Total Purchasing

A Model for Locality Commissioning

Rod Smith, Fran Butler, Mike Powell

• Publisher: CRC Press
• Year: 2018
• eBook ISBN: 9781315349008
• Edition: 1
• Topic: Business
• Subtopic: Medical Theory, Practice & Reference
• Index: Business

This text is based on the practical experience of pilot schemes which have identified a variety of opportunities and innovative ideas which others can adopt and develop. This book is a reference for principals and managers of fundholding practices, those thinking about becoming fundholders, and for the managers of provider units seeking to expand their services, including the commissioning authorities.

1

An introduction to total purchasing

Rod Smith

Fundholding has proved remarkably successful, despite the political controversy surrounding its introduction. By 1995/6 41% of the population was covered by fundholding, compared with only 7% coverage in 1991/2, the first year of fundholding. Fundholding initially covered only a limited range of hospital and community services, mainly elective services, although the services covered have gradually increased since its introduction, with a major extension to include many extra community services from 1 April 1993, including community nursing, chiropody, dietetics, community and mental health services and services for people with learning disabilities. Nevertheless fundholders only control about 20% of their patients’ resources.

Many fundholders and indeed NHS Trusts felt that the list of goods and services purchased by fundholders was illogical, and there was much confusion on the ground about the fine detail of what was in and out – for example, infertility outpatient services were outside fundholding and gynaecology outpatients were within it – so it was often difficult for fund-holders and Trusts to know whether the fundholder or his health authority should pay for such a service.

The fact that emergency admissions continued to be purchased by health authorities while most outpatient care and elective surgery was purchased by fundholders led to fundholders not necessarily becoming involved in strategic purchasing. For example in the short term it might be advantageous for a fundholder to purchase elective orthopaedic surgery from a distant provider or a private hospital, which might in the longer term damage local emergency trauma services. Purchasing all services will bring fundholders fully into the strategic arena.

Of course there were good reasons for initially only giving fundholders a limited remit as risks for practices with relatively small lists were felt to be too high. A single car crash might seriously embarrass a small purchaser, so A&E was initially left with the district health authority (DHA). The confusion about what was in and out of fundholding also made fundholding difficult to evaluate, as critics were able to say that fundholders were overfunded and evidence to refute or confirm this was impossible to produce. Critics also believed that fundholders artificially made elective fundholding procedures emergencies to avoid paying for them.

Despite all the problems fundholding has been remarkably successful, with falling waiting lists and improved community services in fundholding practices and fundholders saving about 3.5% of their budgets in 1992/3.

This success led the government to announce four pilot sites for total purchasing by GPs in 1994/5 (in Bromsgrove, Berkshire, Runcorn and Worth Valley). Three of these sites involved groups of practices to increase the population base and decrease the risk of volatile activity inherent in purchasing for a small population, although the fourth was a single practice. In October 1994 the Secretary of State announced a further major expansion of fundholding, with extensions to the standard scheme, a simple entry community fundholding and a major expansion of total purchasing to establish a further 25 pilot sites. The NHS Executive was overwhelmed with applications and eventually established over 50 pilot sites involving about two and a quarter million patients. Many potential pilot sites were disappointed, and some have formed unofficial pilots with their health authorities, while others are waiting for the second wave of total purchasing, which will involve a further 20 sites in 1996/7. All of the pilot sites are to be evaluated by the NHS Executive.

Total purchasing in action

Unlike fundholding there is little central guidance on the development of total purchasing and there has been no primary legislation to allow it to happen, so fundholders have to develop local agreements with their local health authority, whose budget for services outside fundholding they will need to share.

Implications for GPs

Most total purchasing groups involve groups of GPs in different practices, who may have quite different ways of working and of using resources. As they come to share a budget and develop a strategy, they will need to work closely together. Conventional fundholding will need to continue alongside the total fund, usually with the individual historically-set practice fundholding budgets top-sliced from the group’s total fund and run individually by each practice. Agreement will have to be reached between the participating practices on how over- and underspends on the shared extension to the fundholding component of the fund are to be dealt with; for example if the number of emergencies are increasing in only one practice, how are the budgetary overspends to be dealt with? Will all the fundholders have to rescue the budget overspend from their conventional fundholding budgets or will the health authority bail out the over spender?

