UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE
To be published as HC 513-iv

House of COMMONS

Oral EVIDENCE

TAKEN BEFORE the

Health Committee

Commissioning

Tuesday 30 November 2010

Dr Peter Weaving, Anthony Farnsworth, nigel edwards and Dr Paul Zollinger-Read

John Seddon, Kingsley Manning and Alan Downey

Evidence heard in Public Questions 280 - 393

USE OF THE TRANSCRIPT

Oral Evidence

Taken before the Health Committee

on Tuesday 30 November 2010

Members present:

Mr Stephen Dorrell (Chair)

Rosie Cooper

Yvonne Fovargue

Andrew George

Grahame M Morris

Mr Virendra Sharma

Chris Skidmore

Valerie Vaz

Dr Sarah Wollaston

________________

Examination of Witnesses

Witnesses: Dr Peter Weaving, Cumbria PBC consortium, Anthony Farnsworth, Torbay Care Trust, Nigel Edwards, NHS Confederation, and Dr Paul Zollinger-Read, Commissioning transition lead for East of England SHA and interim Chief Executive of Peterborough PCT, gave evidence.

Q280 Chair: Gentlemen, thank you very much for coming this morning. I think we might start. Could I ask you to begin by introducing yourselves so we are all aware of who you are and where you come from?

Anthony Farnsworth: I am Anthony Farnsworth. I am the Chief Executive of Torbay Care Trust in Devon and Director of Social Services for the same area.

Nigel Edwards: I am Nigel Edwards. I am the acting Chief Executive of the NHS Confederation.

Dr Peter Weaving: I am Peter Weaving. I am a GP and a commissioner for NHS Cumbria.

Q281 Chair: There is one general question we would like to start with before we go off into the detail. One issue that has been of interest to the Committee since we started this inquiry on commissioning and a parallel inquiry we are doing into the health and social care spending programmes is how the two programmes of change going on in the health service relate to each other. What I mean by that is that we tend to refer to one as "the Nicholson challenge", that’s the £15 billion to £20 billion efficiency gain over four years, and that is going on in parallel with the White Paper process for changing the structures of management in the health service.

We had an evidence session last week which the Secretary of State and Sir David Nicholson attended. During that evidence session , Sir David set out a process of transition which involved the clustering of PCTs to manage a process of change during the period between now and the full implementation of the White Paper process , and that was the means by which he saw it as realistic to deliver the 4% efficiency gain which is the underlying reality required from the Nicholson challenge. W ould each of you like to comment on that process of clustering ? Does that render the clusters redundant at the end of the process and what conflicts do you see emerging during the transition process if you have got clusters forming on the PCT side and the emerging GP consortia at the same time?

Anthony Farnsworth: I would not pose the emergence of the consortia and the development of clusters as antipathetical to each other. I think they need to be done in a complementary fashion. The consolidation of commissioning capabilities in clusters of PCTs is probably a very wise insurance against some of the risks of managing the two big programmes of change that you have highlighted. Many of the skills are rare and many of them need implementing at a scale. It would be a great waste of the commissioning talent that there is in the NHS if it wasn’t used. It is how that is done, though. If it is done in a fashion that attempts to impose or command the emergence of the developing GP commissioning structure, I suspect it will build in a dysfunctional tension. It needs to be done with the GPs, the GP commissioning consortia leading and driving it from the start. That is the best prognosis for a successful component of the transition.

Dr Peter Weaving: The experience from Cumbria is that we have gone down this route already in the sense that we have had evolving GP consortia. Although Cumbria is running as one consortium, it is divided into six localities, each with a population of about 100,000, with clinical leaders there. What we have seen as they have developed, and the publicly consulted plan to improve healthcare in Cumbria has been implemented, is that our healthcare costs have come down. We started in a very sorry place, with £50 million in debt, the public marching on the streets and a lot of unhappiness about healthcare. We have turned that around. We have achieved financial balance for the last three years but, more importantly, we have seen a fall in important areas of spend, like emergency admissions and prescribing costs, which are the lowest in the north-west region. Indeed, going into the future, where I would see the real £20 billion savings coming from is the inefficiencies we still have in what we spend, in the sense that even within our lowest prescribing costs, I know that the variation in that sum between practices can be 100%. Those differences are not driven purely by healthcare need––a lot of it is clinician behaviour. So in terms of taking us forward, I would see us continuing to evolve as we are and feel that that is going to deliver us the benefits and the financial savings that we need to see as a health economy.

Nigel Edwards: Of course, part of the Nicholson challenge, as you know, is a pre-existing commitment to reduce management costs which has been intensified and accelerated and I think the intention is to front-load that reduction. So, in a sense, there are three different challenges, any one of which would be a major issue for a management organisation. As Anthony was saying, the proposal to produce clusters has the distinct benefit of dealing with a group of staff who have specialist expertise that we probably want to retain but it is not clear at the moment where they may end up. I suspect that they may end up being employed by more than one consortium because they have expertise in particular types of commissioning. Thinking about their position, they will not want to be waiting around for one or two years to see whether something might turn up. So there is an argument in moving rather more quickly in this direction to create these consortia so that the GP consortia have a choice of some good talent and, more pragmatically, avoiding the necessity for what would probably be a very nice redundancy bill-I am guessing, but over £1 billion worth of redundancy just for that group of staff, never mind other staff in PCTs. As a strategy, it makes a degree of sense.

There is a bit of a problem, and we are caught between the devil and the deep blue sea here, which is that some places have lost significant numbers of staff already. You have this group of staff who need some certainty so you need to act quickly. But we do know that merging organisations is also a risky and messy business, always with the hazard that people become distracted in terms of getting some organisation integration and doing that piece of work. So you end up with, possibly, not two challenges but four. I can’t really see a way out of that, given where we are now. If we were having this conversation nine months ago, one could have perhaps suggested some different trajectories, but that is somewhat academic now.

Q282 Chair: You are saying that you regard it as a practical way forward and, in effect, the only way forward.

Nigel Edwards: Yes, but not without some challenges.

Q283 Chair: I guess my supplementary question is what do you think is a realistic timescale? Once again, Sir David said last week that for everyone who asked him to slow down there was another who emphasised the importance of getting on with it, in particular against the background of the requirement to deliver the efficiency gain starting from next year.

Nigel Edwards: And both viewpoints are right, in some ways.

Chair: That’s not a very clear guide to action.

Nigel Edwards: I know, and this is a problem. I have a lot of sympathy-I don’t know if my colleagues agree with me-with the situation he finds himself him. The advantage of going fast is we can give certainty to people we need to keep and some indication to people you don’t want to keep that that is the way the future is and they can start to have a bit of certainty, and they can focus on doing the job rather than worrying about their future which is a powerful point. Going faster also sends a signal to GP consortia that people are serious about this and they can get on and formally start to choose those people.

I’m not so convinced that there’s merit in slowing down. Once you have announced that you’re doing this, history suggests that the NHS and the NHS staff tend to implement things faster and people already assume that the future is coming and act accordingly. In a sense, you could not now announce that we are going to slow down very easily, except, perhaps, if you have particular places with problems where you need bespoke solutions and you need to be clear to people what those were and what the process for that is. But I think a national slowing down of this would probably cause more problems than it creates solutions.

Dr Peter Weaving: One of the lessons the evolving consortia learn very quickly is that they need very strong and good support services so they are extremely unkeen to see good people leave the organisations?

Anthony Farnsworth: One of the things we have done in Torbay recently was to merge the PBC consortium and the board of the care trust into a single organisation. The chair of the PBC consortium is our director of commissioning, so we had already begun an "in the igloo" solution to how the transition would be managed with other GPs, which they were enthusiastic about. A direct answer to the first part of your question is that I firmly believe there are big benefits to be had from engaging GPs, and consultants for that matter, in clinical redesign and leadership of change and that includes decision making about commissioning. The sooner we begin to capitalise on those benefits the better. To send a delaying signal would, as Nigel has implied, send all sorts of counter-eddies into the system just at the point that the system is swinging itself to get on with implementing what, presumably, is going to become law following the White Paper.

Q284 Dr Wollaston: I would like to direct a question both to Anthony and to Peter because Torbay and Cumbria are held up as beacons of good practice and it would be interesting for the Committee to hear a little bit more about how you achieved what you have achieved, and also whether you feel that the changes in the White Paper will be an obstacle or actually act to facilitate what you are trying to achieve. Could we have achieved it without the White Paper, in other words?

Dr Peter Weaving: Yes. When we first saw the White Paper, the reaction from Cumbria was essentially "Business as usual" because the route we had started down, which was towards a locality model having clinical leadership and, basically, bringing care closer to patients and closer to home, fitted completely with the White Paper.

The reason we started on that journey, as I say, is because we came from quite a difficult place. Sue Page has already had a mention in a previous session as somebody who has provided inspirational leadership for Cumbria and set us on this path. But what she definitely did was to engage the clinical leads, bring us forward and engage us with the process. It is we who want to take it forward because we believe that there will have to be difficult decisions made in the future and I would far rather be part of making those decisions than have them made about me or about my services or for my patients. I would far rather be involved in that process taking it forward.

Anthony Farnsworth: The fundamental drift of the White Paper is something that I feel, on behalf of our population in Torbay, is going in the right direction. We could and we are on the way to achieving many of the benefits that it is designed to achieve before it had been published. I think, though, it probably is necessary to say that the change in impetus, in terms of the clinical leadership and direction of commissioning from general practitioners, will benefit from the very distinct push that that has been given. Perhaps I could mention, in parallel with the White Paper, the transforming community services initiative which is requiring a separation out of commissioner and provider. If it is of interest to the Committee, there are some interesting questions about the relatively dogmatic insistence on the separation out of commissioner and provider during the situation when one is trying to manage-

Chair: It is something I know Dr Wollaston is certainly interested in and other members of the Committee as well. Please carry on.

Anthony Farnsworth: I would like to describe to the Committee some of the things that go along with the position that one is in as a PCT chief executive of having a cash limit for a population. What does that actually mean? There’s a tendency to see the transactional mechanisms of commissioning as, "That’s what the job is". But that’s really only a part of it. What goes along with that is the partnerships with other agencies. There’s a defined population with a defined cash limit, the requirement to make choices, priorities, to engage with your local public and your local council about that, and most importantly, from my experience, the business of being responsible for managing the local system of care. There I am. I have the cash limit, in my instance, for social care as well as health, and I am responsible for it. That means I am accountable for it.

One of my concerns about the White Paper is that it is not clear to me quite where that responsibility for managing the system of care is going to sit in future. The cash limit itself is being fragmented into different directions, some going to GPs and some going to the National Commissioning Board. So how one retains a sense of a given population with a given public resource deployed on its behalf-Health and Wellbeing Boards may have a part to play here, I’m not sure; that needs further clarification. Understanding the commissioning role not just as a transactional role but as a leadership role with public accountability for the cash limit to a given population is an important concept to hold on to, not least from managing in the financially constricted period of the next decade or so, as far as I can be informed. It is being able to retain a balanced perspective of the whole portfolio of health and social care services for a given population.

That kind of overview, and the ability to stand up in public and account for that to our MPs, to our councillors and to our public, is an important component of public confidence and credibility and the reputation of the health service in the minds of our local taxpayers. I am working my mind around trying to work out how I am going to recreate and achieve that in a situation post the implementation of these reforms.

Nigel Edwards: If I may, that matters because, of course, part of the way that the Nicholson challenge will be met will not be by lots of small decisions but by some quite brave and big decisions that will need to be taken. This idea of the big assistant manager able to take those becomes quite important. It is not clear whether that does fit with the consortia or elsewhere but, without that, we face some quite significant and unresolvable difficulties.

Q285 Dr Wollaston: There is also the issue of being able to make those make or buy decisions which are very important.

Nigel Edwards: Yes.

Q286 Dr Wollaston: How much do you feel the changes in the White Paper are the changes that are already being pushed on PCTs that will impair your ability to make savings and deliver very good clinical pathways?

