Preparing for the New Landscape

Mark Johnson highlights the practical steps GPs and their partners should be taking to prepare for the new landscape of GP commissioning.

GP Commissioning may still be incubating but the world into which it will be born is already changing. The published timetable shows commissioning consortia formally taking over from Primary Care Trusts on 1 April 2013, but we are already seeing signs that system reforms are running ahead of the legislative timetable. PCTs have started winding down their operations, not replacing leavers from key posts and existing Practice Based Commissioning (PBC) groups are staking their claims to become GP Commissioning Consortia (GPCCs).

The draft Bill is expected shortly. While debate rumbles on about the speed and direction of system reforms, the fact remains that GPs have been presented with an historic opportunity to seize the initiative in shaping their local commissioning arrangements. Rather than waiting for the template that may never come, GPs should start preparing now on certain key areas as the timetable is very tight.

Governance and Leadership

Leaving aside questions about the optimum size of a GPCC, it is clear that there will be much work to do in garnering the necessary support from practices across a locality. All practices will need to be part of a GPCC, including those that up to now have chosen to go it alone. To prepare a cogent, cohesive plan, practices must start building a governance structure which allows a leadership team to be appointed, decision-making to be delegated and a level of legitimacy and trust built between the putative GPCC and its stakeholders.

From our work in helping to establish PBC groups as corporate entities, this process is likely to take up to two years to get right. It is not yet clear if GPCCs will be statutory public sector bodies or more akin to independent social enterprises. Whichever model ultimately prevails, there will be a lot of work to do in preparing a constitution, policies and procedures to allow the new GPCC to manage public funds, remain accountable to its stakeholders, demonstrate probity and avoid conflicts of interest (see below). Experience from developing PBC models also shows that GPs are more likely to engage if they can see the tangible benefits from participation and cooperation. These are not just financial incentives. They might also include training and development opportunities and new career pathways into leadership roles, as well as access to new equipment and technology. In our PBC models, a key document is the membership agreement between the practice and the consortium, which puts certain obligations on the practice and, ultimately, allows the consortium to expel them if they do not toe the line.

Managing the transition

The outline timetable shows GPCCs beginning to organise from April 2011. During 2012-13 they will operate in shadow form and receive their indicative ‘fair share’ budget allocations. They formally take over from PCTs on 1 April 2013. In practice, things are unlikely to be so neatly defined. The transition period during which PCTs wind up their operations has the potential to get very messy. GPCCs must give careful consideration to which parts of the PCT asset base, personnel and resources they take on. Careful due diligence is needed to avoid taking on onerous liabilities or unacceptable levels of risk. Particular danger areas will be inheriting PCT staff under a TUPE transfer and the transfer of assets and existing long-term contracts from the PCT.

The effect of TUPE Regulations may be to transfer the contracts of employment of PCT staff to the GPCC, whether they are needed or not. Also, any historic claims, pension entitlements and enhanced redundancy benefits could transfer too. In relation to assets and contracts, it is possible that PCTs will seek to transfer PFI contracts, ISTC contracts, onerous property leases and historic deficits. It is not yet clear whether there will be a national pot to deal with these, but they could present a significant risk in an already tight financial envelope for commissioning budgets.

All of this could add significantly to the GPCC’s cost base just when the government is seeking to reduce the management overhead to around one third of current PCT levels. To avoid this the GPCC must have a leadership team in place which can properly and robustly negotiate the terms of any transfer and properly consider risks could be mitigated by outsourcing functions to external providers.

Financial planning

Unlike GP fundholding, the commissioning budget will be held separately from practice budgets. Commissioning budgets will be based on the health needs of the locality using a “fair share funding” formula to be introduced from 2012 onwards.

If savings are made in commissioning activities, through improved care pathways, reduced prescribing and referrals, these have to be retained in the GPCC and reinvested in local services, not paid out to GPs. GPs’ reward for taking part in commissioning activities could therefore only come through (i) being a paid GPCC office holder (ii) the QIPP payment for improved outcomes or (iii) other membership benefits such as premises improvement or ICT upgrades.

