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Archive for the ‘Strategy’ Category

Doing surgery? Then you need anaesthetics on-site. Obstetrics? Then you need paediatrics.

Acute care is a tangled web of interdependent services, joined by so-called “clinical linkages”. Pull out something innocuous-looking, such as physiotherapy, and the whole thing collapses.

These clinical linkages were all mapped out in an earlier post, and Roy Lilley picked it up in his discussion about competition and regulation (as did Paul Leake). His argument was that competition in healthcare provision could lead to these clinical linkages being unpicked, with disastrous results; therefore any local service reconfigurations would need to be managed (and not left to the forces of competition) in order to preserve these clinical linkages.

So how real is this threat?

Let’s start by sketching out the scenario we are worried about. A healthcare provider (it doesn’t really matter if they are NHS or private) sets up a new elective facility, which attracts work away from the neighbouring NHS acute hospital. This destabilises the NHS hospital and triggers the closure of its acute services (including A&E), much unhappiness for local people, and a political row.

There are three possible ways in which the new provider could destabilise the old:

1. by financial cherry-picking: diverting away from the old provider a lot of highly-profitable elective work that had been subsidising the loss-making clinically-linked acute services;
2. by deskilling: diverting away a lot of elective activity, so that clinicians at the old provider are no longer seeing a big enough caseload and become deskilled, so that those clinicians can no longer provide a safe acute service on which other acute services depend;
3. by poaching: recruiting clinicians away from the old provider, causing the closure of a service on which other acute services depend.

In the Parliamentary committee debates on the Health and Social Care Bill, there was quite a lot of discussion of the problems that might be caused by “cherry-picking”. Monitor responded to these concerns in two ways: firstly to point out that if the problem is that elective procedures are more profitable than non-elective ones, then the solution is to change the tariff price and remove the distortion; and secondly that if economic destabilisation of acute services is the possible result, then Monitor can designate those services as essential and allow extra funding for them.

I would add a further point: it would be rash to assume that elective care is always profitable and acute care is always loss-making. So much in healthcare is characterised by gross and unexplained variations, and so there are likely to be many highly-profitable acute non-elective services, just as there will be many highly-loss-making elective services.

Deskilling is more pernicious, and would not be solved by flinging money at designated services. If surgeons are twiddling their thumbs all day because their elective workload has disappeared down the road, they are not going to be as practiced when surgical emergencies come in. Recruitment and retention would also go to pot. If you lose acute surgery, then acute medicine is at risk and so is A&E. What can be done?

Well, the first question to ask is: where is the new provider going to get its doctors from? In the middle of London, it is quite possible to run a hernia factory from 9-5, Monday to Friday, keep a whole team of surgeons busy, and still leave plenty of elective work around for the rest of London’s NHS doctors; deskilling would not happen in that scenario. But could you do the same in Northampton or Stoke? In practice, you’d probably be using the same NHS doctors who work at the local NHS hospitals, and so they wouldn’t be deskilled, just maintaining their skills on a different hospital site.

For the sake of argument, though, let’s say you did manage to set up an elective factory in the shires without using doctors from the local NHS. Perhaps your medical staff have been brought back from retirement, or want to work family-friendly hours. Would that not pose a threat to the local NHS hospital? Indeed it might. But how might the NHS hospital respond? They could do nothing, and let their surgeons twiddle their thumbs on full pay, but that would be perverse. A more sensible response would be to make their surgeons available to the new provider on attractive enough terms, which sidesteps the deskilling problem and replaces lost income. So it looks as if the old provider could respond to the deskilling threat, and head it off.

What about the third threat: poaching? Well the short answer is that nobody is irreplaceable. The old hospital can just recruit some new doctors. And if the service is so unattractive that it is impossible to recruit, then the old hospital’s problems run much deeper than the arrival of a new elective provider.

So we have seen how a degree of flexibility by the old provider can help sidestep the threat of destabilisation by the new. But we have tacitly assumed in this scenario that both the new and old providers are traditional monoliths who operate hospital buildings, and employ clinical staff, and contract with the NHS commissioners.

Now let’s imagine a world in which those three functions are unbundled. One possible way of doing this would be for the doctors in the old NHS hospital to establish themselves as Chambers and contract directly with commissioners; then the Chambers pays the hospital for the buildings, nurses, diagnostics and so on. Now we can see how much easier it would be to avoid the deskilling problem, which was the most serious challenge we faced above.

