CORRECTED TRANSCRIPT OF ORAL EVIDENCE
To be published as HC 764 - ii

House of COMMONS

Oral EVIDENCE

TAKEN BEFORE the

PUBLIC ACCOUNTS Committee

Health Landscape Review

Tuesday 1 March 2011

Chris Ham, Dr Clare Gerada, Jill Watts and Dr Shane Gordon

Evidence heard in Public Questions 210 - 292

USE OF THE TRANSCRIPT

Oral Evidence

Taken before the Public Accounts Committee

on Tuesday 1 March 2011

Members present:

Margaret Hodge (Chair)

Richard Bacon

Stephen Barclay

Matthew Hancock

Chris HeatonHarris

Joseph Johnson

Austin Mitchell

Nick Smith

Ian Swales

James Wharton

________________

Mark Davies, Director, NAO, gave evidence. Amyas Morse, Comptroller and Auditor General, Gabrielle Cohen, Assistant Auditor General, NAO and Marius Gallaher, Alternate Treasury Officer of Accounts, were in attendance.

REPORT BY THE COMPTROLLER AND AUDITOR GENERAL

National Health Service Landscape Review (HC 708)

Examination of Witnesses

Witnesses: Chris Ham, Chief Executive, the King’s Fund, Dr Clare Gerada, Chairman, Royal College of General Practitioners, Jill Watts, Chief Executive Officer, Ramsay Healthcare UK, and Dr Shane Gordon, GP Commissioning Lead, gave evidence.

Q210 Chair: I welcome you all and apologis e for the little delay in bringing you all together this morning: we had a number of things to go through. We have had a hearing - I hope you have been able to look at the transcript - on the issues that we think arise for us in terms of value for money and accountability in the NHS reforms. What we want to use this morning for-and for heaven’s sake, say whatever you like-primarily is to tease out further, with a range of rather good experts, the issues that we got out of talking to David Nicholson and Una O’Brien on 25 January. So that is the framework for this morning. I want to start you on one of our prime concerns––perhaps Jill Watts could start us off on this––which is that there is a concern that the financial challenges facing the NHS with the Nicholson challenge of taking £15 billion to £20 billion out of the system, together with a very radical reform agenda, are very risky. That is the question we are asking: do the two meet well, or are we biting off more than we can chew by trying to do fundamental reform together with huge cost reductions? What from your perspective is your view on the risks with this reform agenda?

Jill Watts: I suppose any major reform is going to carry risks. I do not think you can have change without carrying some risks, so you probably have to look at the longer term benefit of actually going through that change process and what the landscape is going to look like then: is that going go be a better landscape to improve the overall system and fundamentally make ourselves a better environment to deliver higher quality care. We are very supportive of the overall direction of the reforms, because we believe by putting greater competition and greater choice into the marketplace, that you will-

Chair: We will come back to the issue of competition.

Jill Watts: So yes there will be risk, but any change will carry risk, so you have to look at what is the benefit of that risk.

Q211 Chair: And your view of the benefit would be what?

Jill Watts: I think that the benefit will be improved patient care, I think it will be a more efficient system. I think there will be significant challenges over the transition period: you cannot possibly implement this type of radical change without risk and without disruption to the system, but the alternative is to just continue along as it is, and I do not think that is sustainable.

Chair: Clare, do you want to come in on that?

Dr Gerada: Yes, of course, and this is from the Royal College of General Practitioners: We are seriously concerned about doing both at the same time. We have expressed our concerns about the pace of change, the extent of change, and, though of course the NHS needs reforming-it always does-we are concerned that disrupting the architecture of the NHS at a time of having to make £20 billion cuts is very dangerous. We feel there may have been other ways of doing that which have been well voiced: merging PCTs, capping management budgets and putting GPs on the majority of the board.

We are also concerned about the opportunity costs for this: we have made a rough calculation that it would be between 3% and 5% of GPs that will be actively involved; that is leading the process, everybody will be involved at some level. We have calculated-back of the envelope, I am afraid, because there isn’t any calculation out-it will cost about £300 million in terms of GP time. That is just the GP time; we are not talking about management costs, and that is a significant amount of money.

Q212 Chair: Do you mean this is time? That is the first time I have heard that figure.

Dr Gerada: Time, yes.

Chair: So it is 3%, £300 million to £500 million?

Dr Gerada: It is £300 million if you calculate, back of the envelope I am afraid, but you calculate GP time, removing the GP from their consulting room, having to backfill that across the consortia when they are all up and running, assuming three full-time equivalents for running the board, depending on how many boards there are. But that is a conservative estimate.

Q213 Matthew Hancock: Does that take into account the fact that those GPs will be taking on management responsibilities that others would therefore not have to do? So have you done a holistic view rather than just looking at one part of it?

Dr Gerada: No, that is the actual time, but look at the roles of the GP: number one, GPs are more expensive than managers, let’s be absolutely clear here. Cost for cost, hour for hour they are more expensive. In terms of management, you are still going to need management time, you are still going to need administrative time, you are still going to need expertise within the consortia to do the things that GPs can’t do. With the best will in the world, there are exceptional cases, of course, of GP managers, but GPs are trained to be clinicians, to look after patients.

Q214 Joseph Johnson: So just to be clear, your £300 million is a net number, is it, or a gross number, for the cost of GPs?

Dr Gerada: That is the cost estimated out of the number of GPs removed from their consulting room to serve the consortia.

Chair: Just to get it clear, there may be administrative savings, but there is a GP cost?

Dr Gerada: There is a real GP cost, but we are also concerned; the fact is that you have asked about doing it all at the same time. Now, clearly we have to present solutions. We do feel that we welcome the direction of travel with respect to having clinicians involved in the planning of the health service-of course that makes sense. We say clinicians because the fact is it should not just be GPs who are involved in the design of health services. We also feel that there are opportunity costs with respect to the provider reform-that is in fact improving what we should be doing on the ground-and GPs and others should be getting involved in improving services on the ground.

Q215 Mr Bacon: Let me stop you for a second. You said you have a concern that it should not just be GPs who are involved in designing health services. Can you say who has said that it should be only GPs involved in designing health services? Because we have had Sir David Nicholson here several times and I have not heard him say that.

Dr Gerada: I have read David Nicholson’s transcript and you are absolutely right, but the Bill quite clearly says GPs will make up the board of the consortia. Now, of course the sensible GPs will then use clinicians to help design the services for their patients. What we are actually saying is that should then be translated into the Bill around having other clinicians involved.

Chair: So you are talking about other clinicians?

Dr Gerada: Yes.

Q216 Chair: Shane Gordon is at the other end of the spectrum: what’s your riposte to what Dr Gerada has just said.

Dr Gordon: I think it depends what the key point of the reforms is.

Chair: And could I ask you to speak up, because the acoustics in this room are outrageously awful?

Dr Gordon: It depends what the key point of the reforms is. If the key driver of the reforms is to help the NHS to deliver the 20% productivity challenge that it has got over the next 5 years-

Chair: The driver of the reforms is to help the NHS deliver, that is your view?