Press reports have suggested that consortia will be paid a management fee of around £9-10 per patient per annum to discharge their commissioning responsibilities. If a minimum population size of around 100,000 is assumed, this will equate to a budget of around £1m per annum to run the organisation – about the same overhead as a well-run SME business. From this sum, the consortium must source premises, support services such as accounting, public health advice, data analysis, contracting and procurement. It seems obvious that the consortium will have to be a very lean operation. There simply won’t be any room for passengers and the leadership team will have to take look hard at how it can buy in only the essential services it needs to function. If sophisticated IT systems are needed to transform services and provide real-time data, it is unlikely that these can be set up and run internally from this kind of budget. Furthermore, it seems this budget only applies from steady-state operations as from 1 April 2013, so careful thought will be needed about how to manage the transition period.

The new goal for GPs and their commissioning consortia is to deliver a radically different health system, where GPs understand what is being spent and the outcomes being achieved; and crucially, it must cost less to run. Prospective consortia should begin preparing now, cast off pre-conceptions and keep an open mind on how to deliver this daunting challenge.

Mark Johnson is managing director of specialist law firm TPP Law and has advised a variety of PBC consortia and new provider organisations on their formation, governance and successful contract bids. A free report on preparing for GP commissioning is available at tinyurl.com/tpplaw.

Managing Conflicts of Interest

GP consortia will be exposed to conflicts of interest from many directions, including how they allocate budgets, award new service contracts and refer patients to provider companies.

How do they deal with these issues in a balanced and proportionate way, respecting their statutory duties and preserving public trust? Not by putting every new service out to tender, regardless of the economics, or to exclude clinicians entirely from decision-making on services. To do so means losing some benefits inherent in inclusive commissioning initiatives and pathway redesign. The solution lies in having a clear codified system for managing interest conflicts as part of the organisation’s process of governance.

What is a conflict of interest?

A conflict arises if (1) a person owes separate duties to act in the best interests of two or more bodies on the same or related matters, and those duties conflict, or there is a significant risk they may conflict (for example a board member of a consortium may also be an individual GP service provider); or (2) a person’s duty to act in the best interests of any patient or public body on a matter conflicts, or there is a significant risk that it may conflict, with his own interests in relation to that or a related matter.

Self-interest is not the only cause of conflicts. It could be a colleague or a family member has an interest in a particular situation, for example if a spouse was a GP holding shares in a provider company which stood to benefit from a new contract. A conflict can occur because an office holder owes duties to more than one organisation or board.

Regulating behaviour

The consortium constitution or terms of reference should detail the duty to act with integrity and maximum transparency. That normally requires that participants declare their interests – either in a written register or verbally in a meeting. These declarations should be updated regularly. Office holders should absent themselves from meetings or decisions where there is a material conflict of interest, unless their colleagues or rules of governance permit them to stay.

Boards should include independent non-executives to act as dispassionate guardians of public interest. Clinical professional rules are also key to regulating behaviour. The GMC’s Good Medical Practice provides clinical judgment guidance here.

Proportionate measures

Some believe all newly-commissioned services should go out to open tender to demonstrate compliance. This is disproportionate and likely to be costly. A key feature of the ‘any willing provider’ (AWP) model is that no guarantee of demand or activity levels is given. AWP is simply a licence to carry on the service should patients opt to use it. It is well-suited to services such as dermatology, cardiology or urology, where a nationally-agreed tariff exists and ‘choose and book’ applies. As such, there should be no significant financial benefit conferred upon the AWP participants, since they are subject to strict market disciplines.

Alternatively, if the consortium intends to provide significant guarantees of minimum activity levels and financial rewards, it is important to design and implement rigorous procurement procedures which ensure contracts are awarded fairly, without bias or self-interest. The process for contract award should be fully documented in advance. The criteria for award should be clear, objective and transparent.

This article first appeared in Primary Care Today (www.primarycaretoday.co.uk).