Because each Chambers could work across multiple hospital sites, it could respond much more flexibly than a traditional hospital service that was anchored to its buildings. If deskilling ever became an issue, the Chambers could redeploy clinicians across different hospital sites to head off the problem. It could, for instance, supply the clinicians needed by the new provider, including (where it made sense) retired or family-committed doctors.

So it is far from clear that clinical linkages are necessarily threatened by competition in healthcare provision. And even if they are, a flexible and competitive provider market could respond by unbundling provider functions in a way that unties people from buildings.

First law of forecasting

Forecasts are always wrong.

Second law of forecasting

Detailed forecasts are worse than aggregate forecasts.

Third law of forecasting

The further into the future, the less reliable the forecast will be.

Factory Physics, p.441

So if all forecasts are wrong, why bother? Well, the “first law” is a bit mischievous; instead of “wrong” perhaps “inaccurate” would be closer to the truth. As a Professor of Statistics once said:

All models are wrong but some are useful.

George Box

We cannot avoid forecasting. Even if we refuse to make explicit forecasts, and just carry on as usual, then we are effectively forecasting that the future will be like the past. So we make forecasts because we expect the future to be different in some way, or because we expect the analysis to tell us something useful that we don’t already know… or perhaps because someone told us to.

All forecasting starts by estimating future demand, and in healthcare there are two main ways of doing this. We could look at population, morbidity, medical advance, and anything else we can think of, and try to work out from first principles how much demand there should be for healthcare. Try it if you like, but you’ll be massively and embarrassingly wrong. The better alternative is to start by looking at actual demand in the recent past, and estimating how it might be affected by future trends.

And how do we measure demand? In theory we want to get as close to the source of demand as we can: which from a GP Commissioner’s point of view means evaluating all contacts between primary care practitioners and patients; and from an acute hospital’s point of view means evaluating GP and consultant referrals and A&E arrivals. Which is all very well, but in practice does not give us a complete enough picture; we don’t know what is wrong with patients when they first arrive, and so we don’t know what activity will be needed to care for them. So in healthcare, we end up using activity as a proxy for demand.

Starting with observed activity as our baseline, we then apply some kind of trend growth rate. This trend might indeed be based on demographics and medical advance (but these usually underestimate growth by a large margin), or worked backwards from financial affordability (which at best shows the scale of the challenge facing us, or at worst is merely wishful thinking), or simply estimated by looking at what happened in recent years (which is pragmatic and usually best).

Whichever method we pick, it is still going to be either inaccurate or a fluke. No trend continues forever, and these errors in future demand trends are a big source of error in any healthcare forecasting model. The more detailed we make our plan (HRGs, monthly profiles…), the more volatile the numbers; the further into the future we go (25-year PFI capacity plans…) the worse our trend assumptions. The second and third laws of forecasting are right about all that.

Given the inaccuracies around demand, there is little point in being over-sophisticated about the rest of the forecast. But there are a few other things that make a big enough difference to matter:

• If we’re using part-year historical data in a highly-seasonal area such as medicine or trauma, then we need to smooth it for the seasonal effects to make the baseline representative. (Though it’s usually easier just to use a full year’s data.)
• If we’ve been doing a lot of non-recurring activity (or failing to keep up with demand) in the past, then we need to adjust our baseline demand accordingly.
• What if there are specific things we know we are going to change, such as diverting COPD patients to a primary care led service, ceasing a low-effectiveness treatment, or stopping activity that does not address demand? The best way to handle these is to change the baseline activity as if the change were already in place.

Other than correcting for those kinds of things, the emphasis of our forecasting should not be on trying to improve accuracy any further: we have done enough.

Instead we should focus on making our forecasting useful. What capacity will providers need? What will waiting times be? How much will it cost? Where can we disinvest? How should we present the results so that we can understand them and take the right action?

There is another benefit to keeping forecasting simple and pragmatic: it makes it easier to relate our high-level longer-term forecasts to our more-detailed and shorter-term operating plans. By adopting common assumptions, when reality doesn’t turn out quite the same as our forecast and our operating plans are adapting, at least we can relate our local knowledge more easily to the big picture.

Hospitals accepting unselected medical emergencies must have on-site surgery.