Implications for health authorities

The health authority will need to set up monitoring systems to ensure that the total purchasing group is working to its budget and delivering agreed national and local targets. There will also need to be local arrangements to align the total purchasing group’s strategy with the rest of the DHA’s – for example on local mental health provision, where a local large hospital is to be closed, or on cancer services. Public health input for the fundholding group will also be important. Agreement needs to be reached on a budget setting mechanism. One of the great attractions of total purchasing is that a capitation model of funding can be developed, something which has proved impossible to develop in conventional fundholding because of the complexities of what is in and out of fundholding.

Implications for acute and community Trusts

Trusts will need to make major adjustments for total purchasers. Many acute Trusts still have contracts that price emergencies on average specialty cost, which fundholders are unlikely to accept. One of the attractions of total purchasing is that if GPs can reduce lengths of stay in hospital, they can bring resources out of the hospital to support patients in the community. GPs have had many years of talk of work and resources coming into the community but have noted more success in the transfer of work than in the transfer of resources.

Why this book?

This book is written for all those working in Trusts, health authorities, social services and general practices who have to enact total purchasing; it is designed to help them speed up the processes that we had to develop from first principles. It is edited by two GPs and the project manager from the Berkshire Integrated Purchasing Project – a total purchasing pilot involving six practices and 85 000 patients – and has contributors from acute and community Trusts and from the health authority. In addition to the Berkshire pilot site the book also includes a study of the Wiltshire and Bath pilot, to give a wider perspective. Inevitably in such a fast-moving field there will be areas that we have not covered in great detail. This book gives the reader a general introduction to the scale of the task of total purchasing.

As well as being useful to total purchasers we hope that the book will be useful to those developing locality purchasing outside fundholding. Locality purchasing, like total purchasing, is concerned with the development of primary care-led purchasing by involving GPs in the local development of health services and giving them incentives to change their own behaviour and the behaviour of other health care workers who look after their patients, to improve the health service. To be successful locality purchasing will need to take on some of the lessons of fundholding – ownership of decision making by GPs, recognition by all GPs that a resource wasted on one patient is a lost opportunity for another and, perhaps most importantly of all, devolution of resources to the locality acting as a strong encouragement to change. The origins of the belief among fundholders that ‘one GP with a cheque-book is worth ten on a committee’ are uncertain, but it hides a simple truth that Trusts listen more attentively and act more rapidly when there are financial consequences to inaction. We believe that total purchasing provides a model for locality purchasing and that over time there will be little difference between successful total purchasing and locality purchasing, regardless of whether its origins lie in fundholding or non-fundholding.

2

Total purchasing – the health authority perspective

Gary Bolger and Richard Mills

This chapter gives an overview of a total purchasing project from the health authority’s perspective. It is aimed at GPs and health authorities who are considering such a venture and builds on 18 months’ experience of the authority in Berkshire.

The chapter gives the background to total purchasing expectations that the authority had (and continues to have), the systems that were needed, public health involvement, calculation of budgets (including the advantages and disadvantages of different types), accountability and lessons learned.

Background

Once the initial changes following the introduction of the NHS reforms had settled down and purchasers had become established, most health authorities started to consider the development of more locally-based purchasing. This took many different forms but is generally known as locality purchasing. At the same time a number of the small health authorities were merging into larger county groupings, and they were keen not to lose a local focus.

In parallel but separate from this, regional health authorities (RHAs) and family health services authorities (FHSAs) had been developing fund-holding, which in some areas (including Berkshire) had by the third wave (in 1993) come to encompass a significant proportion of the population. Furthermore, some of these fundholders had come together to form local groupings to pool resources and expertise, one of these being the West Berkshire Fundholding Consortium.