Anthony Farnsworth: It is relevant. If I step down a level from my previous statement and go down to the level of deploying resources on individual care packages where you have got GPs, district nurses, social workers and physiotherapists, assessing the need for treatment, providing treatment, writing prescriptions and making referrals, at that level the system works well. If you have got an aligned set of intentions amongst those professionals, the system works well when you maximise the discretion and potential of those professionals to make that make or buy decision themselves rather than to impose it upon them. They will be inclined to be virtuous, in that respect, if they are operating within a system that is inclined to make them that way, if you see what I mean. That is one of the nuances of the commissioner-provider separation that is not widely understood. Lots of provider staff make, if you follow me for a minute, micro, individual case commissioning decisions and that is tremendously positive for patients. It leads you towards choice and personalisation of both health and social care which I think is a part of the policy agenda that is so welcome in the White Paper.

Dr Peter Weaving: On the make or buy side, and this is speaking more as a GP than as a commissioner, as my colleagues said, GPs are responsible for probably 80% of the healthcare spend in the NHS, prescribing the drugs, referring people to outpatients and admitting the emergencies. There is only a relatively small proportion they are not directly responsible for. The responsibility, which comes with the White Paper, for them accepting the size of that responsibility, is really quite important. In terms of improving healthcare and delivering the savings, it is important that there is a certain amount of "making" going on in primary care so that we can free up some capacity in secondary care so they can do more of the important secondary care stuff and leave the simpler stuff to us. That is a very important cost-effective mechanism that we need to make better use of.

Q287 Dr Wollaston: The issue I have is that a lot of GPs I talk to tell me they are very keen to roll up their sleeves and get on with designing patient pathways. What they don’t want to roll up their sleeves and do is be responsible for competition law. I just wondered if you would like to comment on that.

Dr Peter Weaving: What has been a consequence of our journey is that we have come more away from competition than towards it. We don’t find it a particularly useful driver of the quality of service. What we find drives the quality of service is collaboration and sitting down with our secondary care colleagues. The Committee may not be aware that some GPs think it is very important to sit down with consultant colleagues. In Cumbria we do that on a weekly or fortnightly basis to look at some of the important issues which are facing us because we don’t believe that you can commission your way out of trouble. If you want to improve services you need to sit down with the people who are providing it and plan it jointly. That will give you far better results than writing a detailed specification and saying, "Give me that."

Q288 Dr Wollaston: Would you like to see secondary care doctors on commissioning consortia as well, more multi-professional?

Anthony Farnsworth: Yes.

Dr Peter Weaving: We are meeting with them on Thursday, exactly that model.

Dr Wollaston: That’s what you are doing.

Anthony Farnsworth: At a very early stage in the formation of our consortium in Torbay is the invitation from the consortium to the acute hospital trust medical director to join the consortium for the precise reason that the clinical engagement between primary and secondary care is essential, as my colleague was saying, to achieve the change. There is a place for competition and you can locate it on the procurement and commissioning wheel, and it has that place, but generally one gets far better results, far better alignment of motivation and intention, by engaging clinical intelligence across the care pathway.

Q289 Chris Skidmore: It follows on fairly naturally to management costs and administrative support services. Dr Weaving, you mentioned the need for strong support services. In your evidence you talk about the consortia in Cumbria and that they cannot and should not take on the PCT administrative functions.

Dr Peter Weaving: Yes.

Q290 Chris Skidmore: First, I was interested in what you have already ongoing in Cumbria in terms of what operations you have and who takes over the administrative functions within the consortia and, secondly, are you concerned at all about the 46% reduction in management function costs over the next four years? Would that possibly impact on the commissioning practice itself?

Dr Peter Weaving: Yes. Obviously, we have come from the situation of being an ordinary PCT with all those ordinary functions and my role and that of my clinical colleagues is to provide clinical steer and clinical leadership. It is not for us to become experts in contracts, IT and performance. There are extremely good people in the organisations who already do that work. I need them to support the clinical steer that I wish to put on things. In terms of the management costs falling 46% over the next year or so, it will be a very interesting discussion to say, "What are the functions that are currently done by PCTs that we wish to do away with to enable developing consortia to do the job that they will do best but not to take on a lot of-I think Paul Corrigan described them as-the "worrying roles" of PCTs. PCTs are very good at worrying about certain things but not very good at producing good change in clinical pathways and so on.

Q291 Chris Skidmore: You say the consortia in Cumbria are currently designing the level of business support needed.

Dr Peter Weaving: Yes.

Q292 Chris Skidmore: What is that looking like in the Cumbria area?

Dr Peter Weaving: Essentially it looks a bit like a distilled PCT. As I said, the set-up we have in Cumbria is, following the political boundaries within the county, there are the six localities. We are certainly not going to replicate support functions for each of those. There will be a central support function which will provide financial expertise, IT, performance management and all those things. That will supply all the localities.

I should probably explain that although the localities are semi-autonomous and we try to operate the principle of subsidiarity to try and get healthcare decision-making as close to the patient as possible, we also recognise that across a geographical area like Cumbria you still need something-we call it "the senate"––where we meet. The senate looks after things like the equivalent of the Post Office, roads and rail because those functions are required across all the localities but you don’t want to replicate the management of each of those functions within the locality. So there is, if you like, a nesting dolls model. If you are acting as a very big organisation, you need to demonstrate localisation and if you are very small, you need to show joined-upness. For example, if I wish to change the way cardiac services are provided in Cumbria and have an interventional service which we don’t have at the moment, I need to join with the other localities to exert that commissioning clout. But if I wish to influence an individual practice’s prescribing, then that needs to be done on a very personal, local basis. Those are the important things for me but, underneath all that, we still need good support functions. It is a very popular statement to say, "We’re going to remove management and administration to save money and we’ll protect frontline services", but I think we all agree frontline services without support and management will not be very good frontline services. I think we do need to support that.

Q293 Chris Skidmore: Moving from the PCT model to the consortia model, how much upheaval was there in terms of redundancy costs within Cumbria itself?

Dr Peter Weaving: We are still going through that at the moment. But it’s more the unsettlingness of "I work for an organisation which is going to be defunct in three years’ time." Understandably, it’s an extremely upsetting place to be.

Q294 Andrew George: May I check the population areas, the populations within the locality area of the consortium as a whole?

Dr Peter Weaving: It’s about 100,000 population. The population of Cumbria is 500,000 and it is divided into six localities. Eden Valley is a smaller one of about 60,000 to 70,000 but the rest are around the 100,000 mark. Even so, for something like cardiac services you need three or four of those joined together to get the commissioning clout.

Q295 Valerie Vaz: Is that a settled population?

Dr Peter Weaving: Yes. Cumbria is very settled.

Q296 Valerie Vaz: You have got registered and unregistered patients?

Dr Peter Weaving: They are largely registered. We don’t have much in the way of migrating populations. It’s a fascinating mix because we have got wards where the life expectancy is something like 93 fairly adjacent to wards where the life expectancy is barely 70. We have got the deprived west coast of Cumbria––Workington, Maryport and, down in the south, Barrow––and then you have got very affluent areas in the middle like Greystoke and South Lakes around Kendal.

Q297 Valerie Vaz: Do you think your model will work in areas which are not particularly settled?

Dr Peter Weaving: Yes. In fact, we have some of the strongest consortia in evolution. One of the national pilots is taking place in Allerdale which is basically deprived West Cumbria, and there they have taken the subsidiarity model down even further, down to very small communities such as Maryport, Cockermouth, Keswick and places like this-Keswick being one of the less deprived ones, I would say.

Q298 Valerie Vaz: Do you think your model works partly because you have this coterminosity with the local authorities and you have support from the PCTs?

Dr Peter Weaving: It makes it very simple for a lot of things. It is a very sensible arrangement and it fits with the rough size of population you need to be stable. But even within that, to get individual GPs changing their clinical behaviour you need to shrink it down. You need to drill down even further so that a GP sitting with his surgery still feels that he is part of this system and that the decisions he makes are part of the bigger picture. That is particularly important when we have looked at things like chronic disease management and trying to avoid emergency admissions. Unless you have got people who are joined up with that-I will digress slightly. When we lost out of hours care, GPs became increasingly office docs and a lot of the emergency admissions are driven out of hours. What we need to get to is the in hours doc, having plans for patients set up so that, out of hours, an individual patient has a clear mechanism of being looked after so that they’re not reliant on somebody who has just arrived in an ambulance or an out of hours service, but there is a clear plan for that patient, for example in residential care homes. In Cumbria, between 50% and 30% of them get admitted to hospital each year as emergencies. That is a population for which we know it is really bad to admit them to hospital. They actually do worse being admitted to hospital than they do if they are looked after in their place of safety. One of the things we are setting up is for each of those individuals to have a care plan so that it doesn’t matter if it is a GP visiting during the day or an emergency ambulance turning up at night or an A&E department greeting that patient, they all have access to the same care plan and know not only what the medical background for that patient is but what that patient wants, what their family wants, what their carer wants and what the GP wants.

Q299 Chair: Can I interrupt the dialogue because I think Mr Farnsworth wants to comment?

Anthony Farnsworth: I am just going to draw the Committee’s attention to the question you raise about coterminosity with local government. We have here an emerging situation where the consortia’s population will be defined by a group practice and practice registration and that is not necessarily the same as a geographical patch. I think there is some further thinking to be done, particularly along the lines of the relationship with local government, the Health and Wellbeing Board and how one is able to account, if you like, for a population for a place-a given part of England. I think the concept of "place" and the stewardship of public sector resources in a given place and how that is developed and applied in partnership with others, including local government, and the link between that and accountability, remains one of the puzzles here that is in need of further articulation as things move into legislation. There is a risk of losing the ability to connect those things together if it is simply left to practice registration.

Nigel Edwards: This is an issue because if you take an area like cardiac services, health education will be commissioned by local authorities, primary intervention by local authorities, the primary care interventions by the National Commissioning Board, the secondary care by the GPs and tertiary care by the National Commissioning Board or by group special services. So there is an issue with the loss of a place focus of commissioning potentially becoming quite fragmented and there needing to be the sort of machinery Dr Weaving was referring to to stitch that all back together so there is some geographical and population focus.

Rosie Cooper: In short, a mess.

Q300 Grahame Morris: Following on that same theme that has been touched upon, and I don’t know whether my question is best targeted at Mr Edwards, but it is in relation to this issue of registered and unregistered patients and whether that is really going to reflect local needs. I am thinking particularly not so much about Torbay or even Cumbria in that regard, but if GP consortia have to cater not just for registered patients but for unregistered patients what would be the consequences for areas suffering multiple disadvantage? I’m thinking of Easington. I’m thinking of the old industrial areas. I’m thinking of Tower Hamlets. If patients are choosing to register in the cities where, perhaps, they work should there be some allowance made for other areas who are grappling with issues of health inequalities, ageing populations and high levels of ill-health? I know Cumbria has issues about rural sparsity. I would be interested in your thoughts on that and on deprivation.

Chair: All within 60 seconds.

Nigel Edwards: There’s a whole portfolio to your question. A few points. We deal, first of all, with patients with registration problems, with areas with lower levels of registration or with high levels of churn. There is a practical difficulty about actually measuring outcomes. If you are in Newham and 20% of your patients move to other areas-your patient population is entirely being refreshed with people who are like the last lot who have moved out-being able to make a long term investment and show outcome improvements is a challenge. If you are going to have a focus on being able to deal with the homeless, the unregistered and some of these other groups who may not use general practice in the way that the bulk of the population do, you probably still need to have a geographical focus.

Q301 Grahame Morris: A residual responsibility.

Nigel Edwards: So somewhere in this system there is someone who will bring all of that back together and look at these because many of the interventions you need to be making are based on geography.