Acute health care services: Report of a Working Party.
Academy of Medical Royal Colleges, September 2007, p.22

There’s a lot of guidance like this, from the Royal Colleges, subspecialist societies, NCEPOD, and the Department of Health, all describing in helpful detail the critical links that exist between different acute services.

But each document describes only a few strands in a complex web of interdependencies. Senior clinicians and managers, however, need a system-wide view, but it is difficult to piece together the whole picture from this mass of detail.

The lack of a big picture can waste a lot of time. When acute reconfigurations are being considered, managers and clinicians may get together in a large group to draw up the reconfiguration options. Much later, after a lot of work, some options have to be struck out when a fatal flaw is discovered (such as not being able to separate paediatrics from obstetrics). At worst the lack of a big picture can be dangerous, when piecemeal changes are made locally, to individual services, without realising that they could destabilise the whole hospital.

So we need an overview of these important clinical linkages. Looking only at those 24-hour services that must be provided on the same hospital site, we think the links look something like this. A solid line means that one service must support the service it points to; a dotted line means that it is possible to run the service without that support but procedures must be in place to ensure safety.

There are caveats of course. It isn’t possible to capture all the nuances of this complex guidance in one diagram: for instance, the distinction between a selected and unselected acute medical take is not fully captured. Also there are cases where older guidance states a requirement that is not mentioned in more recent, overlapping guidance; this leaves it unclear whether the requirement has been softened. In the full version of this work, therefore, the diagram is accompanied by the relevant passages from the guidance (referenced by the numbers beside the arrows).

We think this is the first time that acute clinical linkages have been comprehensively published in this way. At a time when acute hospitals and commissioners are under pressure from the EWTD and the financial squeeze, many are considering whether they could transfer services to an adjacent hospital or stop providing them altogether. This map of acute interdependencies should help to show where this can, and cannot, be done safely.

To take just one example, could you save money by downgrading physiotherapy to daytime only? A novice manager might think so. But the answer is clearly no, because that would put at risk the intensive care unit, acute surgery and medicine, and the A&E department. Not a career-enhancing move.

We ended the previous post with our Challenged Trust looking at its money quite differently. Instead of squeezing the biggest-spending budgets in time-honoured fashion, we now know which services are profitable and which are loss-making, which means we can focus on turning our loss-makers around without hurting our profit-centres. We also know the price of each theatre minute, bed day, X-ray and so on, making it much easier to spot things that look expensive (£1,300 for an ophthalmology inpatient bed day? £400 for a histology test?).

In effect, we have turned our organisation upside down.

Now we can see our income coming in at patient level, and our expenditure going out at patient level too. We can see how every part of the hospital is trading, not just with commissioners, but with every other part of the hospital too. Consultants are starting to wonder things like “if theatre time costs £25/minute, why are we wasting all that money by starting half an hour late every morning?”, and “why is the recovery room fully-staffed first thing, when the first patient never comes out of theatre before 9:45am?”.

These are good questions. If it was their money, they wouldn’t spend it like that. Suddenly they’re noticing a hundred details about the way they work that don’t make sense. But they still aren’t doing anything about it. Why? Because decades of experience has told them it isn’t worth the effort. But if it was their money…

Up in the management offices, we know we’re still struggling to turn our hospital around, to get it into good enough financial shape to be a Foundation Trust. Big organisations like this don’t go from awkward to nimble just like that. In a hospital, managers can’t implement change like we could in a factory. The Trust is full of autonomous professionals: medical consultants, nurse consultants, consultant scientists; they all have their own ways of doing things, and a fair bit of power to do it that way if they want. That’s a good thing, but it is also why change can be so grindingly slow, and often expensive if you have to lubricate the wheels of change with extra money. But time and money are the very things we don’t have.

It’s an old joke that a hospital would be a doddle to manage if it weren’t for the patients. But seriously, it would also be easier if it weren’t for the consultants. We could be running a superb Trust within months if our remit was to manage all the staffed facilities, including most of the nurses, but minus the consultants. Now that our newly-improved accounting has turned our organisation upside down, we can see a way of making that vision reality.

So we could have the GP commissioners buying orthopaedics directly from the orthopaedic surgeons, medicine from the physicians, and so on. The doctors could carry on working here as usual, and buy the theatre time and bed space and diagnostics from us. We could get on with running a great Foundation Trust with a large estate and thousands of staff, and they could get on with delivering the standard of care that GP commissioners expect, and using our facilities as efficiently as they can.

