Secondary Care - Contracting with hospital trusts

Dr Niti Pall and Georgina Craig explore how GP commissioners can use contracts as levers for change.

Dr Pall: Now is the time to design contracts that work in your community (Photograph: NTI)
Dr Pall: Now is the time to design contracts that work in your community (Photograph: NTI)

The hallmarks of current NHS contracting policy are choice, competition and any willing provider (AWP) contracts.

Giving patients choice of provider for elective hospital care has been an obligation since 2006. The Co-operation and Competition Panel (CCP) recently published interim findings on how well PCTs delivered on this and concluded they deprived people of choice.

Familiar arrangements like directing GPs to particular providers; limiting providers to certain treatments; setting minimum waiting times for treatment and different prices for different providers or using block contracts and caps on activity are anti-competitive.

An earlier CCP ruling that a tender for a limited list of willing providers was not a barrier to new market entrants reinforced this and rendered an expensive tender process a pointless exercise. So these old ways and strategies to manage financial risk are out.

Instead, wherever possible, the government wants licensed providers to compete and the money to follow the patient.

However, in response to intense lobbying from the BMA and others, health secretary Andrew Lansley conceded to pressure from doctors and ruled out price competition.

This means there will be just one mandatory tariff price and providers will differentiate themselves in terms of quality issues, such as access, convenience and patient experience.

There are two schools of thought on the AWP model. Those in favour argue that it rewards patient-centred services and innovation, drives efficiency and makes providers responsive. Necessity is the mother of inventiven and tough competition will force providers to fundamentally redesign services.

Yet, simultaneously, commissioning consortia need to drive integration and service reconfiguration so that hospitals become smaller. Plus, they must deliver 4 per cent efficiency savings through the Quality, Innovation, Productivity and Prevention (QIPP) agenda and £20 billion in cash.

This is going to be difficult with AWP arrangements fragmenting the underpinning provider cost base.

Those against say that AWP contracts will encourage cherry picking of the easy stuff and excessive demand for services. It will make the system more costly and fragmented. Patient care will suffer. It will fail to deliver QIPP and will ultimately destroy the NHS.

Georgina Craig: close collaboration does not mean a cosy relationship

Pick-and-mix solutions
The pragmatic solution is pick-and-mix. And because the system is in flux and few precedents are set, we believe GP commissioners can be inventive and push the boundaries. Now is the time to design contracts that really work in your local healthcare community because, after all, you are going to inherit them in 2013.

Contracts that deliver choice, service reconfiguration, QIPP and, possibly, a down-sized hospital require vision, focus and tough negotiating. This is precisley the challenge for HealthWorks Commissioning Consortium (HWCC) in the West Midlands.

HWCC covers a population of more than 150,000 in Sandwell and West Birmingham and is exploring how to drive change using a range of contracting options. The GPs involved believe success lies in a flexible menu of approaches and in differentiating between designated services - the 'must buys' - and other services where encouraging competition is easier.

Working with Sandwell PCT, the consortium has struck a 'global sum' contract for designated services with their secondary care provider, Sandwell and West Birmingham Hospitals NHS Trust. This will see a reduction in the trust's budget of £16 million for 2011/12 and reduced bed numbers under a new building project and a programme called Right Care, Right Here.

The plan has been approved by regulator Monitor, and HWCC now has a limited secondary care financial envelope plus freed up resources to invest in redesign and capacity for care closer to home.

For services where HWCC can drive competition because they are lower risk and present fewer barriers to approval, it has a different contracting strategy.

Provide service solutions
The trust can increase its income by competing for these services. HWCC is open to any provider asking for some front-loaded funding so that it can innovate and provide service solutions that will cost less in the long run.

In this way, HWCC partners with providers to innovate and deliver new methods of service delivery. If another willing provider comes along, it can offer similar arrangements within the confines of competition law.

HWCC is also looking at 'programme budgeting' in specialities that are ready for it. Chronic disease management is ripe for this. This allows setting a budget across both primary and secondary care and designing integrated services. Savings are reinvested in service development and in incentives for providers to change.

Close collaboration does not mean a cosy relationship. HWCC is outcome-focused and places equal value on clinical care and patient experience. It clearly defines what good quality care is like. And because it sets clear expectations, it gets what it wants from the commissioning process.

  • Create a clear vision of the design of the new system you want to commission and share it widely.
  • Work closely and collaboratively with your providers. Build clinician-to-clinician relationships.
  • Challenge existing clinical practice and protestations that change will destabilise hospital trusts' finances.
  • Ask your consultant colleagues to champion patient care - and incentivise them to change behaviour.
  • Use a range of contracting options. Transition creates room for flexibility and innovation. Use it to design contracts that work for your local situation and seek approval later.
  • Sit alongside PCTs and co-own contract negotiations. If you do not, you might inherit contracts you do not like. In the long run, the consortia will pay the price.
  • Dr Pall is a GP in the West Midlands and chairwoman of Pathfinder Care Developments CIC and Georgina Craig is managing director of social business healthcare consultancy Georgina Craig Associates. Both are members of the NHS Alliance's national executive

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