The question of resource allocation you raise is a really difficult one because there is an unresolved academic and methodological dispute about exactly what the right way to measure the allocation mechanism should be and whether you should count deprivation in that. To some extent, this is a technical question. We don’t, as yet, know what the new allocation formula will look like but what is clear is that if you are going to allow people to register with practices outside their geographical area you probably should not be using geography, which is how it is done at the moment, to determine what the allocation should be. You should be using the characteristics of the patient, which will require-and this is possible to do-a new methodology. It will probably have the result of significantly changing things, particularly if, as is also proposed, as I understand it, you reduce the funding for deprivation in the funding for health services and put that into the funding for public health. All that will have this very significant redistributive effect so consortia which may well find that they are thinking they are going to be gaining from the operation of account allocation formula may very easily find that they are losing. There will be a very interesting debate to be had about how those formulae are calculated. Of course, the key question is: what pace of change should you have to move people to their new target? How public health funding will be allocated and how that will affect different levels of deprivation and life expectancy and the rest, we are due to find out, I understand, in the next few days. I can’t help you on that.

Dr Peter Weaving: Although we don’t know what the new formula will be, what we have done in Cumbria, because the six localities have quite different levels of deprivation, is we have taken the NHS formula and applied it to each locality individually and it has produced quite significant shifts in healthcare funding which has definitely benefited the more deprived areas which have received quite definite increases in funding. We have taken a rate of change of travel and I think we are heading to bridge 50% of the gap in three years. But there are some quite large changes in funding for health economies and that is to the detriment of the better-off economies at the moment.

Anthony Farnsworth: I echo the point that, in moving practice level allocations on a pace of change towards fair shares, we have been trying for some years to steadily-"first and most deserving" is the expression for this-benefit more deprived practices and, within a fixed sum, that is a redistribution. There are winners and losers in that redistribution but I am happy to stand by the redistribution. I think it is justified.

Q302 Grahame Morris: Do you all subscribe to that, all three?

Anthony Farnsworth: Yes.

Dr Peter Weaving: Yes, definitely.

Nigel Edwards: Of course, the more you fragment-the lesson from Dr Weaving’s example-the more consortia you have, the more variation you have. This is just a statistical fact. There will be some difficult conversations when these new allocations are calculated and when the new formula is introduced which will be, particularly in better-off areas with a relatively young population, for some people, a quite unpleasant surprise.

Q303 Chair: This is no longer, of course, about differential growth. This is about actual reductions in some areas if you are to achieve any significant resource transfer?

Nigel Edwards: Yes.

Q304 Mr Sharma: In answering Grahame’s question, you have already partly answered mine, but additional to that is the fact that in a constituency like mine, Ealing, Southall, where there is quite a large unsettled population, changes in the welfare benefit might encourage some, if not many people to move out and a settled community becomes unsettled for different rules in benefits, housing benefit and other areas. A shortage of social housing forces people to move out and then areas like Cumbria might have people from my constituency or the south-east moving further into there. Won’t that cause a lot of problems if there is a shortage of resources, particularly when there are cuts in administration costs that put more pressure on the consortia as well as the local GPs?

Anthony Farnsworth: I understand the question and I think you are quite right to be aware of the forthcoming changes in the benefits system which I think will impact significantly, particularly on adult social care funding. I remind the Committee of the mechanism that was used the last time the GP contract was renegotiated of reimbursement for temporary residents. The health service has previously considered a mechanism for managing turbulence in primary care registered populations in the GMS contract. Your civil servants would be able to advise you how that worked and I wonder if it might have some applicability, as a mechanism, to relatively unstable or moving populations in the light of your question.

Q305 Rosie Cooper: I want to ask about historic debt, but before that, so as not to lose the thread, Dr Weaving talked about the model he has got now, in essence, being a "distilled PCT". I wondered whether, as the Secretary of State was so fond of Cumbria, he might have paid more attention and, therefore, applied that model to the rest of the country to give us a good result without the cost, the angst and the grief of both the Nicholson challenge and the huge structural challenge currently being imposed on the service. Perhaps Mr Farnsworth, or all of you, could tell me how, in the models you have now got, where the patient voice is, how the patient influences and has a say in what is being done for them in their name?

Dr Peter Weaving: There are a number of mechanisms. Some are informal and some formal. As a practising clinician––as are all the GP locality leads––the informal mechanism is that we spend quite a lot of our working week sitting down with patients not only hearing what their side of the story is but also hearing what their experience of other local services, particularly the hospital service, is. That is extremely useful intelligence. It is soft and it tends to get forgotten. Also, within each locality we have patient representation and that can either be patient representatives sitting with a locality board or we also have-and I’m just trying to think of the technical term for it-fora where we have groups of patients we can ask questions of. That is simply, if you like, a registered list of people who are keen to-

Rosie Cooper: A forum?

Dr Peter Weaving: Yes.

Q306 Rosie Cooper: But do they ever get an actual say? Are they ever involved actually at the point of decision making?

Dr Peter Weaving: The patient representative will sit at a locality board meeting like this and would give a view, would take part in the debate and would have a voting right, the same as any other member of the locality board.

Anthony Farnsworth: There are a couple of other avenues. First of all, we do-I am sure all PCTs do-consult publicly on priorities. The decisions about resource spending, new commitments and changing services are discussed, and some of them, if they are substantial changes, are subject to formal public consultation. We are also subject to the health scrutiny process that local government carries out.

Rosie Cooper: A complete waste of time, but carry on. I do understand your role, but a complete waste of time.

Anthony Farnsworth: I suppose I’m trying to answer the question, what are the mechanisms in the present system that are designed to do that?

Rosie Cooper: Yes.

Anthony Farnsworth: It may be that it doesn’t fully fulfil all those hopes but, none the less, it is there. Then there is the advent of what were formerly the PPI fora that have now become the links that-I see your expression again.

Chair: We try to keep most of our opinions until we write a report but can’t always succeed.

Anthony Farnsworth: I think Dr Weaving’s first answer was probably the most profound, which is at the level of the individual consultation, the exercise of choice, the provision of information to individual patients about their treatment, about the choices they face, the options they have, conservative treatment, intervention and so on. That is the most meaningful level.

Nigel Edwards: We should just say that while GPs do see 70% of their practice population in the year, which is an extraordinary coverage, it is sometimes not easy to spot patterns where there are weak signals. In the opening address of the counsel to the inquiry, it is very noticeable that the GPs in mid-Staffordshire appeared not to notice what was happening in their patch. I think this is defensible because hospital use is a relatively rare event and the number of people within that is a relatively rare number of patients who were having problems. The address said of seeing patterns that "The sum of lots of individual GP consultations is not a population health view." I don’t know if Dr Weaving agrees with me but there is also a need to have, on top of that, a mechanism for systematically looking for some of these weaker signals that may be hard to detect on an individual consultation basis. So while individual consultation gives you a huge amount of very rich intelligence, there isn’t a sign in the GP surgery that says, "If you want to talk about health strategy and priorities, please book a double appointment." There is not that opportunity to have that conversation. I think there is a need for other mechanisms, and not just at the GP level of commissioning.

If I may, one point that is really worth making here is that there appears to be no patient or consumer voice in the role of the economic regulator, which is a very important part of what will become the commissioning machinery and will be making decisions which will affect, in some detail, the provision of care and will be deciding on some of the integrated models that we have heard about this morning. It will have a say on whether or not those meet their criteria in terms of meeting patient benefits. We should not just be looking for patient involvement at the practice, consortia, Health and Wellbeing Board level but at other levels in the system as well.

Q307 Chair: Can I bring Dr Zollinger-Read into the conversation, having won through the weather? You are very welcome.

Dr Paul Zollinger-Read: Essex doesn’t do snow.

Q308 Chair: It may be useful to the Committee if I repeated to you the question that the other three witnesses answered at the beginning: in your experience, you are doing many of the things that are in the White Paper policy. Does the introduction of the White Paper facilitate what you are doing and how do we avoid making the development of your ideas more difficult?

Dr Paul Zollinger-Read: I suppose we are, in Cambridge, in the unique position that over a year ago, long before the White Paper, we reckoned the PCT wasn’t working. So we went out and had long and detailed conversations with all the GPs and decided that what we needed to do was form clusters rather than PCTs. So long before the White Paper we started setting up clusters. They range from 100,000 to 50,000 and we have now got five of them. They are autonomous in that they now have their own budgets. What that did was two things to us. First, it put clinicians in the driving seat where they weren’t before and secondly, we recognised we were not good at getting the patient voice into a PCT of 600,000. We did all the things you have heard but we weren’t good at it. We went down that road and we did one other thing as well. We set up a whole series of peer reviews whereby GPs reviewed the referrals and described them as their "colleagues". We decided we weren’t going to send referrals to a black box they don’t get out of, we were going to leave it to clinicians.

The results are interesting because in our Hunts area our activity and our stats have gone down. With Addenbrookes the growth has reduced. I have no idea of this cause and effect but what we know is that we’ve changed the system and we’ve got beneficial results so far. We have certainly got much, much greater clinical engagement.

Another thing we did that I’m not certain the White Paper speaks as much as I would like on is the primary and secondary care divide. That is a real issue that we haven’t tackled. We said, "What are the nine key clinical areas across this county?" They ranged from oncology to cardiology to diabetes. We said, "Let’s set up Joint Working Groups with a consultant lead and GP lead and patient input." Then I got it wrong because I said, "Right, we’re going to task you with being cost effective." What I should have said is, "We’re going to task you with improving quality." Once I actually got that right those workstreams then really motored looking at, "Where are we?" "Where do we want to go?" "How do we maintain or improve the quality and improve cost effectiveness?"

We are also having very difficult discussions about the use of chemotherapy in the last stages of life where, because this is clinician-led, they can quote the papers and the New England Journal of Medicine which show good quality palliative care-surprise, surprise-will actually extend your life. Chemotherapy will not extend your life. Good quality palliative care will. So we have moved, in a short series of jumps, to a clinician-led organisation and it has improved our outcomes.

Q309 Chair: Clinician-led, meaning GPs as the catalyst for the wider clinical community?

Dr Paul Zollinger-Read: Yes. We started off by saying, "Right. We’re the Executive. We want GP leaders. Five of you come in. You are part of our Executive. You have the power of veto." What we are now doing is we are setting up something which is dreadfully called "the senate". I know it is dreadfully named, but it will be GP leaders and they will now form the strategic group across Cambridgeshire and Peterborough so that we will start to have a strategic focus that they can link in and ask, "What are we doing in major trauma centres? What is our view on oncology?"

Q310 Rosie Cooper: If I may just continue the train of thought I was going down, I want to try and elicit, where patients engage or influence currently, whether, in the new consortia, you think that patients could access or influence directly and how you feel that GPs in the consortia would take, for example, to open board meetings and their decisions being made in public, and, at each level of the new world, where do you think the accountable officers should be? Who is going to take the rap for each of these decisions? In the consortia will the chair be the accountable officer for the decisions that are being made in their name? Where do you think the buck stops?

Dr Peter Weaving: I think it should stop here. I would be very happy for it to stop here and I would very much welcome any mechanism which empowers the public. It is quite difficult to empower the public in healthcare decision making. There has been previous reference to the fact that clinicians, even if they don’t want to, tend to be overbearing and put off public influence. That is very unfortunate, but I think it does happen. So it is very difficult to get real public engagement and I genuinely don’t know how you do it. It’s very easy to get representation. How you get empowered opinion turning into policy is much more difficult.

Anthony Farnsworth: There is a relationship between your question and my earlier observations about the responsibilities and accountabilities that go with having a cash limit for a population because, right now, if something goes wrong in Torbay I am the accountable officer and I know that I’m the person who is responsible for it. Your question is a good one. If a GP consortium has a cash limit for a given population, I would have thought that it would have to carry with it an accountable officer status just in terms of Treasury accounting terms. That is a role that could be held by a GP and that becomes a position of public accountability and responsibility. In that sense, I think that is the nearest proxy I can see at the moment to providing a good answer to your question.

