate governance has again emerged as a focus for
Commissioners and Providers following the Francis Inquiry and the
Coalition’s stated appetite for greater transparency and
accountability at a Board level.
If the principles of transparency and fairness are to be applied
consistently to all NHS funded care, both in relation to that which
is commissioned and that which is provided, then the real test will
be in applying the same measures of transparency and accountability
to new commissioners; those that commission on behalf of new
commissioners; and providers of NHS funded services, whether
public, public/private, third sector or private.
We recently advised a PCT on the first reconfiguration of
services following the Department’s guidance two weeks ago;
continue to advise commissioners and providers on the new TCS
agenda; and can offer practical support on changes to your estate,
services, and related procurement advice in anticipation of the
structural changes to the NHS.
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The content of this update is provided for the purposes of
general interest and information. It contains only brief summaries
of aspects of the subject matter and does not provide comprehensive
statements of the law. It does not constitute legal advice and does
not provide a substitute for it.