McKinsey fears consortia management funding will be too small

Management consultants have expressed doubts that GP consortia will be able to cope with drastically reduced management costs set by the DoH.

In a discussion paper on GP commissioning, consultants McKinsey argue that if consortia’s management allowance is around £10 per patient, as predicted, they will face staff shortages.

‘Commissioning costs today are £60 to £90 per head,’ the report says. ‘Of this, our analysis suggests around £37 will be borne by consortia, with the rest falling to others.

‘Current speculation is that the management allowance will be £10 per patient – challenging to achieve, even if consortia reduce commissioning costs substantially. £10 per capita would fund around 35 staff for a population of 250k, costing £2.5m. PCTs today have 200 staff for the same population.’

Although the DoH has not confirmed how much the management allowance will be, NHS chief executive has made it clear they will be significantly less than PCTs receive.

The cost of releasing time for a clinician would add to the problem, say the report’s authors.

‘Additionally, there are the costs of being an accountable, clinically-led, organisation. PCT Boards cost about £0.5m to £1m.

‘Releasing time for a clinical director, five clinical leads and sessions for other clinicians [could cost] £800,000 to £1.5m, which alone would require a population of 80,000 to 150,000 to cover.’

The report says the larger the consortia, the less likely it will fall into deficit. ‘At a size of one million (people) no consortium would be likely to run a deficit above 1%,’ it recommends. ‘If consortia each have 100,000 patients, about 4% of them would run a deficit greater than 2% of total budget.’

Many consortia are considering ‘multi-tier’ arrangements involving small consortia (30-50,000 patients) grouped together with a population of up to a million.

‘This should provide enough scale to commission acute services well, keeps management costs per head low and manages risk effectively, while retaining the responsiveness of local arrangements,’ it says.

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