The thinking about the development of Health and Wellbeing Boards, whether they are executive or non-executive, whether they are within the executive part of the council or part of the partnership architecture and how they are finally constructed, there is a potential partial answer in the design of that Health and Wellbeing Board arrangement. But I don’t think that can fully supplant, nor is it designed to, the accountable officer role that would need to sit within the health service for health service responsibilities.

Dr Paul Zollinger-Read: I am a GP and I have been a chief exec and a GP at the same time. I think you should stand up and be the accountable officer. These are clinically led organisations and they need to have accountable officers who are clinicians.

Q311 Chair: Can I just be clear: You are currently the chief exec of the Cambridgeshire PCT and a practising GP?

Dr Paul Zollinger-Read: I put it on hold and I go back in March. I think that was the wrong decision. My current employer said, "This is a really big job. You need to put that on hold." I have been a GP and a chief exec of five or six PCTs since early 2000 and I think it adds value.

Q312 Valerie Vaz: So someone judicially reviews your decision and you are the named person that they judicially review?

Dr Paul Zollinger-Read: Yes.

Q313 Valerie Vaz: Ultimately that is going to happen, isn’t it?

Dr Paul Zollinger-Read: Yes.

Valerie Vaz: They are not going to be happy with your decision so they judicially review you, as opposed to the Secretary of State?

Dr Paul Zollinger-Read: That’s an interesting conundrum. It has never happened to me.

Valerie Vaz: Because they usually do it to the Secretary of State.

Chair: You might live to regret it.

Nigel Edwards: I think it is entirely unclear exactly how this will work in the new system. It is also not clear what governance structures the consortia will have. I think the intention at the moment is to leave that fairly fluid. I’m not expecting to see the type of board and machinery that we have seen in PCTs. I think it will look quite different.

One of the interesting questions is, just by analogy with-and this may seem odd-hospital management in Hungary and Poland and a number of other Eastern European countries which I’m familiar with, being hospital director is a job done by a doctor. It is generally reckoned to be not a job worth having and when you are sacked, which is a very regular occurrence, you go back to your previous clinical job, which is the one you wanted to do anyway, and you earn twice as much money as you did previously. There is an important point which is, if this is a job worth having it should be a job worth losing. We have serious people here who will take this seriously but I think there is also a message to the rest of the system about, "This is the place where all the accountability is." I don’t quite see how that works in this new system. The point that was made earlier about judicial review and the need for a very clear, transparent decision-making process which currently exists in PCTs is also very important and it would be important to make sure it isn’t lost. I am torn on this because history suggests that asking the Department of Health to design governance structures is probably not a good idea. On the other hand, some design rules and principles just to help people not fall into the very obvious traps that end up leading to judicial review would be helpful. I don’t know if my colleagues agree with that.

Anthony Farnsworth: And locate the accountability.

Q314 Dr Wollaston: Can I follow through on Paul’s previous answer, and that is to say with these three very successful pathfinders here today in front of the Committee, would you have thought it was possible to get what you have achieved without the White Paper and just roll that out across the rest of the country or did you think the White Paper was necessary to implement it nationwide?

Dr Paul Zollinger-Read: I also run Peterborough NHS and you find that Cambridgeshire NHS got there a lot quicker. Peterborough, with the White Paper, is now incredibly motivated and the GPs are moving forward really quickly. I don’t think we would have got that without the White Paper.

Q315 Dr Wollaston: So you think the White Paper is going to be a good impetus to roll out-

Dr Paul Zollinger-Read: I do, simply because someone like me fundamentally believes that commissioning needs to be clinically led and you need to tie the financial accountability to the clinical decisions. The final bit, which we probably haven’t heard much about, is this. We have heard about patient engagement but patient involvement in their own decisions about their care is a crucial bit that we must get right in this White Paper because we haven’t done it well before.

Q316 Chair: I guess one of the traditional challenges to clinically led commissioning of the kind you have described is the question, does it face the tough restructuring decisions required, service re-provision and reorganisation? Do you have experience of that? Does it facilitate those?

Dr Paul Zollinger-Read: All I can say is that years ago it was fund holding and that was a different world but we made decisions to restructure mental health services locally because they were poor. Within a very short space of time we had a really positive local mental health service that everyone else benefited from as well and that happened because it was clinically led.

Anthony Farnsworth: A supplementary example would be with respect to cancer services, the road cancer networks and the implementing of improving outcomes guidance, which are clinical evidence-based standards for cancer care. That would give you another proxy of the sort of clinically driven evidence-based mechanisms that GPs as commissioners would need to support them in tackling, for example, a major service reconfiguration or a relocation of service that might be indicated in terms of its viability or its standards.

Nigel Edwards: If GP consortia were given the job of doing that strategic change then they will do it. But, taking the lessons of what has happened previously, they will probably need to club together on occasions to do it effectively. The big lesson is whether they will be given the licence and the support to make those difficult decisions because while, in principle, we are very keen on people making these decisions, when the reality of the decisions are made some of the previous supporters cannot be seen for dust.

Q317 Andrew George: Can I clarify? When you say clinically led decisions, of course what you mean is GP-led or primary care-led decisions. Can I just be clear that, in the case of Cambridgeshire and Cumbria and elsewhere, when you say "clinically led decisions" how do you make sure that those clinically led decisions represent, if you like, the clinical view across the piece including secondary and tertiary? I know that this has been mentioned already.

Chair: There is a good bit of competition between the witnesses to answer that one.

Anthony Farnsworth: To use the example I started with, the development of clinical standards for cancer care is done not just by GPs, it is done by consultants and the National Cancer Action Team and so on. That may be a good example-

Q318 Andrew George: No, it is not a good example, is it, because that is taken at a more strategic level, isn’t it? It is not taken at the GP consortia level because the cancer networks cover much larger areas, don’t they?

Anthony Farnsworth: Yes, but, in effect, their mandate or power to operate is a delegated or devolved arrangement from a number of, at the moment, PCTs and, in future, consortia. They hope the health service realises that it needs to collect a critical mass of expertise in order to make difficult strategic decisions and I am sure that has been the case and will continue to be the case in future. It remains to be seen as to how much of that voluntarily emerges between consortia and how much of that is located in the infrastructure of the National Commissioning Board or its substructure. That remains to be seen.

Dr Paul Zollinger-Read: Two examples on the clinically led decisions, dermatology and diabetes: both GPs and consultants in Cambridgeshire decided that they would move it to a community-based model. So those were clinically led decisions. When I go round, the commonest things I hear are "them" and "us", hospitals versus primary care. What those groups decided was, "Right. There are consequences of this. You, as a hospital, have fixed costs. So how are we going to make sure we can make this transition work, not just for us in the community but for you in the hospital?" So they have developed a maturity of dialogue that facilitates those transfers.

Q319 Andrew George: Is it not true, though, that maybe whilst, on the one hand, the clinically led decisions with regard to a sub-specialty have to be taken within the context of having a population level that takes you to more strategic decision-making, whereas with the kind of decision that you are talking about in Cambridgeshire, are you not describing a situation where the GPs hold the purse-strings and the hospital clinicians are there taking part in that decision-making from the perspective of the providers of services? It is not, if you like, an equal relationship. We are getting your perspective on it and you are telling us that it is clinically led.

Dr Paul Zollinger-Read: It is an equal relationship because you can’t move a service into the community unless you can get agreement across a clinical pathway. So you have to agree and clinicians on primary, secondary and community have to agree what that pathway looks like and then agree to move it. If it is not agreeing with all those clinicians and with the local patients then it will fall over quickly.

Q320 Andrew George: And where does the patient come in?

Dr Paul Zollinger-Read: The patient comes in helping to design what that pathway looks like. So, for instance, in Fenland we have piloted moving diabetes out to our most deprived area and we had significant improvements in HBO1c. That is a measure of good diabetic control and that was very much supported by patients.

Q321 Andrew George: But they don’t sit on the Board. They are not part of the planning process?

Dr Paul Zollinger-Read: They sit on the Board or the groups of our localities or the trusts, as we call them.

Q322 Andrew George: They do?

Dr Paul Zollinger-Read: Yes.

Dr Peter Weaving: I think the very important point you are making is, do primary and secondary care clinicians agree and everything is fine in the garden? If they sit down and talk constructively and look at good clinical evidence it is usually fairly straightforward and you can get agreement. But sometimes people have particular ways of working and there are disagreements and there are issues which need to be resolved. That is probably one of the very few times when genuinely commissioning does make a difference and you say, "Actually, we do want it this way. We do want it provided this way." But you have to be absolutely sure you have got it right if you are going to go down that route rather than the far better one as described by Paul of actually reaching a joint pathway.

Q323 Dr Wollaston: How will that be impacted if you have to consider competition law from outside providers?

Dr Peter Weaving: In Cumbria we are very fortunate in the sense that although it brings the whole choice thing up, in a way, if you really ask patients what they want they don’t particularly want a choice of lots of providers. What they really want is to be able to take part in healthcare decisions and they want choice about those decisions rather than having lots of providers.

Q324 Dr Wollaston: But do you think there will be a problem for you in designing these pathways if you have to consider competition law and who is providing the best value for money rather than the best quality of service?

Dr Peter Weaving: It will be a great distraction for many health economies where it is very difficult to have a competitive market because, basically, you have a town or a small city which essentially supports one district general hospital. Can you realistically produce competition which is going to improve the care for anybody?

Q325 Grahame Morris: My question is related to that last issue about the design of care pathways and the commitment to empowering patients which everyone subscribes to. On the evidence from the NHS Confederation in relation to market mechanisms, where it says: "There is a risk of an over-reliance on market mechanisms to manage complex health services", do you have a view on where the limits should be placed upon the operation of a market mechanism in relation to re-designing services?

Nigel Edwards: That is another complex question. What we had in mind there particularly was there are a number of services which are made up of other services and the individual components of those services have their own markets which are more powerful, individually, than the market for the thing that they had come together to produce. The best example of that is probably trauma. Trauma is a very rare event but it is created by vascular surgery, thoracic surgery and neuro surgery. There’s a list of other things that it consists of, each of which have their own market, which dominate the market for trauma. So you cannot rely on markets, in these circumstances, to solve these complex problems of, "How do I get all of those six or seven specialties in one place working together?" That is certainly one issue.

There is, then, I think a question, and there is a bit of a danger here of regarding markets and competition as an end in themselves rather than as a set of tools and techniques where you have got to produce an outcome, and also to assume that the competition is entirely for each little component that patients experience as opposed to the whole diabetic pathway. So the solution to Dr Wollaston’s problem is to have competing providers of the pathway who are going to compete for the whole management of the care of those patients. That would not be the way that you would deal with hernia repair. What you are really looking for here is a non-dogmatic nuanced approach which uses competition and markets in addition to the other tools that are available to you and you make sure that you fit those tools to the job in hand rather than just applying it within limit. The competition regulators do seem to have that rather more pragmatic approach to have things done.

Q326 Grahame Morris: Perhaps you could answer this as well, because it is related to that, and this is the issue that we have heard from a number of organisations and witnesses who have given their evidence about the issues around any willing provider as opposed to a preferred provider and whether that might undermine some of the core values of the NHS in terms of fairness and equity.

Nigel Edwards: I’m not sure that a preferred provider model does anything for those objectives at all. It seems to me that there are hosts of questions about any willing provider models but there are a series of services the NHS provides and for which an any willing provider model seems to be an entirely appropriate way of working, with the slight caveat that-and you need to be aware of this-they can be inflationary because you are bringing in the supply. One of the invariable rules of healthcare is, "If you build it, they will come." There is supply and induced demand but if you want innovation and if you want new entrants then any willing provider models are fairly effective ways of providing that. Markets are blind to questions of distributional justice and equity. So, "Who provides this?" and how it is provided will not make an impact on this. How you design a system about how patients access it with the sorts of conversations they have with the people that refer them and how they get to know about it is what is going to have an impact on demand.

Q327 Grahame Morris: So other than word of mouth, the only way to address that without compounding health inequalities is to address it through the allocation formula in terms of addressing health inequalities and special needs?