Dr Gordon: That has to be the main focus of the NHS, to drive up quality whilst dealing with the 20% productivity gap. That requires significant innovation in the way services are delivered to make them more productive. The key agent for change is the clinicians on the ground changing the way they deliver services, changing the way they behave, and in order to do that you need local clinical leadership to persuade the majority of clinicians to move from where they are to a different way of working. That is why I think the change to GP leadership of the local health community is important. I agree completely with Clare, that if you are going to redesign services, you want the involvement of experts in those services to do that, but I think that is different from the stewardship of the local health system, which is a generalist activity, not a specialist activity.

Q217 Chair: So you think there isn’t a risk in combining the two; you think the two are inextricably linked?

Dr Gordon: Absolutely, I think they are inextricably linked.

Q218 Chair: Now, Chris Ham is the expert outside this: what is your view?

Chris Ham: At the King’s Fund, we have said from the very beginning, when the White Paper was published, we think there are some real risks in doing the two at the same time. We agree with the Health Select Committee that talked about the £20 billion target as being an enormous challenge, and a challenge that no other health care system in the world has ever met in the past, and to do that at the same time as such a fundamental, top down restructuring of the health service seems to us to be a very big ask of talented managers of a hospital or at a primary care level, especially when you are cutting back management costs, taking out 45% of management costs in Strategic Health Authorities and Primary Care Trusts. The reorganisation, we know from previous experience, is going to be a distraction. It will take the time and attention of managers and clinical leaders away from the core business-which ought to be about improving patient care and achieving financial control-because understandably they are going to be preoccupied with reorganising the structure, rearranging the deckchairs, if you want to put it like that. We fully accept and support the need to improve the health service, we are not arguing against reform, but our bottom line is that evolution would have been better than revolution in enabling the health service to rise to that financial challenge and to address the outstanding concerns about care and quality.

Q219 Chair: You would have preferred really what Clare Gerada talked about: capping admin costs, putting GPs onto PCTs, that sort of an approach?

Chris Ham: Our view is that what the Government wants to achieve around more patient centred care-higher quality, better outcomes-we absolutely support. Equally, Andrew Lansley has often mentioned places like Cumbria and Cambridgeshire, which already are working in the way that the White Paper and the Bill intend the health service as a whole to work in future, which leads us to the view that if we can make it work in our current system in a number of places like Cumbria and Cambridgeshire, then it ought to be possible to extend what is happening there elsewhere without the distraction of a top down restructuring.

Q220 Chair: Let me just move it on to thinking about GPs. Anybody want to ask anything else on risk?

Stephen Barclay: Dr Gerada, you talked about a £20 billion cut; I thought any money saved was being reinvested in the Health Service.

Dr Gerada: Sorry, £20 billion?

Stephen Barclay: You used the phrase a "£20 billion cut", but I thought any money identified as part of the Nicholson challenge will be reinvested in the Health Service.

Dr Gerada: Right, then I misunderstood; I thought that we needed to make £20 billion savings across the board.

Stephen Barclay: To reinvest in the Health Service.

Dr Gerada: If we are reinvesting £20 billion saving in the Health Service that’s fantastic.

Stephen Barclay : That is not a cut, is it?

Dr Gerada: I’m sorry, I’m not an economist here.

Stephen Barclay: We are not talking about as an economist, I am just saying, if you identify saving in one part of your budget and put it into another part of your budget, that is not a cut in terms of the overall budget on health spending. I thought that was fairly obvious.

Chair: I think we all know that.

Q221 Stephen Barclay: May I come to Mr Ham’s point? I think you present it almost as an either/or: either clinicians focus purely on clinical issues, or they are distracted on to the reorganisation, and that impacts patient care. But what Sir David Nicholson was saying was regarding the current cost of £5.1 billion on management, which has exploded in recent years in terms of the management costs. Pulse magazine reported that PCTs’ management salary costs increased by 25% in the two years between 2007 and 2009. He is saying that the aim of this is to get that £5.1 billion down to £3.7 billion, which will be the cap. So surely that is freeing money up for clinical need?

Chris Ham: Absolutely, we fully support that, but equally, there will be a cost. The number is disputed, as you will know, on the cost of the transition: redundancy costs, and the other associated disturbances as we move from one system to the other. An issue I hope we can explore later is what will be the transaction costs of the new system when it is up and running, particularly the complexity around regulation with Monitor, CQC, Competition Commission, OFT and all the comings and goings at that level.

Q222 Stephen Barclay: In understanding that, why did salary costs go up 25% in two years?

Chris Ham: Because the previous Government-and I am sure this will also be the case with the current Government-wanted to make sure that commissioners could negotiate on equal terms with very strong hospitals and healthcare providers to make sure that the market, as it was in those days, was fit for purpose. Commissioning is a really hard thing to do well, and I expect in future GP commissioning consortia will have budgets to enable them to buy in the expertise, the management support they will need too. Whether they will be sufficient, as a consequence of these changes, we will have to see.

Q223 Matthew Hancock: Can I come in on a similar point, which is to do with this description that we heard from two witnesses about making savings, and efficiency savings being somehow either/or when the reforms are also on the table, because Sir David Nicholson was very clear in his evidence to us. He said that improving GP commissioning will align the incentives of GPs to deliver more efficiently, and he said that making every hospital a foundation trust will align the incentives of hospitals to deliver more efficiently. I am not an expert in healthcare but I think that, if you add in primary care delivered by GPs and secondary care delivered through hospitals, that covers quite a large part of the budget. If the reforms will allow GPs and hospitals both to become more efficient, doesn’t that mean that they will help to free up the savings rather than get in the way of delivering the savings?

Chris Ham: Absolutely, and my point is no different from that: it is around the pace of change. Pursuing the reforms in the way that we are at the moment, over a two or three year period, expecting commissioning consortia that do not yet exist-except in very nascent form-to take on 80% of the budget, and to do that successfully from April 2013 across the country is a big ask. It is also something that no other healthcare system in the world has ever aspired to or ever achieved, to place that much financial responsibility in the hands of general practitioner consortia.

Q224 Matthew Hancock: Dr Gordon, you say that absolutely you need to do the two together. You are one of the GPs who is delivering on this already, so do you agree with David Nicholson that putting GPs in the driving seat in this way will increase their efficiency and align GP incentives with the incentives of hospitals?

Dr Gordon: I think it is the only way to truly align incentives, and I guess in response to Chris’s point about "Can you do it in the current system", yes Cumbria and Cambridge are managing to do it in the current system, but there are 148 other PCTs which are failing to do it in the current system. The question is: can you continue to do the same thing and expect a different outcome?

Q225 Chair: Out of the 27,000 GPs, you are clearly up there and enthusiastic for the system, but is it your view that we will end up with the same thing, that some GP consortia will be capable, and will be able to eke out savings, but there aren’t enough GPs with a sufficient knowledge or ability to get the right expertise to get consistency of approach across the country in the same way as there aren’t with PCTs at present?

