Commissioning: further issues - Health Committee Contents

Written evidence from Professor Margaret Whitehead (CFI 50) (WH Duncan Professor of Public Health, University of Liverpool)


1.  The session is specifically concerned with how the NHS reforms will affect resource allocation, given that there is to be a shift from PCT weighted capitation allocations, based on geographic populations, to consortium allocations, based primarily on patients registered with GP practices. The concern from a public health perspective is that the shift from PCT commissioning to GP consortia commissioning raises potential problems that include, but are much wider than, the resource allocation issue. The switch to commissioning through GP Consortia will undermine one of the fundamental mechanisms by which the NHS strives to ensure good geographic access to a full range of services wherever people live. Currently PCTs have responsibility for all the people resident within defined geographic areas, not just the patients registered with specific health services. This allows for long-term needs assessment, planning and commissioning of services to match those needs, as well as accountability of public employees for the use of the resources allocated for that population, measured against outcomes that are also population-based. The proposals in the Bill abandon the population-based principle for the first time in the NHS's history. With GP Consortia, the basis of commissioning is for registered patients only, within the patchwork boundaries of each consortium, which have no well-defined geographical footprint. The ability to assess needs of people living in each area and plan for the proper geographic distribution of services for communities and local populations will be lost if this essential requirement is not met (Whitehead et al, 2010).

2.  The technical difficulties of monitoring GP Consortia for performance, governance and accountability for health and health service outcomes will be immense without a well defined geographic population denominator, but there has been little or no consideration of this, at least not in the public domain. The focus so far seems to have been largely on financial accountability mechanisms. Consideration now needs to the given to how GP consortia will gain the necessary public health input that they require in the commissioning process, as well as how this specialist expertise should be funded.


3.  Since its inception, the NHS has been based on the principle of "equal access for equal need". This principle is embodied in two longstanding objectives for resource allocation from the centre to local health services:

  • (i)  To distribute resources based on the relative need of each area for health services. Currently, this objective is to enable PCTs to commission the same levels of health services for populations with similar needs;
  • (ii)  In addition, to contribute to the reduction in avoidable health inequalities (DH, 2011).

The resource allocation formula devised to meet these objectives includes the age profile of the population (localities with more elderly populations have higher needs, all else being equal); additional need over and above that relating to age (localities with less healthy populations and higher levels of deprivation have higher needs, all else being equal); and unavoidable geographical differences in the cost of providing services—the Market Forces Factor (MFF) (it costs more to provide the same level of services in high cost areas such as London and the South East). From 2008 onwards, a separate component has been included in the formula to meet the objective of contributing to avoidable health inequalities. The indicator used was disability-free life expectancy (DFLE), which is the number of years from birth a person is expected to live which are free from limiting long-term illness and disability. DFLE exhibits a strong socio-economic gradient, decreasing with increasing deprivation, making it a reasonable choice of indicator in relation to health inequalities.

Both these objectives need to be embodied in the new NHS system, but it is made extremely difficult by the loss of responsibility for a defined geographic population. It is unclear, for example, if and how a measure such as DFLE could be derived for GP Consortia, given their irregular, non-geographic footprints.

4.  In this and any future resource allocation formula, it is essential to take deprivation into account not only because the prevalence of ill-health increases with increasing deprivation, but also because of the higher likelihood of patients having multiple, interacting health problems which makes their treatment more complex and costly. In addition, living in poorer socioeconomic circumstances may impede recovery and make it "harder to reach" them with the services they need. Some geographic population basis needs to be retained.


5.  The fact that more disadvantaged populations have a higher disease prevalence and more complex conditions means that caring for them may be more difficult and costly. There are significant implications stemming from this in the move towards a more market-driven NHS system, not least the issue of cream-skimming (the practice of selecting "easier to serve"/less costly/more profitable patients). There is a danger of cream-skimming in the new NHS structures which was not present with PCT commissioning. PCTs are responsible for a population allocated to them within a defined geographic boundary—there is no possibility of picking and choosing the people within that designated area. GP Consortia, however, will not have that constraint. They can pick and choose which practices are members of the consortium: those practices based in disadvantaged communities could be shunned, for instance, while those in more affluent areas could be encouraged to join. There may be practices that no consortium is keen to take on board, simply because of the socioeconomic profile of their patients.

6.  There is also the possibility of increased cream-skimming by GP practices when practice boundaries are removed and patients are able to register with any GP practice, theoretically anywhere in the country. There will be no obligation on practices to accept patients from the local area in which the practice is based if other, "easier to serve", patients from elsewhere come forward for registration. One consequence of such a process could be the creation of the converse: "sink practices" which contain the less profitable patients with the more complex conditions. There is evidence that cream-skimming of this nature went on under the GP Fund-holding initiative in the 1990s, and any perverse incentives to do so in the new NHS reforms need to be addressed, presumably by the NHS Commissioning Board.