Nigel Edwards: I am for the decision made by clinicians because we do know, and we’re not really sure why, that deprived communities get less access to a whole number of treatments from which they would benefit. I suspect a lot of this is about the nature of the interaction that happens in the consulting room. Just as an aside, it does seem to me all of the things we have heard here do suggest, and particularly listening to our colleagues here, that the ability of the consortia to direct the influence and the behaviour of their colleagues in general practice and primary care is going to be as important as their ability to commission secondary care. I think a trick may have been missed in the design-going slightly off piste, if I may-in the White Paper of not giving the people who are running GP consortia more formal power in terms of either the management of the GP contract or at least its performance management.

Anthony Farnsworth: I am just going to touch on this question of any willing provider again which your question raised. The experience I have is in trying to run a system in Torbay of care co-ordination. There are about 5,000 people in Torbay who are nearly all elderly, have co-morbidities and feature on one or more than one of the GPs’ chronic disease registers. They consume more than half the adult social care resource and at least half the hospital resource. I find myself trying to run a system of care co-ordination and that requires a system of care provided in general practice, in community settings and in the hospital to work together as a system.

Whilst it is possible to envisage specifying for that system and putting it out to tender to an any willing provider market, I have to say that that would not be my preferred step. If the system broke down and was not working I might be driven to that, but my main discipline, effort and attention is to get us managing that system and making it work for the benefit of those 5,000 or 6,000 complicated elderly patients who are the bulk of the non-elective and complex work that goes on in our health community.

Q328 Valerie Vaz: Obviously, this is quite key. You are all expected to be up and running by 2013. How-each of you-are you going to manage this transition?

Dr Paul Zollinger-Read: For me, I have reached a point that I say we have to flip the PCT because I can’t keep running clusters and a PCT. So I’m having active discussions with both Cambridge and Peterborough about, "Right, we’ll flip the PCT and now become a support service to your consortia. We’ll align ourselves with your objectives and then we’ll work out, is this the type of support structure you need? It won’t look like that in future-we will need to bring in different skills-but we need to do that because we can’t continue to run the two."

Anthony Farnsworth: Same answer, supported by clustering PCTs.

Dr Peter Weaving: The same answer-

Chair: We end where we began on that subject.

Dr Peter Weaving: -the evolutionary process. But I think we underestimate the management support that the consortia will need.

Nigel Edwards: And evolution produces some unwanted and difficult consequences from time to time.

Q329 Valerie Vaz: What about the financial costs from flipping the PCT?

Dr Paul Zollinger-Read: We have clearly got our management reduction targets that we are achieving. We have clearly got our QIPP targets that we are currently achieving. Peterborough, when I took it over, had a debt of £5 million but will hopefully end the year with much less than that. So both organisations, due to GP involvement, are heading in the right direction.

Nigel Edwards: The question of debts, that is left to the end of this transition. Given that the NHS has a sealed sum of money, there is only one place it can come from. If it is not passed on to the consortia there are some good managerial arguments for not saying to people, "You will be let off any deficits." It will either top-slice from allocations or it will come out of reserves that could have been spent on healthcare. I think there is a little bit of a fiction that seems to be, if you read the GP press, that someone will come along with some additional money. No one I know who is involved in this is expecting that.

Rosie Cooper: In fact, I think the medical press are currently saying it will come from surpluses held by the strategic health authorities.

Nigel Edwards: That is usually a one-off deficit.

Rosie Cooper: Absolutely.

Nigel Edwards: It doesn’t deal with the situation where people have got rolling deficits.

Rosie Cooper: My latest intelligence says that.

Dr Paul Zollinger-Read: That is my absolute point. I have taken over many organisations in debt and paying it off would have done us no favours. It is a structural underlying reason that you need to understand and usually that requires declinical engagement to correct.

Nigel Edwards: I agree.

Chair: On that note, thank you very much for your attendance and for your contribution this morning.

Examination of Witnesses

Witnesses: John Seddon, Vanguard Consulting (visiting Professor at Cardiff University Business School; fellow at ResPublica), Kingsley Manning, Executive Chairman – Health, Tribal, and Alan Downey, Partner and Head of Public Sector, KPMG, gave evidence.

Q330 Chair: Thank you for joining us. I think all three of you heard the previous evidence session. Perhaps I can ask you to briefly introduce yourselves to the Committee before we start?

John Seddon: I am an occupational psychologist. I run a consulting firm called Vanguard. Vanguard’s purpose is to help organisations change from a conventional command and patrol design into a systems design. I was asked to come here on the basis that I have been working in health but I haven’t in the sense that I haven’t helped any health organisation to redesign itself. We have inasmuch as this work starts by studying your organisation as a system and some of that work has gone on but, in all cases, it leads people who work in the NHS to a position of conflict with the Department of Health. But I am grateful to be invited and I would like to explain, if I have the opportunity today, how it is that commissioning is driving costs up.

Chair: Thank you. We shall look forward to coming to that.

Kingsley Manning: I am executive chairman of Tribal, a health business. Tribal is a leading supplier of support and advisory services to the healthcare system.

Alan Downey: I am a partner with KPMG, the accountancy and advisory firm. I am responsible for our public sector practice within KPMG and, like Tribal, we are a provider of professional services to the NHS and to other public sector bodies. A particular focus of much of our advice is on financial management, good financial control and introducing commercial discipline.

Q331 Chair: Can I begin by focusing the minds of all three of you gentlemen on the twin nature of the change management challenge faced by the health service at this moment, that is to say, first, that it has to deliver a 4% efficiency gain compound over four years and, secondly, that it has to engage in a process of institutional change which is described in summary in the White Paper? The Committee would be interested to know, first, whether any of your organisations were consulted by the Government as part of the preparation for these processes and, secondly, what your observations would be about the way in which the process is unfolding. Who would like to go first?

John Seddon: The answer to the first question, for me, is no. My general view is that, like a lot of change in the public sector, this administration believes in industrialisation and scale. I think that is a mistake.

Q332 Chair: Would you like to enlarge on that?

John Seddon: Yes. Most of the Ministers concerned with the public sector believe in bigger is better, that we should, for example, share services, share front offices and back offices and these kinds of things which have IT-led change. The greatest example of this failure at the moment is HMRC. I think the numbers are that something like 1.7 million people have paid too much, more than 4 million people have paid too little and 17 million people they are not sure about, which must be most of the people on PAYE.

Chair: I am pleased to say HMRC falls outside our sphere of responsibility.

John Seddon: Yes, but we’re doing it in health.

Q333 Chair: The Secretary of State, I guess, if he were here, would say he is precisely seeking to aim away from that mistake by encouraging responsibility closer to the patient in the form of GP consortia. Do you think that is right?

John Seddon: I think it is vital that we have clinical decision making in the health service. We have made a great mistake with too much managerialism, I am sure of that. I listened to the conversation earlier about patients and choice. What I have found in every other public service I have been involved in is that people don’t want choice, they just want a service that works and when they haven’t got a service that works they will spend a lot of time going out on a cold Tuesday in November or whatever.

Q334 Chair: Shall we go along the witnesses first? Mr Manning, I saw you nodding both ways in the course of the comments of Mr Seddon.

Kingsley Manning: Certainly we haven’t been paid for advice by the Government since 5 May. In fact, we have been asked to reduce our prices significantly along with other tier 2 suppliers, so much of the advice we have been giving has been for free.

The important point to remember in terms of regaining the efficiency gain that David Nicholson spoke about is that some 70% of that will be achieved by tariff reform, in other words, to provide a reform. Most PCTs, most service health authorities, are quickly going to enforce price reductions on their suppliers. Therefore, it is not a question for PCTs so much except to the extent that PCTs and commissioning groups of other sorts, including GPs, get in the way, if you like, of the efficiency shifts that have to be achieved and productivity gains that have to be achieved on the supply side. So 70% of your 4% per annum, Chairman, is going to be achieved essentially through a forced price reduction on suppliers. The balance, certainly, has to be delivered through commissioning and that, essentially, assumes doing less or ensuring that what you do is done with cheaper suppliers or controlling referral processes.

There is a conflict between having significant change and the reform of PCTs at a time when you are attempting to manage that process. But the fundamental direction of aligning decision-making, clinical decision-making and individual patient decision-making, at the front end of the system seems to me to be exactly the right diagnosis. The whole process of transition management may not be the one we would have potentially designed if we had been asked but it is the one that has been chosen and I think that, as Nigel Edwards has put it, the arguments for going slower and faster are about equal and, having announced the change, there is a sense of inevitability and momentum which now needs to be carried through.

Alan Downey: We were not consulted prior to publication of the White Paper. As far as the challenge that the Government has set for itself and for the NHS, it is a very big challenge because it is trying to do two very important things in parallel, a major change of policy, the shift from PCT-led commissioning to GP-led commissioning, and, at the same time, addressing a pretty substantial financial challenge under the QIPP banner.

I don’t agree with John that the policies which are now being proposed are all about industrialising processes. I think in many ways this is a much more devolved process than the one which was followed under world class commissioning, the PCT-led initiative of the last Government, and my hope would be that we will see a variety of different approaches being adopted by different GP consortia and that that will not only be accommodated but will be welcomed by the Government. So they are making efforts to stand back a little, to push accountability down and to allow clinicians to do what everyone who has spoken so far, I think, has agreed with, which is to align clinical judgment with financial accountability. I think that is absolutely the right way forward.

There is going to be turbulence in the system over the next couple of years, not least because there is this rather unusual position of saying to the PCTs, "We want to abolish you but not yet." I’m not sure, for example, that many private sector organisations would have approached the task in quite the same way but we haven’t seen a great exodus from PCTs. They do seem to have held up reasonably well. The clustering of PCTs will help to reduce the turbulence. The QIPP agenda, after all, has been running for the last 18 months so we would expect some fairly well advanced plans to be in place already. It is not a new challenge for the NHS. But, given that the decision has been taken to give responsibility to GPs for driving change in the system, there is every reason to believe that with the right support they can rise to that challenge. They are the best placed people in the system to remove some of the unnecessary variations in referral practices, in prescribing practices and also better placed than I think PCTs were to make that vital joining up between primary care and secondary care which has been a real problem for the NHS for such a long time.

Q335 Grahame Morris: I have got a number of questions but I wonder if I might just clarify in my own mind that you three gentlemen are all representatives of private sector organisations that would presumably profit from the changes that are being implemented in the health service? That isn’t necessarily the case.

John Seddon: Yes and no.

Q336 Grahame Morris: That’s a good answer. Could you elaborate on your opening comments where you suggested that commissioning, either in its present form or as envisaged, would drive up costs in the health service?

John Seddon: I would be happy to. We first saw this phenomenon in housing repairs and, to a systems thinker, it is identical to commissioning in the health service. In housing repairs people use a schedule of rates. It is everything that could go wrong with a house and in it is a specification for what you should do, with standard times and materials. It was mandated as best practice by the centre and the ethos in it is that we need to manage costs.

Actually, when you employ the schedule of rates in housing repairs you have a whole series of problems and they are all created by the inability of this design, in particular the schedule of rates, to absorb variety. Not all tap repairs are the same. And we have made this mistake in health. Because having a schedule of rates stops you absorbing variety you get both under and over provision. With under-provision "You get what we do", not what you want. I disagree with Alan. We’ve industrialised a lot of voluntary sector services that are bought on a contract against a specification. We’ve done the same with things like health and equality as part of health agenda and so on. And scale contracts as well in adult social care-a big mistake. With over-provision you are, effectively, incentivising any provider to do more work, and that happens.

On top of this, of course, we have a whole administration for coding, re-coding, doing lots of re-work because we get it wrong at the start and so on. This creates a lot of repeat demands into services. I call these demands failure demand which I define as caused by a failure to do something to turn it round for the customer. We know nobody has studied failure demand in health but we have studied it extensively in adult social care. It typically runs at about 80% of the total demand under the system.