Dr Gordon: I think there are a number of factors with that: one is, the pool of GPs who have the skills currently is too small, but there is some time to develop them before April 2013 and there are, from the pathfinder programme, clearly a large number of GPs willing to commit themselves to doing that, and being generally capable people, I am fairly confident they will do well at that. There needs to be a programme to ensure the supply of GPs with those skills.

Chair: But you have got to do that within two or three years.

Dr Gordon: You have, but the question raised earlier, about all of the commissioning being done by GPs, is not the right assumption. It is a question of using the right expertise in the right place with clinical leadership to bring the body of clinicians along with the change management programme that needs to deliver the productivity benefits.

Q226 Nick Smith: So do you think there will be new higher commissioning costs for your consortium?

Dr Gordon: No, I expect the overall cost will be within the cost envelope which is proposed within the reforms, and will accommodate the 33% reduction in management overhead, including the costs of the GPs.

Q227 Chair: But I looked at your blog, interestingly enough, because you run a very lively blog, in which you said "Another interesting week begins. So many things to get to grips with as a protoconsortium lead." I love that phrase. "This week I’m juggling commissioning our organisational development diagnostic, our inhouse apprenticeship programme, getting to grips with the QIPP workstreams and our 200 page system QIPP plan, reading 200page board papers, the 367 page Health Bill, negotiating the transitional governance structures with the PCT and starting to think about scary things like safeguarding." Do you have time to treat your patients?

Dr Gordon: Yes, I still see patients every single week.

Chair: Every single day or every single week?

Dr Gordon: Every single week. I do that on two days a week.

Q228 Matthew Hancock: So would you say it is similar to lots of other careers, where everybody goes in, say, as an engineer into an engineering firm, but some become managers and some carry on engineering.

Dr Gordon: Absolutely.

Matthew Hancock: So that’s perfectly reasonable.

Q229 Chair: It is an interesting issue, and there may be a difference in the Committee on this. Should GPs only be seeing patients twice a week, once a week?

Dr Gerada: I think you were saying once a week.

Dr Gordon: No, I see patients every week.

Chair: Every week; what, once a week? One out of your five days a week?

Dr Gordon: Yes, I spend one day a week seeing people.

Chair: So you spend 20% of your time seeing patients. Is that the right thing for a GP to be doing? I think maybe there is a difference.

Joseph Johnson: He is the GP lead.

Q230 Mr Bacon: The question really is, should clinicians be managers, and there is presumably one school of thought that says you spend a lot of money training somebody to be a clinician, why would you have them as a manager? A few years ago, this Committee visited Boston, and we went to the Harvard Business School. One of the five presentations we had was from a doctor, a trained general practitioner, who was doing a doctorate in business administration and his likely future job would be running a large general hospital. In the NHS, we do have some chief executives of big acute trusts who are GPs. Now, if we have 27,000 GPs and we have 150 or 200, large acute hospitals––I would be interested in all of your views on this––but it doesn’t seem to me extraordinary that a very small proportion of those 27,000 GPs, with that training, would end up in senior management. I think that having people with a clinical background running large acute hospitals, say, or running large commissioning bodies, say, instinctively, intuitively is probably a good thing, not a bad thing. All the conversations I have had with the GPs in my constituency over many years, always boiled down to a frustration with the PCT and the people in it, and crudely-and it is crude, and of course there are some good people in PCTs-we had six primary care trusts in Norfolk, with a lot of people, not all of them of the right level of skill, frankly, a lot of them very highly paid. Of course there has been a lot of slimming down. I would love to hear Dr Gerada and Dr Gordon on this but is it wrong in principle that we should be seeing clinicians moving into management, or is it right?

Dr Gerada: I will answer that, but can I just pick up first this issue about efficiency savings and being a GP? I am a GP: I see patients. I do not make efficiency savings when I see my patient, and I think that is, to me, the crux of it. What the reforms do, if we as GPs are going to be starting to think of our patient and making an efficiency saving when we see that patient, then I think these reforms are very dangerous.

Q231 Mr Bacon: Could you possibly answer my question, which was not about efficiency savings.

Dr Gerada: I will answer about management, but I just wanted to make that point. The other point about seeing patients, we are absolutely, but the whole point about putting clinicians in charge of commissioning is that they bring their clinical skills and their knowledge of their patients and their patients’ needs, and of their population, which means that if you have done two or three years of general practice and then move out and become a manager, you go native. You clearly bring your intelligence and medical training, but you are leaving behind the things that make you.

Q232 Chris Heaton-Harris: So what is the point being chair of the Royal College of GPs, then? Are you going native? Are you becoming a kind of union rep? Are you shooting from the hip rather wildly?

Dr Gerada: I bring to the Royal College of GPs an active, clinical workload; I’ve been a GP––

Chris Heaton-Harris: Don’t other GPs do that in other roles, then?

Dr Gerada: I understood from Mr Bacon that these doctors went to management school.

Mr Bacon: It was one particular doctor.

Dr Gerada: That is the model in America, but if you are bringing your GP skills to management, and you are not doing the GP bit that is bringing the skills, then de facto, why not bring in a senior manager?

Q233 Mr Bacon: So what you’re really saying is that there is benefit, but the benefit would be greater, much greater, and the risk of going native would be lessened.

Dr Gerada: I think you should stop deriding managers, professional managers.

Mr Bacon: Hang on, I was not deriding anybody. I was asking a generic question, I was not trying to ask an adversarial question, particularly. I am trying to understand the extent to which there is benefit in having people with a deep clinical background helping manage NHS organisations, and it seems to me intuitively that there is a benefit. There may be a cost as well, and you have just identified the cost of potentially £300 million of management time-that is the gross cost, without the net savings on the other side-but I am really trying to get to this much broader point about the benefit of having clinicians involved in managing, and it sounds to me like there will be a benefit. You are saying that the benefit will be much less if they disappear from their frontline role, in a similar way that head teachers who stop teaching stop being such good teachers. Now, that seems to me an argument, probably, for having those clinicians still maintaining some clinical contact, but really I am trying to get to the overall point about the scale of benefit in having clinicians manage, I wasn’t saying anything negative about managers generally.

Chair: Can I just say to the Committee, I’m going to allow our witnesses to give a response to this issue.

Dr Gerada: General practice is extraordinary, in that the higher up you go the more you still do the day job. It is one of the only specialties in medicine, one of the only senior professional groups where you can continue to do the day job. So Dr Gordon does the day job, I do the day job-I do the day job actually two and a half days a week-and it means that you stay grounded. It means that when you read the manual, as many people read the manual, and think you can translate that to the patient that I saw the other day where I had to sit on the commode in order to meet their needs because there isn’t anywhere to sit, you keep grounded. You keep grounded with your population and you keep grounded with your patients. So yes, of course GPs are highly intelligent people who can manage anything, with enough training. But it takes them away from the reason you have asked them to do it, which is they understand the needs of their patients and their population.