7.  A related challenge for the NHS Commissioning Board will be to do something about the distribution of GPs, which has become less equitable, year-on-year, since the early 1990s, made even worse since the abolition of entry controls in 2002 (Goddard et al, 2010). These controls regulated the setting up of new GP practices in over-served areas, with the aim of encouraging more provision in under-doctored, more deprived areas. Remedying this will require targeted area-level policies.

8.  The accelerated drive to "cleanse" GP lists of "ghost" patients in preparation for the switch to GP Consortia Commissioning could result in another form of cream-skimming. Reports in the GP journal Pulse claim that up to 40% of patients could be stripped from practice lists under tough new measures to clean the databases of registered patients on which resource allocation to Consortia will be based (Pulse, 2 March 2011). In one pilot scheme in NHS Brent, every patient who has not visited their surgery within six months and who fails to respond to two written notices will be wiped from targeted practices' lists. This exercise was designed to cut costs by stripping out patients who have died or moved, but it also risks removing whole swathes of the local population who have very real and on-going needs for health care but who have not used the primary care services in the previous few months. This could affect, in particular, elderly people, those who are disabled or mentally ill, ethnic minorities and people in high deprivation, high turn-over areas. Lists of some GP practices with a high proportion of patients from high deprivation, high turn-over areas could be particularly hard hit by this cleansing and could face closure as registered numbers fall. Much of this is currently speculation, but requires further investigation.


9.  The current resource allocation formula contains a component to address the second NHS resource allocation objective: "to contribute to the reduction of avoidable health inequalities". There is debate about whether this element should be removed from the formula that will distribute resources to GP Consortia and instead be covered by the formula currently being developed for the transfer of the public health budget to local authorities and the proposed "Health Premium". The first point to be made about this proposal is that even if the health inequalities objective were to be built into the local authority public health resource allocation formula, the move would still only partially address that second objective. There would still be a need for an element in GP Consortia Commissioning budget for reducing inequalities in access to GP commissioned services that may contribute to the observed inequalities in health status. In addition, the NHS Commissioning Board would need to ensure the continuation of public health activities carried out by GPs as part of the essential services they provide for all patients.

10.  Under the Public Health White Paper, local authorities will have a new statutory duty to improve the health and well-being of their local population, and possibly for other duties, such as elements of health protection. A ring-fenced budget, weighted for health inequalities, will be allocated to upper tier and unitary authorities in local government for this purpose, based on target allocations determined by an allocations formula and drawn from the former NHS budget for such public health activities. The development of a formula for this purpose will have the advantage over the formulae for allocation of funds to GP Commissioning Consortia in that it will have a defined geographic population base: people residing within local authority boundaries. The consultation document puts forward three general approaches for establishing the public health formula: a "utilisation" approach based on current patterns of public health activity and indicators of need; a "cost-effectiveness" of public health spend approach, and one based on "population health measures" within the LA areas. The utilisation approach is inadequate because variations in spend on narrowly defined public health activities are likely to be poor indicators of relative need across local authorities, as well as there being a lack of comprehensive data on activity and costs at the required spatial level. Likewise, the cost-effectiveness approach suffers from a paucity of evidence on the cost-effectiveness of public health interventions, as well as being fraught with data and methodological issues. The third approach is the only sensible choice from a conceptual and practical perspective. Measures such as standardised mortality rates and ratios, life expectancy and disability-free life expectancy are all available at the LA level and are indicators that demonstrate a strong socioeconomic gradient. If incorporated into the formula, one or other of them could indicate increased need requiring additional resources for public health activities.


11.  In addition to the above public health allocation, there is a proposal in the Public Health White Paper to introduce a new "health premium" to incentivise action to reduce health inequalities. This will only apply to that part of the local public health budget that is for health improvement. The proposal is for local authorities to receive an incentive payment, termed a "health premium", depending on the progress they have made in improving the health of the local population in general and of improving the "the health of the poorest fastest". Possible public health outcomes indicators have been put forward for consultation on their potential to measure the required progress. Over and above problems of availability and robustness of the data at the required spatial level, there is a fundamental problem with the proposed indicators, related to the purpose to which they are put. While several of the proposed indicators might work as indicators of increased need in an area, if used as indicators of improved outcomes they could simply deliver the premium to areas where it is easier and faster to make progress, which may well be the more affluent areas around the country. There needs to be a re-consideration of the use of financial incentives for public health outcomes from both practical and ethical perspectives.

March 2011

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Prepared 5 April 2011