When you couple these ideas up with standard times and standard costs you effectively discourage innovation and you discourage any reduction in costs and when you add to that standard tariffs it encourages cherry-picking, so "We’ll do the things that advantage our position." What we know in housing, and to a systems thinker it is very like health, is that in housing when you dispense with the schedule of rates and design the service against demand you halve your costs at the same time as improving your service. I think that kind of opportunity is available in health but you would have to completely re-think the philosophy of commissioning.

Q337 Grahame Morris: With what alternative?

John Seddon: We made this mistake years ago in the private sector and private sector companies got out of these mistakes. If we think that we should organise work on the basis of standard times, that is a big mistake because there is variety in work. So we have to get off the idea of the times that things should take and the things that should be done, which is all included in the specifications, and start understanding and measuring what things do take and what needs to be done. When you make that simple shift you are starting to work with measures that help you understand and improve the performance of the system which you do not get when you use standard times, which are a feature of industrialisation.

Chair: Grahame, do you want to follow that up?

Q338 Grahame Morris: I do, but it is more related to some of the earlier comments or responses in relation to how critical it is that GPs are involved in the commissioning cycle. In an area like mine, in Easington, in County Durham, a population of about 100,000 where we have about 50 GPs, in order to properly participate and make it a success what proportion of those 50 GPs would you think should be actively involved in the commissioning process?

Kingsley Manning: First, can I come back to your first question, which is to say, yes, we are a public company. We are quoted on the Stock Exchange. We are owned almost entirely by our staff and pensioners. Therefore I have a fiduciary duty to deliver a profit to my shareholders who depend upon it for their pensions and a return on their savings. In doing so, we wish to operate at the high standards we have done for over a decade. I have been working in the health service for 30 years and I believe that we have delivered value for money and enormous benefits to our clients over that time period, which is not incompatible with us being an ethical commercial company.

Do we stand to make profits out of the reforms? Possibly. We won’t make any profits out of commissioning as Mr Lansley is quite clear that nobody will be allowed to make profits out of commissioning, indeed which I think we would agree with. That would be the ability to take a profit related to an inflation-based risk and I think that would be inappropriate.

Q339 Chair: You could, presumably, give profitable advice about how commissioning could be structured?

Kingsley Manning: We already provide advice to about 12 or 15 PCTs as it stands on commissioning with a significant return on investment in those cases and an improved outcome for patients and improved cost-effectiveness for the NHS.

I believe that the changes in the White Paper, which have to be taken as a whole, including the AWP process as well, but particularly around commissioning, do allow the possibility of having a significant engine for change being driven not just by GPs but, as importantly, by patients and citizens. I think it is terribly important-there was a lot of discussion in the prior session about the role of clinician here-that the clinician is not the centre of this system, or at least it shouldn’t be. It should be the citizen, not even a patient, because we should be dealing with people who are well, not just ill. The problem about being a patient is that one immediately becomes a supplicant of this system and one of the really interesting backbones of the White Paper is the information revolution that will go along with this, such that we will have patients informed in a much more powerful way. Citizens will be able to see the performance of hospitals, individual GPs and individual surgeons and be able to judge the outcomes of individual providers. It is therefore giving, for the first time, the ability potentially to be partners in the management of their own healthcare for both wellness and illness. It seems to me that is a terribly important part of it.

That, coupled with the ability to have a choice of providers, which I think is the second very important part of this, has to be seen as being the other side of the commissioning process. This is not simply about setting a clinician up as the centre of the system, but the citizen and the patient. What that requires is, I am afraid, John, industrial level risk-taking, industrial level infomatics and industrial level support to enable those patients to take choice.

The evidence in mid-Staffs, the evidence of the extent of choice network, is that if patients are given information and if the choice is important, they will take it. If you have a child and your daughter or your son has cancer, you want a choice of the best cancer provider available to you. Citizens are much more sophisticated about this, and therefore choice does matter. Increasingly we should trust patients much more and trust citizens much more to become much more powerful in the management of their own healthcare.

Alan Downey: I think there was a question about the number of GPs who should be involved in commissioning and I think the simple answer is all of them because every clinical decision that is taken by a GP, indeed every clinical decision that is taken anywhere in the NHS is in effect a commissioning decision. There are financial and other consequences that flow from it.

I don’t think it is necessary or desirable for the Department of Health to be prescriptive to the GP consortia about how they should organise themselves, about their governance structures and about how they should decide on decisions that need to be taken other than those which are taken at the individual GP level. So if one consortium decides that it wants to devolve a lot of responsibility to all GPs and another decides that it wants to raise some of that decision-making up so that it can be taken by one or two individuals on behalf of the whole consortium, that is a decision for each individual consortium to make. And it is a feature of the system that the Government is trying to introduce now that it is about trying to empower these GP consortia to set things up in a way that they think will work best in the interests of their patients rather than prescribing a particular approach which was more a feature of the system that we had before the election.

Q340 Grahame Morris: So are you targeting areas that are currently under-doctored where you have a smaller proportion of GPs per head in selling your services or offering them in the terms that Mr Manning described earlier?

Alan Downey: We are not targeting areas in that sense because it is not our role to provide medical services. What we have been doing is holding discussions with a number of consortia that have started to perform to try and provide them with assistance to enable them to think through the roles that they have taken on.

I don’t want to dwell on this point about profit because Kingsley has addressed it already, but in the current climate where the Government as a whole and the NHS in particular is under huge financial pressure, there is very little money around to pay the bills of the likes of KPMG and Tribal and so on. We are not actually earning any money at all. We are not making profit at all from the work that we are doing at present. It is no problem to us because, if you take a firm like KPMG, approaching 90% of our business is with the private sector. We only provide to our public sector clients the services that we also provide to our private sector clients and if they decide that they no longer wish to buy those services and the Government decides that they no longer represent value for money, it is not actually a huge problem to us.

Q341 Grahame Morris: I can’t let you off the hook. Is that a kind of long game, a kind of what we would describe in layman’s terms as a loss leader in anticipation of a wholesale privatisation that private sector companies would be involved in and that you would subsequently profit from?

Alan Downey: That would certainly be my hope, that by staying in the game at the moment we will be able to continue to provide services to the NHS in the long term. But that is by no means guaranteed. We are not making a calculating business decision based on an accurate assessment of risk. We are simply staying in the game at the moment because we think it is the right thing to do. It is perfectly plausible to believe that, in due course, there will be far, far less work for firms like ours not only in the NHS but in the whole of the public sector.

Q342 Valerie Vaz: I am sorry, the right thing to do for whom?

Alan Downey: For the public sector clients that we have relationships with.

Q343 Valerie Vaz: Right. Not for the patient necessarily but for your clients?

Alan Downey: We are not engaged by patients so we don’t have a direct relationship with patients.

Q344 Valerie Vaz: They’re the ones that are paying their tax to get a service.

Alan Downey: Of course they are, but you have to deal with the people who are in a position to seek your advice, enter into contractual arrangements and so on. Ultimately, the whole point is to try and produce a health service which delivers a higher quality service and which delivers value for money for the taxpayer. That’s why we do what we do. We need to be able to make an acceptable level of profit in providing our services because we are a commercial organisation and if the time comes when we are not able to make an acceptable level of profit in the longer term, then we will revert to providing services to our private sector clients which, as I say, is approaching 90% of our business.

Chair: I suggest we move on from that subject.

Q345 Chris Skidmore: I am keen to draw out the experiences of your organisations in either observing or enacting change, both in terms of clinician-led commissioning and also in terms of the transformation processes involved. First, Mr Downey, I’m very interested in what your colleague Mark Britnell had to say at the NHS Alliance Conference on 19 November. I don’t know if you are aware but he said that KPMG did some work in a big northern city with an access population of 1 million and that, through introducing clinically based decision making, that was able to deliver over £200 million worth of efficiency savings, roughly about 20%. So you are meeting the Nicholson challenge over and above through clinician-led commissioning. Would you be able to elaborate on that and give a bit more detail about what that programme was?

Alan Downey: Yes. I think it would be accurate to say that we identified savings to the tune of £200 million rather than that we delivered that amount because delivery, in most cases, depends on the organisations in the NHS acting on our recommendations. But one of the issues and one of the challenges which the NHS faces is that care tends to break down when patients cross the boundaries between different organisations and they move from primary care to community services, to secondary care and so on. The particular project that Mark was referring to was one where we were able to work in a single project with all of the health service providers in a particular locality, with the primary care trust, with the mental health provider, with the community health services provider, with three acute trusts and so on. By bringing all of those organisations together, it was possible to identify some very substantial savings that could not be achieved within the organisational boundaries of one of those players. It was necessary for there to be co-operation across the boundaries.

Q346 Chris Skidmore: So that’s including social care as well?

Alan Downey: This was primarily focused on services delivered by the NHS but the local authority was also involved in the programme and so there were some savings there as well. That is the kind of role that an organisation like ours or, indeed, other organisations that we frequently compete with can play, which is to help facilitate decision-taking across boundaries which are genuinely quite difficult within the NHS as it is currently structured.

Q347 Chris Skidmore: Do you want to say something, Mr Seddon?

John Seddon: I haven’t earned any money from this, given the responses earlier, but I think it is as well for the Committee to know that in Plymouth there is a consultant neurologist who has followed my principles. I teach managers not to manage cost because it drives your costs up but manage value instead. He has transformed their stroke care. This is a delivered saving, not a maybe saving. Originally the cost of stroke care in Plymouth was £6,000 a patient. It is currently running at £3,000 a patient. Interestingly the tariff is 4, which is a problem I referred to earlier about arbitrary measures and tariffs, and he did it all on his own, without any help from me or anyone. He did it all by reading my work and working it out.

In adult social care, most interestingly, there have been major savings and this has occurred in Wales. It is indicative that it occurs in Wales because Wales doesn’t have the same kind of regulatory control that we have in England. But there are significant savings in administration, very large savings in use of materials and the provision of materials but the largest savings come from solving people’s problems in their community, not driving them into care homes. That is all evidenced and is reported by the Welsh Audit Office in a report earlier this year which you can access. I think it is really important to say that these designs have been achieved by ignoring the strictures from the centre.

Q348 Chris Skidmore: That is surely what the White Paper is partly trying to achieve, devolving power. It is plastered across it.

John Seddon: I think the White Paper lacks coherence and good operational clarity. As I said earlier, I think it is very important the clinician should be involved in decision making but I would go further. I would say in order to design a better health service you really need to understand demand. If we can understand demand we can design a better health service. The clinician that has used my idea, Stephen Allder, in Plymouth-I think you should invite him here, by the way-has studied demand in his trust for all major conditions, the first person to do this, to my knowledge, and the interesting thing is that all conditions are stable in demand terms. To a systems thinker that is Christmas because it means we can start designing a service that works because we know these things are going to occur. Most of the people in that system wouldn’t believe that demand is stable. They think it is going to be random. They think it is rising because we are getting older. Actually, the data shows that demand is stable by major conditions.

Q349 Chair: Do our other witnesses agree with the proposition that demand is stable because it is certainly not evidence that has been presented to us hitherto?

Kingsley Manning: Fundamentally. First of all, you can’t treat demand in healthcare in any way like a homogeneous section. It is not. It varies enormously. But demand for most services is incredibly predictable. We can be pretty certain how many people are going to have heart attacks in Barnet in three years’ time. Predictive analysis is an incredibly powerful tool. We are doing it for 15 or 16 PCTs already. You can predict the people that are likely to have falls and those that are likely to suffer from cancers in a very, very effective fashion. Demand for most of these conditions is both predictable and stable.

The shifts in demand that have occurred are usually system-generated and are very much in unplanned care-emergency admissions-and are very often to do not so much with clinical conditions but with social circumstances, the failure of social care provision, under-provision, and the failure of having alternatives to, for example, hospital admission for complex elderly care services. So you cannot treat these things as separate but we have known for a long time how to measure demand for healthcare in great, great detail and to be able to predict it increasingly with substantial accuracy.