Q234 Chair: Okay. Now I’m going to ask Shane Gordon to answer that, and then Chris Ham, and then I’m moving on to the next issue.

Matthew Hancock: And Jill Watts, also.

Chair: Okay, let’s go to Shane Gordon first, Chris Ham and then Jill.

Dr Gordon: The question was "Is it right to have people with an intimate knowledge of the core business leading the business?" The answer is yes.

Chris Ham: I have studied a lot of the US organisations that you are referring to, and I would also say yes, there are real advantages in having people with that clinical knowledge, GPs and others, involved in commissioning and provision of healthcare. But when you go to the best of those organisations in the States, wherever you see a clinical leader, that person works hand in hand with a very experienced manager, and it is that partnership which is fundamental to their success. The challenge in GP commissioning is partly around training more people like Shane to be in the vanguard and to lead GP commissioning consortia. Even more so, I would suggest, is what some people would call "followership": GPs are not great followers of GP leaders. We need to invest in helping them to be good supporters of the people who would be heading up the commissioning consortia, and I think that is under-recognised. The third thing is this: I think GP commissioning-as long as it is broadly inclusive of nurses and hospital specialists-will be beneficial when it settles down, but there are some things that GP commissioners are unlikely to do well. The complex service reconfigurations of hospitals in London, for example, are a very, very big challenge and I do not think there is any evidence from previous examples of primary care-led commissioning that GPs have the appetite or the expertise to undertake them. They’ll need a lot of support from the commissioning board and, I suspect, the regional offices of the commissioning board, in dealing with those kinds of issues, because they are very, very difficult.

Jill Watts: As a nurse and a midwife who has moved over into management and has done an MBA in health administration, I think it is extremely beneficial to understand the world in which you’re working when you are managing it.

Q235 Mr Bacon: Do you still deliver babies?

Jill Watts: No, because I use that expertise in different ways, and certainly that close understanding of how organisations work, and as a provider of healthcare I think it has been invaluable.

Matthew Hancock: Does the fact that you don’t still deliver babies make you any worse as a manger?

Jill Watts: No. I think I have that past experience, so I understand that, but it’s about individual preference: people choosing to develop their careers where they want to go.

Q236 Austin Mitchell: One of the problems is the scale of the units of GP commissioning, because it seems to me that those bodies that already exist are larger units that amalgamated several primary care trusts. Now, you could argue for it on economy grounds, and it might well be more economical to have a larger area, but you cannot argue for it on the grounds of expressing the patient’s wishes and allowing patients to be effectively represented by doctors in the area, nor in terms of developing close contacts as we have in Grimsby-because we have a care trust plus-between the primary care and the local authority. So this is going to be a real tension. What is your area, Dr Gordon? Is it a big amalgamation of areas, and is there going to be a trend to bigger and bigger commissioning units which are going to be out of touch with the patients?

Dr Gordon: I completely agree with your tension. Our area is 320,000 patients, which is the size of our existing primary care trust, but within that structure we have localities which are very much made up of and in touch with their local GP practices. One of the benefits of clinical leadership in consortia is the trust relationship between the leaders of the consortia and their peers in the practices. It isn’t a hierarchical relationship, it’s a flat relationship. It is very different from the hierarchical relationship between existing management structures and GP practices.

Q237 Chair: Can I move us on to two other issues on commissioning that I think we need to talk about. We spent quite a lot of time in the first evidence session talking about accountability. I had not realised that your area, Dr Gordon, is basically the same size as a PCT, which I think is perfectly sensible, and I hope my lot do the same, but if you get much more fragmented consortia out of your 27,000 GPs, how do you think the accountability can work properly, particularly from our point of view, where we have an interest in ensuring value for money for the pound spent. Question two: there was stuff in the papers yesterday about the way in which the commissioning body, Nicholson’s body, is going to validate a consortium, and then take away that validation if things go wrong without any right of appeal. Do you think that is the right approach? Validation’s probably the wrong word: commission. The commissioner will commission consortium and decommission.

Chris Ham: I think it is the authorisation process? I think that’s what you’re referring to; the commissioning board will have responsibility…

Chair: But the two issues of accountability; do the first and then the second.

Chris Ham: I think to begin with there will have to be some sort of authorisation process run by David Nicholson and the commissioning board to assess whether commissioning consortia are ready to take on the responsibilities that are being offered to them. I think we would all accept the need for that: if you’re handing over £80 billion of public money eventually, then they need to have the right governance arrangements in place, having accountable officers, having financial and other expertise to enable them to do their job effectively. I think commissioning consortia would welcome that, as well as those concerned with accountability for public resources, and that is something that is being developed as we sit here. We don’t yet know what that process will be.

The second bit is really around how then, when they’re up and running, when they’ve been authorised, they are held to account by the commissioning board, and my understanding is that there will something called a "commissioning outcomes framework", which the commissioning board will determine, setting out the criteria indicators that will be used-not targets-for assessing the performance of the commissioning consortia, and there will be some rewards built into that, so I would expect, now we know who the chief executive of the commissioning board is going to be, that there will be a reasonably robust authorisation process in the first stage, and an accountability process in that second stage.

Q238 Chair: You think that’s okay?

Chris Ham: I think it will be okay. There are lots of complex issues. For example, the commissioning board will have to create some kind of financial contingency to deal with financial failure by commissioning consortia. Some commissioning consortia will be fantastic-better than the best of the PCTs-some will be okay, some will almost certainly fail. Now, if that is not the case then commissioning consortia will defy the bell curve of performance which all organisations in every sector are affected by. So you will need to plan for failure, plan for that contingency and take some money out to allow for how that can be dealt with.

Chair: That was another issue that we raised with both David Nicholson and Una O’Brien, and Una O’Brien did say she "wasn’t planning for failure".

Mr Bacon: Eventually, about three minutes later-because I cut her off at that point-she did make a very rapid recovery. Within two or three minutes she was using the phrase "the design of the failure regime", so one hopes they are thinking about this. What’s your view about what the Department has done, so far, in the design of the failure regime? Because you are quite right: the bell curve will show there will be failure; the real question is, netnetnet, will we be better off than we are now or worse off? We’ve had PCTs fail and go into debt. What’s your view?

Chris Ham: My view is you need to design a regime that anticipates and prevents failure happening, rather than a regime which is designed to sort out failure when it’s happened.

Mr Bacon: If it does get that far, you need a rescue regime, don’t you?

Chris Ham: You need a rescue regime, which is partly having access to a pool of money, if it is financial failure, to bail out a commissioning consortium that gets into difficulty, and secondly having a regime for, if it is persistent failure, successful commissioning consortia or others coming in to take over the management of those organisations.

Q239 Chair: Before I bring in Chris, do any of you want to add anything on the accountability and failure regime issues?