Working like that, it surely won’t be long before 9:01am is considered a “late start” in theatres. Who knows, we might even see anaesthetists wheeling the patients down themselves…

Better late than never… “the quarter” for Q4 of 2009-10 is out, and it’s the first edition to escalate any NHS trust to “Challenged” status in the tough new(ish) performance management regime. All in all there are six challenged trusts, including two who are there purely for financial reasons.

A lot has happened since Q4, of course, including the White Paper announcement that by April 2013 all NHS trusts should be foundation trusts. Yes, even the challenged ones, which is quite a stretch. As the White Paper said:

In the event that a few NHS trusts and SHAs fail to agree credible plans, and where the NHS trust is unsustainable, the Secretary of State may as a matter of last resort apply the trust administration regime set out in the Health Act 2009.

This is the rather scary procedure where a trust special administrator is appointed to “exercise the functions of the chairman and directors”. Not something you’d want to happen in your hospital, really. So let’s put ourselves in a challenged trust’s shoes. What could we do to avoid this fate?

Let’s assume we’ve already had a major cost improvement programme across multiple workstreams, got management consultants in to analyse this and that, delayed paying suppliers, made the most of our (ahem) coding opportunities, cut back on agency staff, all that kind of thing… and the numbers are still turning red. So we take a deep breath, and sit back. What isn’t working?

Everything we have tried has been directed from the top of the organisation. We did it for all the right reasons. Leaving things to line managers hasn’t solved the problem for the last few years, so why would it suddenly start working now? We needed to act fast, and be seen to act fast. How could we convince the SHA that we were solving the problem if all we could say was “line managers have been set tough targets”? So we took charge. But we haven’t fixed it.

Sitting back, we think how our management model is inherited from the block contracts of decades ago. Back in those days we used to receive an allocation of X millions to run the hospital, topped up with non-recurring money for service developments and waiting list initiatives. The number of patients we treated was separate from that, and we thought about activity more as a performance measure; if activity did have anything to do with money, it was a cost.

Nowadays patients come with tariffs attached, so in theory every part of the hospital is now an income generator and patients are business. The problem is that we still handle costs in the old way: this much for nurses’ pay, that much for pharmacy. When we cut costs, we look for big numbers in the expenditure tables (like pay) and then squeeze them, without really knowing whether those numbers contribute to profit or loss. So we might end up balancing the books this year by, say, cutting back on physiotherapy pay costs… only to push up bed costs because we can’t discharge orthopaedic patients on time, and wind up deeper in the red than before.

So we can set about making our numbers more useful. If we extended the work we have already done on costing, we could come up with something better. Not only would we get a picture of whether each HRG and specialty was profitable or loss-making, we could get back some really interesting numbers like theatre time = £25/min, or each bed day = £172 at site A but £98 at site B. These item-based prices are much easier to understand, and we can start getting a feel for whether things are good value or expensive around the organisation.

Armed with this kind of information, we are much better-equipped. We can steer clear of mutilating our profitable services, concentrate our efforts on the biggest loss-makers instead, and see exactly which parts of the organisation could lose a little weight. That might just be enough to dig us out of the hole we’re in.

It might also be enough to lead to something much bigger. Something that could turn our whole management model upside down, and step up to a new level of performance. But we’ll have to leave that for another post…

In his blog, Paul Corrigan repeats a familiar and widely-held view of the NHS commissioning reforms:

The Government plans to bet the whole of the NHS on the belief that GPs can deliver a business model that can buy £60 billion of NHS health… it is to be hoped that GPs understand how to operate in a business this size. …they will need skills that can work businesses with a turnover of £200-300 million pounds – hundreds of times bigger than the normal GP practice.

Dramatic. Astonishing. And thankfully, nonsense.

Firstly, GP’s already “understand how to operate in a business this size”, i.e. the size of the NHS, because that’s where they work now.

GPs also know how to “buy £60 billion of NHS health” (or at least their share of it) because every referral is a purchase, and that’s how much the referrals add up to. Each purchase is decided by the GP; and they always have been, which is why PCTs (and Health Authorities, and District Health Authorities, and Area Health Authorities before them) could never control their budgets.

