Select Committee on Health Second Report


5  IMPACT OF DIVESTMENT OF PROVIDER SERVICES

167. Commissioning a Patient-Led NHS generated huge controversy when it proposed that PCTs should divest all their direct service provision by 2008. We have already discussed the considerable problems that confused and badly managed announcements about this have generated. The broader question of whether or not PCTs should divest their provider services is very complex and could easily be the subject of a separate inquiry. The issues it raises are so numerous that much of our evidence expressed surprise and concern that the Government chose to announce such a significant change to the delivery of NHS services as an 'add-on' to the administrative reorganisation of PCTs, rather than waiting to produce a more considered policy position in the forthcoming White Paper.

168. We have not had time to fully investigate the complex question of divestment of provider services within the confines of this short inquiry. However, inevitably our evidence raised many important concerns about the divestment of PCT provider services, and we feel that it is appropriate to commit these to the record here, in the hope that they can be revisited more fully as debate on these issues develops.

How will divestment affect commissioning?

169. The most widely cited potential benefit of removing provider functions from PCTs is that it will improve commissioning by turning PCTs into solely commissioning organisations. John de Braux argued that:

170. There may be some logic to the argument for creating a firm divide between commissioning functions and providing functions. Senior management teams of commissioning-only organisations will not have the distraction of having to focus on operational delivery, and can concentrate on the strategic planning and commissioning of services. A second advantage is that PCTs will not face perverse incentives to commission their own services, where in fact externally provided services might offer better quality or value for money.

171. However, these advantages are not as clear cut as they seem. Firstly, while commissioning-only organisations may seem sensible in theory, there is little evidence that this separation of functions will, of itself, necessarily deliver improvements—after all, Health Authorities were also commissioning-only organisations, and did not manage to yield significant improvements in commissioning. It may be that, as previously discussed, other changes will be needed to support improvements in commissioning besides simply separating PCTs' commissioning and providing functions.

172. Equally, while separating commissioning and provision may reduce the potential for perverse incentives in commissioning, under plans to introduce Practice Based Commissioning across the country, groups of GP practices will soon both provide services and commission them, forming new organisations with exactly the same multi-functionality that the Government argues could hinder PCTs' success as commissioners. If the Government genuinely believes that the key to successful commissioning is for organisations to focus solely on that, then it is difficult to see why this rule should not be applied equally to all organisations that commission care. The current position, where GP practices may both commission and provide care but PCTs may not, appears entirely incoherent.

173. Further to this, Dr Reader argued that divesting provider services at the same time as introducing Practice Based Commissioning was actually likely to weaken rather than strengthen commissioning, as whole sections of community staff who could contribute to Practice Based Commissioning were now being excluded from the process:

    The original point of this paper was about strengthening commissioning. The devolvement of those provider organisations actually cuts that whole section of community staff out of that loop and out of Practice Based Commissioning possibilities. As Practice Based Commissioning came in other professional staff have been champing at the bit to get involved, but it has been more complex to see where that fits in and people have been trying to work on that. As soon as the divestment to providers came along lots of PCTs' doors—including my own—suddenly closed on thinking about them because somebody else was going to be running them. There is a whole raft of skills and knowledge and involvement that can be used there in Practice Based Commissioning in different ways to evolve and change services that would be lost.[139]

Wider impact of market-type reforms in primary care

174. As well as the aim of strengthening commissioning, the Government's proposals to divest PCTs' provider services to alternative services providers are clearly also driven by the desire to introduce market-style incentives into the primary and community care sector, as has already happened in the secondary care sector. The Government hopes that by encouraging alternative providers into the community care market, including private and voluntary organisations, quality will be improved and costs will be reduced as a variety of different providers compete to win NHS contracts.