Dr Gordon: The failure regime will not be an allornothing regime. We are told that it will be a rules-based stepped process which will start with performance notices, essentially, followed by active intervention, followed by suspension of the right to commission, followed by the loss of the right to commission, and you would have to fail at every single step before you lose that right to commission. I think that makes for a very structured and sensible opportunity to pick your game up.

Stephen Barclay: How long would that process take?

Dr Gordon: I don’t think it has been specified yet.

Chair: What happens to the patient if it actually does fail?

Dr Gordon: Well, there’s a question about which point in that regime is actually failure, because there are plenty of PCTs that are in that sort of regime already.

Q240 Chris Heaton-Harris: I have a question, probably more for Dr Gordon, about low volume commissioning. Nearby to me in my constituency is the headquarters of the Motor Neurone Disease Association. Obviously very few GPs in their time will come across a patient with Motor Neurone Disease. How does this capability to provide for and commission for that particular sort of patient fit in to this new life?

Dr Gordon: The capability does not exist at the moment in the current system to do that adequately. I would hope that what we will all do together is ask ourselves "Are we capable of doing that sort of work?", come quickly to the conclusion "Not within consortia", and look for solutions like professional networks, advice from national bodies or lead commissioning arrangements that start to bring the right concentration of expertise to bear on the question, which we can then all use in our commissioning process. That happens already through organisations such as NICE, but also through the colleges, national service frameworks, etc.

Q241 Chair: I want to ask one final thing, then move to the providers side of it. At the moment, the GP is your advocate-this is really looking at patient focus-and there will be a change of role. It will alter now: the GP becomes both the advocate and the purse holder. So the GP will have to ration in a way that maybe in the past he or she has not had to do. Maybe it is a question to you, Dr Gordon, and maybe to you Dr Gerada: how are you going to do that? We hear these stories about hip replacements becoming unavailable in bits of the country because of rationing, or IVF treatment, or whatever it is, or an expensive bit of cancer treatment not being funded. How are you going to decide? How are you going to fulfil your role as the advocate on behalf of the individual patient with your new role as the distributor of what will always be limited resources?

Dr Gordon: The General Medical Council already in its guidance, "Good Medical Practice", requires every doctor to have regard to the efficient use of resources, which is that population health perspective. As a profession, we have underplayed our role in stewarding the health of the entire population that’s on our list, the 1,500 to 2,000 patients that we all look after as GPs. We have failed to square that with the advocacy for the individual patient in front of us.

Q242 Chair: But the obese woman may still want a new hip. You are going to have to make those decisions.

Dr Gordon: We do make those decisions already, and the beautiful and brilliant NHS
Atlas of Variation, which was published at the end of last year, shows how vastly different the thresholds are in different areas for making those decisions. In no sense are we making rational rationing decisions across the piece at the moment.

Dr Gerada: I think that is the most important part of these reforms, and one that really vexes us at the College, and the one for which we haven’t got the perfect answer. I disagree with Dr Gordon: we are well aware as GPs of our role with the public purse, and I think every decision we make we’re well aware of that. I think patients don’t quite realise how aware we are of that. We prescribe, for example, 90% of our medicines generically. That saves a staggering amount of money for the public purse. If the patient wants a nongeneric, we steer them away from it. So it is not patient choice: it is based on evidence and value for money. Only one in 20 consultations end in a referral: only 14% of the population are actually ever seen by a specialist, and those are concentrated in about five very serious clinical conditions. So we are well aware of that. But anything that undermines those decisions that we make so that the public think that we are making decisions on their health based on us benefiting in some way, or our consortia benefiting in some way-and remember, we are going to be kept to account for financial balance-that is where the problem will start.

Now, in addition to that, with the abolition of practice boundaries-so at the moment we’ll make a clinical decision and we may well say to the patient "This isn’t in your best interest" and there’s lots of cases we do that-if a patient is now free to move to different GPs, different consortia, shop around until they find a consortium that will offer them a treatment, that also complicates matters. So it is a very, very, very important issue.

Q243 Chris Heaton-Harris: They could move to Scotland.

Dr Gerada: They could move to Scotland, absolutely, or to Wales, or to Northern Ireland. In actual fact, GPs have for years been aware of this. It is important that we maintain that. With respect to the college, we believe that good commissioning is about being a good GP, and that is our strap line. It is about understanding how we use resources. It is understanding how we use resources in the consulting room, how we do peer review, how we involve patients in those decisions, and how we involve the public, and that’s where it starts for us, right in the consulting room. So these ethical tensions are not going to go away, they’re going to get worse.

Q244 Stephen Barclay: Are you saying that GPs, in breach of the GMC’s "Good Medical Practice" guidance, would put their own financial interests before their duty to their patients? Is your concern that GPs will do that?

Dr Gerada: I don’t know, because I don’t know what the Bill will say. We’ve already heard about the failure regime, we’ve already heard about efficiency savings. This is different language for GPs. GPs at the moment don’t, as I said before, talk about failure rate within their own practice, and they don’t talk about efficiency savings.

Q245 Stephen Barclay: No, but you were making a very specific point. You were saying that you were concerned, in contradiction with Dr Gordon, who I think pointed out some of the variations already in the system, and we saw that at our previous hearing: certain hospitals have more than three times the number of staff per bed; one hospital had less than 20% emergency admissions, whereas another was over 60%, so there are already significant variations. I thought you were making a very specific point: you were saying that there was a potential conflict where, because of the incentives within the GP consortia, GPs may get a financial benefit which starts to influence their decisions, which contradicts their duties as doctors and is quite an indictment to say of the people you represent.

Dr Gerada: I think if you backtrack to what I said, I said "Anything that interferes with the public perception that that’s what we’re doing." At the moment we do it anyway, we use our resources efficiently with a patient in front of us, but also, as I said, making sure that we use resources effectively and efficiently. Anything that interferes with respect to the public getting the inference that we’re doing things not in their best interests, but in order to reach financial balance, or-as we’ve heard earlier-for efficiency savings, I think is the conflict. We haven’t sorted it out: we’re just aware of it and we’ve just highlighted it as a big risk.

Q246 Mr Bacon: This Committee published a report this morning that pointed out, among other things, that there is an eightfold variation in the extent to which GPs refer their patients to cancer specialists, much of which cannot be explained by variations that you might expect like socioeconomic factors and the rate at which different people smoke in different parts of the country. Would you expect, in the shift to GP consortia, that this eightfold variation that we have at the moment would go up or would go down?