So if the world is not going to change overnight for those GPs who aren’t actively involved in consortia, what about those who are? Will they be running giant corporations? Hardly. Here are some examples of real “businesses with a turnover of £200-300 million pounds”:

• Bovis Homes (466 employees)
• Majestic Wine (800 employees)
• Photo-me International (1,485 employees)
• Oxford Instruments (1,531 employees)

Even those GPs who are running Consortia will not need “skills that can work” businesses like these. They won’t be operating, managing, or even supervising this value of care. Instead they’ll be commissioning it. Quite different.

So what skills will commissioning require?

We could look for an answer by turning to present-day PCTs. There exists a long and dreary list of all the things that PCTs (supposedly) do at the moment. But do they really “undertake service redesign at a health economy level”, or “manage the local provider market”, or even “provide effective support for carers”? And even if they set their minds to it, could they? The reality is that, no, they couldn’t. Many fine words are written, but they are unmatched by deeds. Back in the real world, providers carry on doing their own thing; many carers remain ineffectively supported. GP Consortia do not need to take on the burden of pretending to deliver all that, and I’ve never met a GP who would want to anyway.

Nevertheless, commissioning something as complex as healthcare is a delicate business, requiring a high level of specialist expertise and commitment. The commissioner does not need the very high level of specialist expertise possessed by the provider, but a high level of general training and experience is certainly needed in order to place orders intelligently. The commissioner needs to be able to evaluate the needs of each case carefully, and commission a level of healthcare that is proportionate to that.

Strip all the fancy language away, and you can see that this is what GPs do all the time. They are general practitioners after all; not specialised, like consultants, but highly trained and experienced nevertheless. They use their skill and judgement to decide whether and how to refer each patient on to secondary care. That referral is equivalent to placing an order: commissioning, in NHS parlance. Which is what they do already: being GPs, not some multi-gazillion pound Master of the Universe type thing.

Neither is it a harmless pastime to exaggerate the challenge facing GP commissioners. Yes, they will be taking on more than they do now; they will have a budget to manage within, after all. But there is no need to make the challenge bigger than it really is or it might scare even the able ones off.

The NHS Chief Executive’s round robin on the White Paper will disappoint anyone who spent the summer holidays hoping it would all go away. After many kind words to those facing the axe, he laid out the message loud and clear: devolution, devolution, devolution.

Most of the attention around the White Paper so far has focused on commissioning: the dramatic abolition of SHAs and PCTs, and putting GPs in charge. Debates have raged about GP incentives, and whether they will have the skills to do what PCTs do now.

But this lopsided attention is curious because GP commissioning is not where most of the change is going to come from, nor where a lot of the PCTs’ current expertise will be needed. The Chief Executive’s letter recognises this, calling for “particular attention locally” towards:

The proposed changes to the provider system, where I think the extent of the changes and the freedoms and opportunities to innovate are particularly significant;

A quick glance at the outside world shows that this must be correct. Who are the innovators who create the latest cars and phones? Not the customers who buy them, that’s for sure. It’s people at Toyota, Apple, and the rest who identify the gaps in the market, spot opportunities to innovate, and design and produce the latest new products. We, the consumers, merely choose whether or not to buy them.

So it will be in the NHS. Providers will innovate, GPs and patients will choose.

This is not to belittle the importance of GPs and patients; they are the customer, and the customer is king. Nor does it imply that a choice of providers must exist everywhere for everything; the fact that new providers could set up a better service will keep the incumbents on their toes.

But it does mean that GP Consortia should think twice before taking on everything their PCT does at the moment. If it helps them balance the books or refer to different providers, then fine. But if it’s heavy analysis around demographics or disease prevalence that’s on offer, then a polite shove towards the provider market might be more sensible.

At the end of July the NHS Chief Executive wrote round with the new Service Reconfiguration rules. His letter formalises the four straightforward tests that the new Secretary of State wants applied to every proposed service reconfiguration:

support from GP commissioners;

strengthened public and patient engagement;

clarity on the clinical evidence base; and

consistency with current and prospective patient choice.