Expectations of total purchasing

Therefore in their different ways, both the health authorities and some fundholders were keen to achieve a focus on purchasing for a particular area. The health authority’s expectations of total purchasing were as follows. It would:

• build on strengths of fundholding
• build on the strengths of the health authority
• encourage GPs to be involved in wider purchasing
• lead to innovative service changes
• recognize the role of GPs as a key influential group
• be recognized as part of developments in the NHS
• improve clinical effectiveness in primary and secondary care.

Fundholders were perceived by the health authority to have particular expertise in purchasing services for individual patients, as they make the individual referrals themselves. They had proved effective in achieving service changes and quality improvements with providers. The health authority felt that its strengths were in strategic analysis, population-based planning, technology assessment, knowledge of wider NHS environment and national policy, secondary care service changes, risk management and managing larger contracts and those for tertiary referrals, including those with providers in Oxford and London. There was therefore a view that bringing the two methods of purchasing together was both logical and advantageous for both parties.

Having taken the decision to support the project, the health authority had to consider what role it should play and how. There was much discussion and negotiation within the project board over this, and the health authority input was mainly in the following areas:

• allowing the project considerable autonomy
• providing strategic context and input
• assisting in the selection of the project manager and providing her with ongoing support
• identifying the roles of individuals in the authority in relation to the project
• organizing support staff to undertake contract management
• providing accommodation for the project manager and team (and their employment)
• calculating budgets.

Setting up systems

Early selection of an effective project manager with the right range of skills was a key factor. There was much work to be done and few precedents on how to do it. The individual needed to be able to negotiate effectively and to have information skills to establish the necessary infrastructure and systems. These systems are dealt with in more detail in Chapter 7. From the health authority’s perspective, it was important that the new systems were robust and effective to ensure that the Berkshire Integrated Purchasing Project (BIPP) could manage its own budget.

The authority appointed a purchasing manager and an information manager to form a BIPP central office. They ensured that:

• the project manager was supported in negotiation
• the contracts would be effectively monitored
• the information analysis of both current and future activities could be undertaken for both contract monitoring and needs assessment.

Ten per cent of BIPP activity is with ‘external providers’, and these are managed by the authority on behalf of BIPP. This both saves BIPP some extracontractual referral (ECR) costs and maximizes benefits from the authority’s specialist contract monitoring expertise.

The project required considerable staff input from the authority, both at director and senior manager level, to ensure that the authority’s interests were observed and also that the project could integrate effectively with the authority’s systems as well as those of fundholding and the FHSA.

Public health and total purchasing

Public health is a medical specialty whose role is to look after the health of the population rather than individuals. The position has some similarity to that of GPs who consider themselves to be responsible for the health of everyone on their list and sometimes have to balance the competing needs of individual patients for their time. However, public health physicians tend to see this role as looking after much larger populations (perhaps hundreds of thousands) and rarely get involved in the management of individual patients. The exception to this is that part of the specialty is devoted to communicable disease control, when individual patient management is much more to the fore, and more recently ECR authorization.

Public health physicians, in order to take on this role, receive training in epidemiology, statistics, health economics, sociology, management and health promotion (as well as communicable disease). These skills are useful in monitoring the health of populations, needs assessment, data analysis, planning services and evaluating interventions and ways of delivering services. These skills should also be useful to total purchasing GPs, who should seek to obtain significant public health input into their project.

In additio...

Table of contents

• Cover
• Title Page
• Copyright Page
• Contents
• List of Contributor
• Foreword
• 1 An introduction to total purchasing
• 2 Total purchasing – the health authority perspective
• 3 The total purchasing group – relations between individual GPs, practices and the health authority
• 4 Project management
• 5 Contracting for change
• 6 The individual fund manager’s role
• 7 Information management
• 8 Total purchasing – the acute Trust
• 9 A priority care Trust perspective
• 10 Social services and total purchasing
• 11 Evaluation of total purchasing
• 12 An alternative model – developing total purchasing in Wiltshire and Bath
• A1-Checklist for total purchasing preparatory year
• A2-Terms of reference for purchasing forum
• A3-Structure of project initiation document
• A4-Relevant executive letters and other guidance
• A5-Spend profile
• Index