Dr Gerada: I don’t know. What I do know is that I have examined the variation in referral to outpatients, and I have also examined the variation in use of accident and emergency services, and once you start looking at these variabilities-clearly general practice has to improve, everything has to improve, and I’m not saying it can all explained by factors other than the GP themselves-there are issues. For example, one of the biggest variabilities about your use of A&E is how close you live to A&E, so therefore in urban areas, you tend to have a much denser population, as are how poor your area is and the proportion of overseas people, in particular eastern Europeans, who may make different use of healthcare services. So there are explanations. I don’t know what might explain an eightfold change: it might be access to diagnostics, it might be skills of the GP, it might be prevalence of cancer in that particular area. Whether it is going to change with consortia, I don’t know––I really don’t––and that’s again one of the issues that we need to be watching for. What I would say, and where the college would come from, where we’re moving to next, is that we must concentrate on providing improvement: we must concentrate on improving my profession to make sure that we diagnose cancer better, we refer better. Whether this is going to be achieved by 4% to 5% of my profession dealing with commissioning rather than improving the provider side, I don’t know.

Chris Ham: We will be publishing at the King’s Fund a major report in three weeks’ time on the quality of general practice, looking at many, many different examples of these variations which seem to be unexplained-as far as we can tell-by factors such as differences in population. There is a case to answer around the current variability around what’s done within general practice, even though general practice as a whole provides a very good service to the population. I think the potential within the reforms is for the GP commissioning consortia to look at these variations, where they are unwarranted variations, much more successfully than primary care trusts have been doing, through having knowledgeable GPs leaders who can use that data and ask tough questions of their peers. But, it relates to your work in the sense that at the moment the responsibility for managing the GP contract will be put with the commissioning board at a national level, not with the commissioning consortia at a local level. We know where there has been progress under the current system in the best of our PCTs, it’s been where they’ve had very good medical directors coming from a general practice background who know the local practices very well, who have got credibility to go in there and ask them tough questions about why those variations exist. So we hope the commissioning board will work with and through the commissioning consortia, who ought to have that local knowledge, to really make this work better in future.

Chair: That’s interesting; it’s strong/weak, isn’t it, so that’s quite a strong centralisation within a decentralisation, and it assumes a capacity in a commissioning body to be able to do that. I thought one of the interesting things in David Nicholson’s evidence is that there is a danger that the commissioning body ends up like the current strategic health authorities. So you end up having a big centre; you have the strong commissioning body with him at the helm, and then London Health-whatever it’s called, people who drive me completely potty-still there, determining what GPs do.

Q247 Matthew Hancock: You have described how the changes could improve the distribution, and potentially take away some of these unexplained distributions in service from a top down perspective. But doesn’t the removal of the boundaries, which Dr Gerada talked about, also allow the patients themselves to reduce some of these unexplained differences, because if your nextdoor county, say, has a better performance, then you can go to a GP in that county and therefore actually drive the improvement and drive a more equal playing field that way, from the bottom up as well as from top down.

Chris Ham: In concept yes; in practice, I think there’s a philosophical issue here as to whether you believe in bottom up patient choice, as opposed to-it’s not top down, more peer pressure within the professional group.

Matthew Hancock: It’s in the provider, rather than from the customers.

Chris Ham: That’s right, and I think all the evidence that I’m aware of suggests that if you’re trying to improve quality of healthcare provision it’s using that peer pressure within the professional group of GPs, in this case, that’s likely to have a bigger impact in reducing unacceptable variability in the quality of care than patient choice, although patient choice will also be important.

Q248 Chair: Your peer pressure, or your commissioning body, will involve a regional infrastructure?

Chris Ham: I was referring to it around how I hope and believe the best of the commissioning consortia will behave; people like Clare and Shane leading these arrangements at a local level, knowing the practices, having the credibility among the GP community, looking at the evidence about variation.

Chair: But David Nicholson will require quite a tough structure if he is to be an effective commissioner.

Chris Ham: What he will require is the support, the will and the ability to work with the commissioning consortia, because at the moment it’s David and the commissioning board that have the locus around managing the GP contract at a national level: that is not a commissioning consortia responsibility.

Q249 Mr Bacon: No, but David Nicholson was very anxious to avoid saying that he is going to develop a regional structure for the commissioning board. He went to a lot of trouble not to say that; I think it was quite interesting, not to say funny, watching him not say it. But is your expectation that the commissioning board, which is going to be a £20 billion body, is going to have some sort of regional representation so that there are interlocutors on the ground locally who know the local GP consortia?

Chris Ham: Absolutely. I have been a student of the health service throughout my career. There has never been a time in the history of the NHS in England when there has not been-call it subnational, call it regional-some kind of regional presence, simply because of the span of control from a national body; we don’t know how many commissioning consortia there will be. I would expect 250 to 300, looking at what’s emerging around the country. You cannot manage that relationship from one national commissioning board to 250 commissioning consortia. You will have to have four or five subnational, regional offices of the commissioning board.

Q250 Mr Bacon: Dr Gordon, I think you wanted to come in on this question of GP leaders asking tough questions of their colleagues

Dr Gordon: Yes, the question was: can you shift from an eightfold variation to a much narrower range of variation? The answer is absolutely yes: it’s what my consortium has spent its time doing over the last four years through practice-based commissioning. I and my colleagues, my fellow GP leaders who spend many fewer hours a week doing what I do, have visited every practice in our consortium every year to have the difficult conversations, and I’ve got personal experience of working with GP practices to pose the tough questions about "Why are you sending that woman who’s had hip pain for two weeks only to a surgeon? Why are you doing that?" And we’ve managed to change their performance: they have changed their thresholds as a result of peer discussion.

Mr Bacon: Do you think the fact that you’re a clinician having that conversation helps, rather than being a manager? I mean "just" a manager.

Dr Gordon: You couldn’t do it as a manger; I have to do it as a clinician.

Q251 Austin Mitchell: I want to talk about area inequalities, because, as Dr Gerada has suggested, this is partly a question of perception as to whether GP consortia are serving their own interests in the economy, or prescribing drugs, or serving the interests of the patient. Now, there are parts of the country, the underprivileged areas of the country, which tend not to have pushy patients, because they haven’t got a large, middle-class congregation making a noise, and secondly which tend not to have the best doctors, the best qualified, the most pushy doctors, the ones most likely to maintain peer pressure on the consortium. Those areas are surely going to be disadvantaged in this new arrangement.

Dr Gerada: It is also, as the Treasury Committee found last week, that the areas of highest deprivation have the lowest figure per head of population of GPs, so you further entrench it. You also get areas where you don’t get investment in general practice. But there’s absolutely nothing wrong in what Dr Gordon is saying. What we’re saying is that as far as professionally led improvement is concerned, the Royal College has been doing that for 60 years through practice certificates and through various tools that it has got, such as the quality practice award and we have just launched practice accreditation. There is absolutely nothing wrong with doing that, and that is, I think, where I said we should be concentrating on provider improvement on the improvement of general practice services, and improvement of the transitions, because patients have problems, and they go between one bit of the health service and another, so GPs should be talking to our consultant colleagues and to our nurses, we should be talking across social and health care, in order to improve systems. But that’s happening anyway within the current systems and it should be accelerated.

Q252 Chair: I am going to move us on to the provider world, and start with Jill on this one, because this is where your interest is. Do you agree with David Bennett that the healthcare market should be more like the utility market?