Unfortunately the straightforwardness ends there, and the letter immediately runs into the heaped sands of inherited bureaucracy. The four tests involve commissioners, the public, patients, and (tacitly) the providers concerned, so it is unsurprising that these feature prominently in the letter. You would expect there to be some other process, given the risk and money involved in reconfigurations, but is it really necessary for local commissioners to involve all of the following? In order of appearance in the letter the cast list is:

• Strategic Health Authorities (SHAs)
• Local Authorities (LAs)
• Local Involvement Networks (LINks)
• Office of Government Commerce (OGC) Gateway
• National Clinical Advisory Team (NCAT)
• Independent Reconfiguration Panel (IRP)
• LA Health Overview and Scrutiny Committees (HOSCs)
• Cooperation and Competition Panel (CCP)

The involvement of so many bodies invites a number of criticisms. It is centralising and weakens local decision-making. It delegates complex judgements to bodies who may be expert in their subject but unfamiliar with the local particulars. It causes delay. It confuses the process, and thereby pushes blame back up the system to the Secretary of State. It is expensive.

So expect further reform, as the Coalition Government sets to work simplifying and localising decision-making in the NHS.

Something else is odd, though, and this goes to the heart of the Secretary of State’s new approach. The covering letter says:

The Secretary of State has also made it very clear that GP commissioners will lead local change in the future.

If the Secretary of State wants a market in healthcare, then surely this is going in the wrong direction? In a normal market, customers don’t design products; companies do. So healthcare providers should conduct the market research and consult the stakeholders, and if that goes well then they can design and take the business risk on developing new service configurations.

To be fair, the Secretary of State only walked into his office a few weeks ago, and cannot be expected to reform everything all at once. But, as the evolving policy on service reconfiguration shows, he will have his work cut out to achieve more straightforward and local decision-making in the NHS.

On Friday the Department of Health updated the Procurement guide for commissioners of NHS-funded services. It is littered with the familiar dreary life-sapping injunctions about OJEU notices, procurement rules, and the need to review, benchmark, and consult with everybody in sight. But in the middle of it all, you can glimpse the future of NHS commissioning: the Any Willing Provider (AWP) model. The guidance says:

AWP may be described as an accreditation process underpinned by a ‘call-off’ contract (ie payment is determined according to patients’ choice of provider). AWP has been defined nationally in its application to routine elective care, but can be adapted locally to facilitate patient choice in other services.

…which of course is virtually identical to the wording in the March 2010 version, and a continuation of the AWP rules that were set back in May 2008. So far, the “Liberative” policy is identical to the “New Labour” one.

As often happens with policy innovations, the AWP model is aimed at routine elective care. Policy-makers don’t like messing with the hot stuff if there is a less-controversial area they can start in. But they did leave the door ajar for AWP to be used in other areas of healthcare as well, if local commissioners want to stick their necks out. And local commissioners should. The language in the guidance may be couched around patient choice, but it works for commissioner choice too and gives GP commissioners much greater flexibility when referring emergencies and electives alike.

The trouble with AWP is that it insists on using the NHS Standard Contract, which itself is still rooted in the old world of planning and performance management. What AWP really needs is a Standard Contract Lite, under which GP practices could refer at tariff or local prices but without needing to go through the laborious processes for agreeing detailed activity tables and performance indicators.

That would bring GP Commissioning closer to the world of the normal small business. A local firm of plumbers does not negotiate and agree lengthy annual contracts with each of its suppliers, specifying guaranteed volumes and bespoke performance standards. Instead it sets up accounts at Travis Perkins, Plumb Center and the rest, and pops in from time to time for pipes, valves and whatever else it needs. If one supplier disappoints on cost or quality, they favour a different one for a while. Minimum performance is taken care of by law, regulation, and standards.

Healthcare is more complex and expensive than plumbing, but in other respects the analogy holds where there is a choice of provider. In this spirit, the Procurement guide says for AWP:

As a minimum, potential providers must demonstrate that:

1) They are registered with CQC (or other relevant body) for that service

2) They agree to the tariff that commissioners are willing to pay

3) They receive no guarantees of volume / payment

So minimum standards are assured, price is fixed, and the activity plan tables in the Standard Contract are redundant. This should make the development of a Standard Contract Lite relatively straightforward; all that is needed is a minimum-content default wording for all the locally-negotiated elements in the contract (which in most cases will simply state “Not used”). Local commissioners could do this themselves, or the Department could save them the trouble by providing default wording for them.