175. The likely impact of market-type reforms on the NHS is a huge and complex subject, and there are still a great many unknowns in this area. The tangible benefits of contestability are uncertain, and may be constrained by limits imposed on the healthcare market by Government. Equally, the benefits of contestability may not be realised if it is not possible to generate enough supply to ensure contestability—this may be particularly the case in remote or deprived areas. Moving to a market-type system also brings its own risks. Some of our evidence suggested that growth in plurality of providers will inevitably bring about an increase in transaction costs.[140] Another risk is that of over-provision of services, which is ultimately very expensive. There is also the risk of private companies going bankrupt, potentially leaving the NHS with no alternative provision, as has happened in the past with nursing homes, which, according to one of our witnesses, are sometimes closed down at very short notice. [141]

176. It is beyond the scope of this inquiry to conduct an exhaustive assessment of the complex subject of market reforms in healthcare. However, our evidence did raise several concerns relating specifically to the introduction of market-type reforms in community health care, which is in many respects very different from the acute sector. Yvonne Sawbridge explained the unique value of healthcare delivered in the community:

    In the community we deal with people not disease ... we want the chaos and the richness that come from helping people live their lives. It does not fit neatly into "You've got diabetes" or "You're having your hip replaced". People have all sorts of things happen to them at the same time and that is a core value … [community staff] are very anxious about losing that and going into organisations that do not understand that difference, which is intangible.[142]

177. She went on to argue that fragmenting the joined up services that community health professionals currently strive to deliver is a real risk associated with introducing a plurality of providers:

    Charlotte Atkins: This is supposed to be patient focussed. Do you think it will fragment the so-called patient pathway?

    Ms Sawbridge: Yes. Seamless care is difficult enough to do at the moment and the more fragmentation the more people you are going to have knocking on the same door to deliver different aspects of care.[143]

178. Introducing non-NHS providers into the community sector also raises questions about workforce development and training. Yvonne Sawbridge asked "Who is going to train our future workforce? Who is going to plan across the health and social care when you have got plurality of provision? I just do not understand how that will happen. It is hard enough now."[144]

179. Currently, there is little contestability in community health services. However, in attempting to increase contestability, a new range of alternative providers will need to be found to provide the services currently provided by PCTs. By their nature, community health services are often long-term and involve complex interaction between different health and social care agencies. In this respect, they are different from the types of health services that have so far been provided by organisations outside the NHS, which have tended to be mostly 'stand-alone' episodes of treatment or diagnosis, such as day case surgery or diagnostic services. It is thus uncertain whether or not alternative providers will see community health services as a worthwhile market to expand into. Other potential providers could include hospital trusts or GP practices expanding to provide community health services. However, while this could improve clinical collaboration and minimise the fragmentation of services, it carries the risk of simply creating an even greater monopoly than currently exists. If PCT monopolies are broken up into smaller (geographically overlapping) new organisations that will compete with one another, this may increase contestability, but at the risk of oversupply.

180. A final, pressing concern is that the NHS will become "providers of last resort", only providing services that are not profitable or attractive enough for other organisations. John de Braux seemed to suggest that this would be the case:

    There will always be some services for which I believe PCTs will say there is no alternative provider, much as we have tried to find an alternative provider it will not be safe to do so, or nobody is interested in providing that bit of the market or whatever, and I think it will stay with PCTs.[145]

However, some of our witnesses objected very strongly to this idea: Dianne Jeffreys told us:

    I think it would be very sad if PCTs ended up as providers of last resort; in other words, we only provided that rump of services that nobody else, that the housing associations, that the private sector, that the voluntary sector, that the community sector did not want to provide. That would not be the best outcome for patients and I for one will try hard to see that that does not happen.[146]

Yvonne Sawbridge agreed:

    Obviously you will get people looking at bits of the patient pathway. People are unlikely to bid for the old lady with Alzheimer's disease needing full leg compression bandaging. There were comments made earlier about how we should not leave PCTs with the services that nobody really wants to do; that is not a very exciting place for anybody. You need to make sure we have got a variety of things that people can do that matter.[147]

181. Whether or not PCTs should divest themselves of their provider services is a huge question which is outside the scope of this short inquiry. However, inevitably our witnesses raised many important concerns about the divestment of PCT provider services, most notably that it would lead to fragmentation of services, and make joined-up care even harder to deliver. Equally, it is not clear whether sufficient alternative providers exist to provide a market in community services. We urge the Government to address these crucial questions in its forthcoming White Paper on out-of-hospital care.


138   Q 62 Back

139   Q 124 Back

140   Q 87 Back

141   Q 132 Back

142   Q 120 Back

143   Q 122 Back

144   Q 120 Back

145   Q 63 Back

146   Q 76 Back

147   Q 121 Back


 
previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2006
Prepared 11 January 2006