Jill Watts: I think there’s certainly some broad similarities there, but yes, I believe that by putting competition into any marketplace-anywhere where there’s a major monopoly, there’s not the same incentive to improve, as in a competitive marketplace.

Q253 Chair: So you think it’s like selling gas and electricity.

Jill Watts: No, healthcare is a much more complex system, but there are some basic fundamental principles in having a more pluralistic marketplace; having the patient being able to choose where they go I think will drive quality of patient care.

Chair: It is not the patient, it is the GP who chooses.

Jill Watts: No, I think patient actually does influence choice.

Q254 Chair: Well, we’ll see. But go back, what’s the difference? David Bennett was quite clear; in his first interview in The Times he compares his role to the regulators who opened up the gas, electricity and telecoms market. I am really interested in what you see, as a provider in the healthcare market, as the similarities and the differences. Because I think it was a shot in the dark, but you’re in the business of healthcare provision, so what do you see as the similarities and the differences?

Jill Watts: Well, I think for any private provider-I come from a company that does nothing but provide acute care hospital services, it has done it for 47 years, and that’s what we do-as a private company, to stay in business, then you have to develop very efficient models.

Q255 Chair: What is the difference between this and the utility market? I’m not trying to catch you out; I’m trying to understand where you’re coming from and how that relates to Monitor’s potential attitudes.

Jill Watts: I am not an expert in those areas, but I would assume the difference of opening up would be the level of satisfaction and quality. You cannot be a private provider and survive if you don’t provide a quality service.

Q256 Chair: Can I just ask you two other questions-James wants to come in. We’re getting very mixed messages as a Committee on this one: should there be a maximum price, or should there be a national tariff?

Jill Watts: I think at this stage there should be a national tariff, because we don’t have a level playing field.

Chair: So how do you compete?

Jill Watts: On quality.

Chair: And who would judge that?

Jill Watts: Patients: we need to have better information available within the system so that there is that ability, and it’s about getting information on clinical outcomes on a range of different areas, so that commissioners, so that patients have that available to make choice.

Q257 Chair: Is there anything in the healthcare market that you wouldn’t enter into, your company wouldn’t want to participate in?

Jill Watts: No, we’re an Australian company.

Chair: Everything? You’d do A&E, would you?

Jill Watts: We do A&E, we do emergency, we run whole public sector; we run whole trusts in Australia, and that’s been a model that’s been successful.

Chair: And you’d want to do that here, you wouldn’t want to cherry pick off bits of it?

Jill Watts: No, we do everything from emergency services, neurosurgery; there isn’t a service that we don’t do in Australia. We run the whole public service, and that is certainly an area that we’re very interested in, yes.

Q258 Chair: We talked about failure regimes for the GP consortia. What do you think the failure regimes should be if one of your units fails?

Jill Watts: Well, if one of my units fails it doesn’t survive.

Chair: What happens to the patient?

Jill Watts: What happens to the patient? We don’t have a history of failure, because we have expertise .

Chair: In the same bell curve, let us assume there is some.

Jill Watts: I think that we probably have a different bell curve. But yes, we have organisations that perform better than others. We probably have far less bureaucracy, a lot more stringent benchmarking.

Chair: It’s quality, we’re competing on quality. Something fails, and it’s public money. The difference is this isn’t people choosing to buy, it’s public money, and therefore there has got to be a regime for failure, and I am just interested in your view as to what the regime for failure would be for-God forbid-one of your company’s units, a general hospital in Barking and Dagenham, you might take over Queen’s, nobody else wants to run it.

Jill Watts: It probably would be not dissimilar, we would do everything that we could. If something’s failing, then we would go in, we would look at the management of that to see what are those issues, we would do everything in our power.

Chair: But you fail.

Jill Watts: Then we would close it.

Chair: Then what happens to patients?

Jill Watts: For those patients, depending on what the marketplace is, there would be opportunities for other people to come in and take over that facility, and that is what does happen: something is failing, and then someone will come in and either take that over, or, whether there is no need; you have to understand why somewhere has failed, it may be there no demand for a service in an area, and so that service shouldn’t be there in the first place. If there is a demand and we can’t deliver that effectively, then there is an opportunity for someone else who can.

Q259 James Wharton: I’ve listened with interest to the broad discussion that we heard about a lot of the changes that are coming in, and I think something that we just touched on and then moved on quite quickly is the issue of patient choice. I can’t help but feel there is a great opportunity, but also some risk specifically tied to patient choice, whereby it can be a real driver for change and for improvement and for delivering a better service, but there is also that danger which Dr Gerada mentioned. For example, with generic drugs, the patient wants a specific drug, what’s to stop them just going somewhere else? Austin mentioned specifically those who are not necessarily pushy and middle class: how are we going to stop patients from falling through the gaps who, for whatever reason, no matter how much information and guidance we give them, are not capable of using choice to deliver a better service for themselves?

Dr Gerada: I think this is a very important point. Choice happens, let us be clear about this, when you are having a cold, elective procedure––that is when there is most choice, because then you’ve got the time to sit and discuss it. Most of the activity in the health service isn’t around that. It’s around the sort of patients that I see, that Shane sees every single day of the week: it’s the patients with co-morbidity, with multiple problems, and, to be honest, it is very difficult to exercise choice there, because you want a joined up service, you want clinicians and care workers that have been working together for years, that put the services together, that don’t run the risk of becoming bankrupt, as some private providers have gone in on cost and have had to walk away from the table. One says "What happens to the patients?" Well, I think that’s a serious risk when you have lots of providers. What the college wants, though it sounds like a cliché, is enough excellent providers and not a multitude of any willing providers, because if you-God forbid-fell down at Westminster Bridge and broke your leg, you would want to be sure that that place across the river has all the services to meet your needs, delivers them with good outcomes and you leave safely without an MRSA infection. So we would actually go for enough excellent providers, and not multiple, any willing providers.

Dr Gordon: There’s another real tension here: as a commissioner sometimes I find it very difficult to engage providers in changing their behaviour, because there is no threat of competition. There’s nobody else to turn to in a health economy to provide that little bit of grit in the oyster. Equally, though, there’s a question about whether in our health system we have too little supply of healthcare from hospitals, for example, or too much. I read the WHO’s analysis of the proportion of care provided in hospitals in the UK, of specialist care, at 60% of specialist care, and in Europe of 30%, and I wonder, have we not got enough providers in the UK market? I don’t know the answer to that, but it’s a real tension.

Q260 Chair: I hate doing this, but I do get completely obsessed by my own constituency situation. When you theoretically say competition will extend choice, that sounds really attractive; obviously it will drive up quality. I think all of us can half buy into that. When I then look at my own constituency, we have got an appalling hospital, which had a report in the public interest a couple of weeks back, which is extremely rare-which actually I didn’t even get a copy of, so it was only by chance that I came across it-and the hospital is an outright mess, and has been and is bankrupt; it is basically bankrupt and has been for years and years, and in a market it wouldn’t survive. Yet, for my poorest people, with the worst health outcomes, if you close that hospital they may have to use three or four buses-they don’t have cars-to get to a local hospital and for their regular appointments, they won’t do it. So there is a tension there between the competition driving out poor performers, and the needs of a really highrisk local population with bad health rates-take any measure and it looks poor: on mortality, on obesity, on all those sorts of things, anything that you take-then actually having worse access to local health care. And this is not for the big things, where obviously we want big, specialist hospitals: this is for the day-to-day stuff that keeps people alive and healthy.