Is that it? When Standard Contract Lites are in place for AWPs, can GPs buy care for their patients just as any small business manages its supplies? Not quite: there is still quite a lot of other baggage to deal with. Can you imagine an average GP being enthused about commissioning, while:

In addition, this guidance requires that commissioners also undertake the following as part of the procurement decision-making process

• Undertake Service reviews to identify areas for improvement and ensure alignment with commissioning strategy (eg QIPP)
• Apply benchmarking to existing services
• Use healthcare market analysis
• Specify relevant service specification, outcomes, KPIs and expected prices
• Engage early with providers, staff and representatives / Trades Unions to asses the potential impact / deliverability of the service
• Engage with service users local communities and other key stakeholders eg Health Overview Scrutiny Committees and successor arrangements …
• Have regard to any sustainable development aspects of the procurement.

This baggage had its place in large-scale bureaucratic commissioning. But it will be unsuited and unnecessary in a more normal marketplace, in which the real commissioners are referring GPs, and the risk of establishing a service lies firmly with the provider. When PCTs are leaving the stage, would they kindly remember to bring all their baggage with them?

The White Paper was like diving into a British lake: a cold shock, a rush of blood, a feeling of disorientation, and yet all somehow very invigorating and healthy.

The SHAs are being abolished, and they will not be missed. I hope that now all the stories of bullying, extra-legal activity, and jobs for the boys will come out. The SHAs filled a gap in the organisational chart of top-down control, but in practice they neither insulated Ministers enough for Ministerial comfort, nor showed enough willingness to place Government policy above local issues to be genuinely useful to them. Soon they’ll be gone.

The abolition of PCTs has been deftly done. Now that so many PCTs are coterminous with local authorities, many people expected functions to transfer over. Health improvement is a natural transfer. So is the join with social care. Handing commissioning to GPs is also natural; in fact GPs have always done the commissioning because they refer the patients. What’s left? An untidy bag of statutory duties will need sorting out, but they are not enough to justify the PCTs’ existence. So off they go.

What emerges at local level is very different from the longstanding model of monopoly hospital toughing it out with monopsony commissioner. In its place we will have something more like a normal market, with many independent commissioners (the GP consortia) buying care from a much smaller number of hospitals. This is very much to be welcomed.

So what could go wrong? Plenty of course, and it will.

Quality will inevitably become much more variable around the country. So expect a lot of complaints about health inequalities and postcode lotteries, even as overall quality improves.

There also will be complaints about the funding formula, because as it is applied more locally, funding will become more variable. The strength of the assumptions being fed into the formula will start to look shakier on close local scrutiny, and the most likely result will be a simplification of the formula and a reduction in funding variation, amid loud complaints from the biggest losers.

Some hospitals will struggle to achieve Foundation status, and some Foundation trusts will flounder (as is happening already). As noted in an earlier post, many hospitals would work better if their monolithic structures were broken up, to separate the different clinical, operating and property functions within them. As with GP commissioning, this would be no more than a reflection of reality: consultants have always been clinically autonomous, and so it would make sense to rediscover their heritage and become organisationally and economically autonomous again too.

Some GPs will struggle with commissioning, especially in the early stages. But a penumbra of independent-sector services will emerge to provide the specialised services they need. This penumbra will not necessarily be big companies from overseas; their chances were better when they had big government to talk to. No, the GP consortia will be much smaller outfits, and will deal easily with boutique companies (like gooroo) providing very well-targeted expertise for the local situation, with each GP consortium remaining in control as customer.

The separation of GPs’ personal fortunes and their commissioning budgets will be crucial, and difficult. GPs will be establishing out-of-hospital services for conditions like diabetes, COPD, and cardiology, referring patients to those services, and profiting from providing them. It will appear that they are pocketing their commissioning budgets in the process, and there will be sufficient wriggle room in the application of the tariff to blunt protestations that they are simply competing on a level playing field. Handling this blurring of boundaries between commissioning and providing will probably be the commissioning regulator’s biggest challenge.

The regulators will face constant temptation to extend their powers and intervene more. Every scandal and every failure will bring calls for Ministers and the regulators to “do something”. These temptations to recreate SHA-style powers through the regulators will need to be firmly resisted if GP Commissioning is to flourish and providers are to become more responsive. The heavier the hand of regulation, the more everyone will look to the regulator instead of to the patient.

As the feelings of disorientation wear off, and as the detail of these changes becomes clearer, it will start to feel as if there are more problems than solutions in these changes. However, a decade from now, I think we will all look back and wonder how we ever tried to run the NHS as a management hierarchy, defying the reality that doctors were autonomous all the time.