Q350 Chair: But it is also true, is it not, that demand, as experienced by the healthcare system in terms of attendances, in terms of treatment episodes and in terms of alternative treatments available, has been on a rising trend?

Kingsley Manning: But fairly modest. You have already heard today that in places like Cumbria and others it hasn’t been rising. We have had a year on year pretty standard rise in any attendances in unplanned care, about 3% across the country. But it does vary. There is not an infinite demand for people to have heart surgery. There is not an infinite demand for people to have cataracts. There is only a finite number of cases of this. There is a pretty much infinite demand, as I keep telling my family, for loving care and attention but that is different. That is a different element of care. So you have to be very clear about what you mean by rises in demand. You have to segment it.

Q351 Chris Skidmore: What about Wanless and the rise of the demographic trend for older people for the next four years of their care?

Kingsley Manning: Yes, in some respects. But, first of all, at the moment it is actually within a lull. There is rising expectation of some elements of care but we are still uncertain yet how that demography will play out in terms of the elder population. Actually, it is the new generation, as I am approaching being one of those people. I am going to be much fitter, much more able and much more demanding as a patient and my demand will be very different.

Q352 Chris Skidmore: This one is longer because the whole model of the efficiency gains are modelled on the NHS standing still by having these £15 billion to £20 billion savings delivered to be reinvested.

Kingsley Manning: But I come back to my original point which is that David Nicholson’s current plan is that most of that demand will come out of technical efficiency gains within provider hospitals. He is essentially saying, "I’m going to force you to employ less people, use less concrete and use less drugs to deliver more care" to the providers. He is only, at this stage, assuming some 30% of gain will come from stemming demand or finding alternative patterns of demand. Ultimately we are going to have to do a lot more to be able to live within the cash envelope and that will require us to think very radically about alternative supply mechanisms or different patterns of care. But part of this demand is complex and it is changing and a lot of it is to do with not just demography but also our assumption about what care we deserve, what care we have as a right and what care we require. That is a very much more complex issue than a single epidemiology of the incidence of cancers.

Q353 Chair: Would Mr Downey like to contribute to this discussion on demand?

Alan Downey: I’m not sure that I would because I am not an expert.

Chair: Don’t feel you have to.

Alan Downey: I’m not an expert in forecasting in these matters and I think it is probably best if I leave it at what Kingsley has said.

Q354 Chris Skidmore: I had an additional question, Mr Manning. Obviously your organisation has major experience in enacting transformational programmes across the country. The NHS is now facing its biggest transformational organisation in 60 years with the abolition of PCTs, SHAs and the shift of clinician powers toward GPs. That is obviously going to cost an enormous amount in redundancy packages. One estimate from the Department of £1.7 billion was already, apparently, put aside by the previous Government. Other witnesses and evidence have said it is nearer £3 billion. I just wondered from your own experience of redundancy packages if there is some modelling or some way you might be able to explain to us how realistic the £1.7 billion sounds, whether it should be higher than that?

Kingsley Manning: PCT management tend to have been members of the NHS for quite a long time and they are reasonably well paid. A rough rule of thumb is somewhere between £50,000 and £100,000 per person made redundant. It is as simple as that. You can work it out yourself from the numbers. We have discussed with the Department ways in which some of that can be mitigated, through, potentially, the transfer of staff to other providers of support services. The TUPE staff will go into various areas. We are already doing it, and we have made that clear to the Department, that if we can help in mitigating that redundancy and securing continuing employment for people through joint ventures and the creation of mutual and social enterprises with ourselves as partners then we are prepared to do that.

Q355 Chris Skidmore: In terms of the figures, how many PCT commissioners may end up being made redundant? Would you be able to give a rough figure, maybe, from your own experiences of what has happened in other circumstances Tribal has been involved with?

Kingsley Manning: We have undertaken an analysis. There are about 37,000 people currently employed by PCTs. That’s a misleading number because a significant number of those people are engaged in doing elements like public health, like public engagement and a whole host of other things. Somebody said earlier it is all the things that PCTs get on and worry about. The actual number employed currently in commissioning is quite small, relatively speaking. We think that with GP consortia the total number of people employed between GP consortia and the National Commissioning Board is probably between 10,000 and 15,000.

Q356 Chris Skidmore: That is 10,000 to 15,000 currently employed?

Kingsley Manning: No, you would need to employ with GP consortia and the National Commissioning Board.

Q357 Chris Skidmore: So there’s a possibility that 10,000 to 15,000 from the 37,000 currently within PCTs could find alternative roles within the new structure?

Kingsley Manning: I would hope so. The sensible thing is for the Department to find ways in which those staff can be transferred to consortia or to support service organisations to avoid the necessity of going through an unnecessarily expensive redundancy route.

Q358 Andrew George: Representing the sector that you do, where do you think, having looked at the White Paper, you can be both most helpful in delivering the objects of the White Paper and what aspects do you think would be most profitable for the private sector to engage?

Alan Downey: Speaking on behalf of my own organisation, I said at the beginning that the focus of the advice and support we provide is in the financial commercial field. Where we think we can be most helpful to GP consortia and indeed to other parts of the NHS is in helping them to implement good financial management regimes within their organisations, to get a good grip on their finances, helping them to reduce costs without compromising quality, helping them to improve efficiency and, if we are looking at the larger organisations within the NHS, helping them to effect transactions which will help them to deliver their strategic objectives. For example, there are a number of acute trusts which are in the process of taking over the community services organisation so they need to conduct their due diligence on the organisation to make sure that they are integrating them in an effective and cost-effective way. That is where we play as an organisation.

Our strong preference is to provide skills and expertise which are not available within the NHS and which will never be available within the NHS and which the NHS will buy on a time limited basis. We will provide that expertise and then we will depart. We are not in the business of trying to take over the jobs of people within the NHS. We are not in the business of what we call manpower substitution. We think it is important that within any organisation, and particularly within any public sector organisation, there should be strong, competent, self-confident business people who can run those organisations who will turn externally for advice only when they really need it. That is the kind of advice that we provide to our private sector clients and it is the kind of advice that we like to provide and want to provide to our public sector clients as well.

Q359 Andrew George: Could you do that on the basis that the NHS remains in the present structure to the same extent or do you think you could do more in terms of offering that service under the proposals of the White Paper?

Alan Downey: As with the provider of any service, there is a question of supply and demand. At the moment demand for our services is high but willingness to pay is low, which is an interesting situation to be in. We could certainly do more. It is our view that financial and commercial skills are not as strong within the NHS as they ought to be and that they could be improved. We would certainly be keen to do more and, what is more, we would be willing and keen to do more on a basis where we put our fees at risk where we were only paid if we deliver a successful outcome. If it was, for example, a project where the focus was on reducing costs we would only be paid a small proportion of the costs that we helped to reduce when the saving was actually delivered. That’s the nature of our business.

Kingsley Manning: I would just say we operate already in a number of our projects on both a performance basis and on a risk of return basis so we often inventively invest in projects or services and only get paid proportional to the success of those. I think, generally, by the way, that the most attractive opportunities for new suppliers into the NHS are to do with service provision.

Q360 Andrew George: I am sorry, to do with?

Kingsley Manning: To do with service provision, new models of care. You have heard today about people with new models of diabetes care, chemotherapy at home services and the rest of it. That is the most likely area for private sector development and independent sector development––more broadly, the third sector. We are not in provision. We will not enter into the market for direct provision of clinical services. We provide a range of technical and professional services, both advisory and in commissioning of services to the NHS. We have invested very substantially in the delivery of very high quality, very, very innovative infomatic services which we do on behalf of about a dozen PCTs where we are bringing international level skills and innovation in the use of a series of very potent products and tools for analysis and support in decision making. We also see opportunities for helping GP consortia to undertake commissioning decision making which we are doing with a number of PCTs at the moment and also in the delivery of what we would call care navigation services where we engage in directly supporting the patient with the GP in managing their own care pathways and their own wellness of health over a period of time.

Q361 Valerie Vaz: Is Mercury Health that part of your company?

Kingsley Manning: We sold Mercury Health six years ago now.

Q362 Valerie Vaz: But you were providing this service as well, were you?

Kingsley Manning: But that was, I am afraid, well before I became a partner in Tribal.

Q363 Valerie Vaz: I am trying to see what the future is like.

Kingsley Manning: No, we won’t. In common with most other suppliers of ISTC services, it was a great way of destroying shareholder value.

Q364 Valerie Vaz: So you just see yourself as supporting commissioning as opposed to actually providing the service as well. Is that right?

Kingsley Manning: Yes, and this is something we touched on before. We think that there is a potential conflict of interest between people supporting commissioning services and providing services themselves. That seems to me to be fairly obvious.

Q365 Valerie Vaz: But you do see there is a conflict of interest, do you?

Kingsley Manning: If we were to provide clinical services, care services and commissioned them at the same time, yes, there is a clear conflict of interest. We wouldn’t do that.

Q366 Valerie Vaz: But you see other people doing that?

Kingsley Manning: I think that there are people who think that it would be very nice to get a very large commissioning budget and then potentially develop businesses which they might then potentially commission to deliver services. I think there is a real problem about that.

Q367 Chair: Do you want to contribute on this, Mr Seddon?

John Seddon: Very briefly, yes. I doubt that I will get the opportunity but if I was asked I would very much like to help the Minister and his civil servants in the Department of Health understand that managing costs drives your costs up, that the last thing we need is industrialisation and that we need to move from arbitrary measures to real measures that tell us about the achievement of purpose. I think the purpose of the health service ought to be for every demand to have fast and accurate diagnosis and then for each condition to be treated on time as necessary. If we built measures around that we would be half-way to improving the system. Then I would very much like to help clinicians understand how to manage value rather than costs which would drive costs out of the system. But I doubt that I’ll be asked.

Q368 Rosie Cooper: Mr Manning, there are two questions I would like to ask but the first is you have suggested that patients should be allowed to form their own commissioning group in the same way as parents can run schools.

Kingsley Manning: You have been reading my paper.

Rosie Cooper: What do you think the advantage is of such user-led consortia, what are the potential pitfalls and, as I have been trying to push the Secretary of State for a number of weeks, do you think we could have the best of all worlds by having patients actually involved and on the boards of consortia?

Kingsley Manning: I would never, clearly, in my job ever disagree with the Secretary of State, whoever it was, over the last 30 years.

Chair: I don’t remember that.

Kingsley Manning: I was simply wondering aloud why these things were called GP commissioning consortia because there are nurse-led general practices. Why shouldn’t we have clinician-led or medicine-led consortia? In those circumstances, why wasn’t I being allowed to set up commissioning consortia for the benefit of middle-aged men who are usually very under-represented at these things?

There is a really interesting opportunity around consortia that will lead to specialisation and segmentation where, potentially, people will be able to make choices. There was a very interesting question earlier about geography, for example. I think people will begin to make choices on outcomes based upon the performance of consortia and if you have a particular condition or are in a particular locality you may well choose to register with a GP, and therefore with a consortium, that much more reflects your needs and requirements. If you are HIV-positive and you live somewhere where the incidence of HIV-positive patients is very low indeed, wouldn’t you do better to register with a consortium in Fulham, or wherever, that has real expertise and knowledge about that?

The logical continuation of that is that we will have a system which may reflect communities, as they are increasingly becoming, that are less to do with place than with self-definition, to do with a virtual environment, to do with condition, stage of life, choice or preference. These communities are not necessarily related to place, certainly not in urban environments and the consortia should reflect that degree of specialisation. The notion of having consortia that are driven by condition or particular interest-mental health, a long-term condition, dementia or diabetes, for example-is potentially a very exciting possibility and I can’t see why it should not be possible within the plans to at least enable that to happen. I think it will happen inevitably, by the way.

Q369 Rosie Cooper: What do you think the pitfalls of that would be?

Kingsley Manning: The pitfalls for anything which is driven by individual interest are narrowness and vested interest but that is already the case. Vested interests drive the NHS as it is today. They drive a false distribution of resources and they drive false priorities, both because there are vested interest suppliers and vested interest in particular patient groups. This way, at least, it becomes transparent.

Q370 Rosie Cooper: So there will be a great benefit to consortia, however described, if they had coalitions and patients, the two sets of people for whom this has got to work, at the core.

Kingsley Manning: I think that in extremis, and your Chairman has spoken about the possibilities of writing out vouchers and so forth, you end up getting people making real choices between commissioners and the commissions become the servant of the members. These things should become membership associations. They should become members of the consortia and members should be in a situation where they begin to direct what its priorities should be.

Q371 Rosie Cooper: Okay. We will obviously investigate a little further. Under the new commissioning system, where do you think the greatest areas of potential growth for your business will lie?

Kingsley Manning: A great deal has been written and spoken about support services to consortia, much of it misguided. The total value of those services, at about £5 or £6 a head, will be £250 million or £300 million. It will be extremely difficult for any commercial organisation to deliver support services to GP consortia. It will require very substantial scale and investment. We may well consider doing that, but I don’t think that we see it as being an overly profitable or extensively interesting opportunity. The most interesting opportunity for us is providing technical support services to the management of lots of conditions and the use of patient management systems coupled with care navigation based on very effective infomatics where the opportunity to deliver vastly improved outcomes for patients combined with substantially reduced costs means that there is the opportunity of driving both scale and the potential for margin and taking risks, by the way. That is where you take risk.

Q372 Rosie Cooper: In your evidence earlier today you were very clear about conflict of interest between the commissioning and provider role. In the past, Tribal, for example, has been involved in commissioning and in providing via Mercury, one of your subsidiaries-

Kingsley Manning: I want to make this absolutely clear. We sold Mercury, as I said before.

Rosie Cooper: Yes, absolutely.

Kingsley Manning: And we were not involved doing any commissioning work at that point.

Q373 Rosie Cooper: No. Forgive me, I am not suggesting you are now but there is an example, a prime example, of where commissioning and providing in a system existed together. There may be other subsidiary companies and organisations where this could in fact be a creep and a big danger. Do you see that?

Kingsley Manning: I think it is a problem for the whole system and one of the issues that GPs are struggling with is, do they want to be providers or commissioners and where did the line divide? The commercial imperative is very often to become providers whilst remaining part of being commissioning consortia.

Q374 Rosie Cooper: Commissioning you can’t make a profit, providing you can?

Kingsley Manning: There’s hugely more money to be made for GPs and everybody else in the provision.

Q375 Rosie Cooper: So we’ll not have very many commissioners and lots of providers?

Kingsley Manning: The scale of the market opportunity for the independent sector is vastly more on the provision side than it is on commissioning. To reiterate, just do the mathematics. The management costs per head that the Government Department is talking about is going to be £5 or £6 or £7, something of that ilk. Fifty times that is about £300 million. The commercial sector and others are being asked to provide support to GP consortia for that amount of money which was previously done by PCTs spending nearly £1.7 billion. It is not a big market. It is not a very big market. We are very interested in doing it. We think it is a really interesting process. We think it is really exciting stuff. But we are not and nobody else is going to get very rich on this.

Q376 Rosie Cooper: I was wondering whether I could have one sentence, a dangerous sentence perhaps. The medical community is a reasonably small community. It’s a big community but in an area everybody knows everybody and they will know the providers. What is the danger of those relationships being too close in a conflict sense?

Kingsley Manning: I think there’s an extraordinary danger but that is already the case. This is a highly stable and self-satisfying system which basically reflects the vested interests of the parties participating at a local level. It is highly collusive. It delivers very, very well in a satisfying way to suit the services. But the reason why you go to mid-Staffs, the reason why you go to Medway, the reason why you go to Sheffield and the reason why you go to Bristol is because these systems are not self-reflecting or critical, they are highly collusive.

Q377 Rosie Cooper: Can you see anything in the White Paper that will deal with that?

Kingsley Manning: Yes, I do. I think that the publication, which is the Secretary of State’s intention, of virtually everything that can be published on outcome data and on performance data will lead to a level of transparency that will enable there to be an enormous light shone on the process. It will simply not be possible for a GP consortium to enter into a collusive relationship with a particular chosen preferred provider. It will be obvious in the data. It will be obvious to patients and it will be obvious to their competitors.

Rosie Cooper: I do hope you are right.

Alan Downey: If I could just support that, if we’ve got strong GP commissioning consortia, if we have a reasonable level of competition for the provision of services and if we have a high level of transparency and data published for the benefit of patients, those three things between them should ensure that we have a health system that delivers high quality care and good value for money. I don’t think, in principle, that it is at all complicated. Clearly getting there is a real challenge and that is what the NHS needs to manage over the next few years.

Q378 Yvonne Fovargue: You mentioned the third sector. It has always been an aspiration to get the third sector more involved in this and it hasn’t worked particularly well so far.

Kingsley Manning: It is very patchy. The most successful commercially aggressive organisation in healthcare that I have seen is Turning Point, whose innovation, combined with their commercial nous, is second to none. I hold them up as a beacon of how things can be done successfully.

Q379 Yvonne Fovargue: How do you feel the White Paper would expand that across the country, because it is very patchy at the moment?

Kingsley Manning: It will be very difficult. The problem with healthcare is that it requires very substantial investment, the regulatory barriers are high and most independent typical capital organisations find that very difficult. But there are glowing examples: the hospice movement, St Christopher’s in south London and a range of others. The market opening will clearly not be there but there will be specific efforts under AWP to be open to the voluntary sector, the third sector and the independent sector. That will be an enormous opportunity for them and an opportunity to deliver very interesting new models of partnership with the more normal commercial structures.

Q380 Dr Wollaston: Based on your company’s experience of providing management support to the NHS, what do you feel is the appropriate level for the management allowance?

Kingsley Manning: Much more than they are going to set it at.

Q381 Dr Wollaston: We’ve not had any clarity, really, about them. There have been murmurings but what would you, in an ideal world, think it should be?

Kingsley Manning: It is very true, and Peter Weaving-I don’t know if he is still here-made this point several times about how his experience is such, about the importance of good support and management services. There is a danger that we potentially cut it at a level which means that we are down to absolute basics. That will then mean, and Peter has talked about this before, that you are then going to make choices about: Do you spend some of your commissioning budget on management and support rather than just your management budget? If it is too low there will be benefits in doing that. Our view is that potentially nearer to £10 than £5 it becomes effective.

Alan Downey: There are also risks associated with setting the management allowance too high, strange though that might sound, because one of the advantages of the GP commissioning approach as compared with the former PCT approach is that it is part of the Government’s aim that these consortia should be entrepreneurial, innovative and find new commercial ways of doing this job successfully. Anybody who has worked closely with PCTs would probably say that although a great deal of good work was done, a huge amount of money was also wasted. You can’t pump too much money into the system and almost drive poor value for money as a result of doing that. If the GP consortia can be resourced to an adequate but not generous level, the Government will probably have struck the balance about right.

Q382 Dr Wollaston: So, £10. Any advance on £10?

Alan Downey: It would be purely speculative to name a figure.

Q383 Dr Wollaston: So you can’t name a figure. You think it should not be set and just see where it arrives at?

Kingsley Manning: No. It has to be set. I agree with Alan that if you over-fund it, you will effectively encourage a dysfunctional market and waste. It needs to be set at a level that reflects the underlying scale economics of providing these services and that is certainly probably sub-ten pounds.

Q384 Dr Wollaston: You think around £10?

Kingsley Manning: This is highly speculative because, frankly, the data doesn’t exist. The analyses have not been done. The NHS has set out to cut its costs by this wonderful figure of 46%, which is wonderfully, spuriously accurate. Essentially, it is going to be dramatically reduced and then it is up to us and other potential suppliers to see whether or not we can deliver an effective system within that envelope. That’s the challenge.

Q385 Dr Wollaston: So there is no evidence base on which to base this?

Kingsley Manning: There are probably tons and tons of analyses and spreadsheets but, at the end of the day-

Q386 Chris Skidmore: But if you deliver at £5 and it is set at £10, the consortia take the £5 in their pockets? You were talking about £5 to £6 as possibly something that you could deliver yourself.

Kingsley Manning: I am talking about the total costs of delivering the service. I am very happy to share with the Committee our analysis of the underlying economics of these things, but there are core costs here. You have to set up infomatics, data centres, transaction services, 24 by 7 staff. There are core services you need and then there is volume and that is why it is going to be very important for any supplier to achieve realistic volumes to be able to support this. I thought that the question around who pockets the difference was going to be in the Bill. I repeat Mr Lansley is not terribly keen on people making profits out of this.

Q387 Chris Skidmore: I didn’t mean profit, I mean in terms of the consortia itself managing its budgets, its possible deficits and taking over PCTs. If the allowance is set at £10 and then, suddenly, an organisation comes along and says, "We can deliver that for a management allowance of £5-

Kingsley Manning: Bear it in mind that at 200, the average consortia would have about £400 million of commission budget and an average of less than £20 million for the management budget. The management budget is tiny by comparison with the commission budget.

Q388 Chair: Would Mr Seddon like to contribute to this debate from, as it were, outside the mainstream?

John Seddon: I have learnt, in my life, that the most important thing to do is to redesign operations before you discuss what levels of management you want. I think the evidence is there that if we redesign health operations, we could save a fortune at the same time as improving the service and then you address the question of what you want the management to do. I know that is rather odd but it works that way round in the private sector.

Chair: I think that came dangerously close to a mainstream view.

Q389 Valerie Vaz: A question for you, Mr Manning, in your description of this virtual patient. Where do you see this accountability of public money? Do you see it as an issue?

Kingsley Manning: It is a tremendous issue. The issue of the Government’s accountability through the GP consortia––the question was asked as to the accountable officer––my understanding is that it would be the chairman but they will also need to appoint a finance director.

Q390 Valerie Vaz: They’re not elected, are they?

Kingsley Manning: There is a real question about that. There are boundaries here between the elected process, which ends up with one sense of representation, and the participation as a member which ends up with a different process of accountability. I would like to see the empowerment of the citizen as a member of these organisations, and particularly in relationship to their own experience of them and having the right to leave or to move away from them. I am concerned, and we will have to see how the relationship with the local authorities work and the rest of it. There are models where the foundation trusts have gone for membership models and governance and there have been temptations to have elected members. Indeed, some original thinking about consortia was from those members. But that results in a certain type of representation which tends to be incredibly institutionalised and, again, to reflect vested interests rather than the common interest of the average citizen.

Q391 Valerie Vaz: You have concerns about this under the White Paper?

Kingsley Manning: I think everybody has concerns about the distribution of £80 billion to a large organisation. I know Mr Lansley does because the accounting and audit issues of that are going to be very substantial indeed. The level is NHS fraud is already significant. We will need to be very careful that that level does not rise further through a reduction in the control mechanism.

Q392 Valerie Vaz: You described the White Paper as denationalisation?

Kingsley Manning: I got told off for that.

Q393 Valerie Vaz: Do you see it moving to a privatisation policy?

Kingsley Manning: No. I tried to explain to Mr Lansley that when I said this, I wasn’t talking about privatisation at all. What he is very interested in doing, and again I understand this is dreadful, is the development of a social enterprise model, a mutual model, which is moving people out of state management into self-management organisations-effectively, a denationalisation process. You can either believe that or not as being a good thing. It seems to me a very exciting prospect that you effectively say to provider organisations within the NHS, "If you wish to take control and manage this organisation for yourself, you will have a right to do so, a right to provide. In so doing, you will move outside the conventional historic state and become something much more like a university structure." It is a bold step and it would change the nature of the service dramatically but it would create a very, very large, effectively not-for-profit, independent sector, a voluntary sector, through the denationalisation of currently state-managed assets.

Chair: We have covered a lot of ground. Thank you very much for your contribution this morning. We will reflect on it in the context of our report.