Chris Ham: That’s where you need a good failure regime for the provider side, isn’t it? You need to have an arrangement: Hinchingbrook is one current topical example, in the East of England, where the strategic health authority invited both public and private providers, and a private provider has been shortlisted to take over the management-not the ownership, but the management-of that hospital. The other option is to link up hospitals such as the one you described, with successful NHS foundation trusts so we can bring their expertise in.

Q261 Chair: But you’d be mad, Chris, to do that. Again, this is theoretical: this hospital has got a debt of £160 million, £170 million. Nobody’s going to write that off in the current climate, and you’d be bonkers to take over that hospital with that debt.

Chris Ham: But equally, you need to maintain the public’s access to a valued local service.

Chair: Quite.

Chris Ham: So you are literally between the rock and a hard place, and I suspect the harder place is around closing the hospital, as opposed to finding a resolution for that.

Dr Gerada: Or invest in primary care, because at the moment we have precious little investment in primary care, and we know that countries that have a big investment in GPs have better health outcomes

Q262 Chair: Don’t start me on that one, because trying to attract GPs to my area is equally bloody awful.

Dr Gordon: I happen to live and work in the SHA which has done the first successful tender of a hospital, and it was a very interesting process to observe: there were only two bidders at the end of that process. But it comes down to the nub of commissioning and this whole argument: do you have completely open competition which drives, potentially, some failure and disadvantaging of certain communities, or do you use competition as one of the tools in the commissioning arsenal, which you apply to specific points in your healthcare provision market where you are not getting good quality? I think it’s that end of the spectrum where we need the legislative support and the support from Monitor to do our jobs well. An unregulated provision market, I think is not going to be successful in the stewardship of resources.

Q263 Chair: My cynicism, having lived with this, is that there is nothing in the reforms I see that gives any incentive to any successful foundation trust or any private provider to take over my local hospital, so that the only other answer is to write off the debt, and nobody will write that off.

Chris Ham: We have a report coming out later this week looking at the experience in south London, where there are a number of general hospitals that were merged because of that history of financial problems and clinical problems too, and one of the conclusions of that is you put in a new management team, and they can do a lot of good work to produce greater efficiency and drive productivity, but there’s only so much they can do when you’ve got the legacy of PFI debt and other long term financial problems. Looking at the lessons from that elsewhere in your kind of circumstance, somebody has to grasp that nettle and say "We’re going to do something both about longterm PFI debt and about underlying financial problems to create the right kind of incentives for successful foundation trusts to want to come in and to take over that responsibility," otherwise it’s not going to happen.

Q264 Stephen Barclay: We have discussed the local variations in provision––Austin touched on this––and one of the features of the health inequalities report was the fact that poor areas have fewer GPs, so it’s paradoxical, and I assume that’s because GPs are very well paid and like to live in nicer areas. To what extent do the reforms increase the likelihood that a GP consortium will put GPs into deprived areas?

Dr Gerada: The only way that the reforms can effect this-and this is where I started and was quite optimistic at the beginning-if consortia wish to invest in primary care, there is nothing stopping them investing in primary care. It will be a very brave consortia to do that, though, because it’s actually counter-intuitive to allow GPs more time to see patients-at the moment we get about eight minutes-and to actually allow GPs to have 20 minutes to do it, to actually invest in bringing more GPs, more nurses, more healthcare assistants into general practice, so that the issues that are going on with Mrs Hodge’s hospital can be addressed in general practice. But I suspect what will happen-and what is already happening-is redesigning of services is moving, for example, musculoskeletal services out, is yet again redesigning diabetic care pathways. So it won’t be around that. But the reforms can be used to do that. The problems isn’t so much GPs get paid too much, it’s also around housing prices in London, there’s all sorts of factors that stop doctors coming into areas that have high social inequalities.

Chair: Cheaper to live in Barking than in Camden.

Q265 Matthew Hancock: On exactly that point, do you think, as an expert and GP, that the evidence shows that longer face to face time with GPs would provide better value for money?

Dr Gerada: Yes.

Matthew Hancock: Does the evidence show that?

Dr Gerada: The evidence is that if you increase consultation time from five to 10 minutes -when I first started as a GP it was five minutes-it clearly shows improvement.

Q266 Matthew Hancock: So if you’re running a consortium and you’re given more freedom to improve value for money, would you do that?

Dr Gerada: I absolutely would do that.

Matthew Hancock: So why don’t you think the reforms will lead to that, since that is what they will do?

Dr Gerada: I hope that they will. ; that’s why I said I started off by being very optimistic. If the reforms lead to that then I think that’s a very good way of using resources.

Q267 Matthew Hancock: What if the reforms lead to the freedom to do that––they are permissive rather than prescriptive?

Dr Gerada: The reforms do lead to the freedom to do that, because the reforms can-I’m assuming, because of changes on the ground-be used to deliver higher quality general practice care, with more GPs, more services being delivered within general practice, more complex management of complex patients, more diabetic patients being moved into general practice, falls clinics, for example, being moved into general practice-it can be used, and I think if consortia are brave and invest in primary care delivery, I think we’ll see a much better health service.

Matthew Hancock: And better value for money?

Dr Gerada: And better value for money.

Dr Gordon: There’s a difficulty in the way the competition side of the reforms is being proposed, which may militate against our ability to improve the investment and restructuring of primary care to be fit for purpose for the 21st century, principally because it’s in very fragmented form at the moment, and therefore not well placed to respond to the commercial levers that are being provided to us as commissioners, which are very large scale and require very high levels of effort from bidders, for example, to be successful. The track record of GPs as tiny little providers in that process is not uniformly good, and therefore it becomes difficult; we can’t just take a chunk of money and give it to GPs to do more stuff. We’ve got local enhanced services, for example, which is a tiny fraction of spend, to do that with. But when we come to, say, building a new general practice, that won’t be within our gift just to make it happen: it’ll have to go through firstly the commissioning board, and then secondly through a large contestability process to run that, and the history of those tendered GP practices is mixed, to say the best.

Q268 Joseph Johnson: Can I come in please on Professor Ham’s point about the need for a failure regime? We are creating conditions where trusts that aren’t going to make it to foundation trust status by 2014 are going to be presented with some quite difficult decisions. They are either going to be disbanded, or they are going to be-as you say-encouraged to merge with a foundation trust. So it’s not like a normal bell curve, where you will have occasional failures every now and then. We will, within the next two or three years, be confronted with a situation where a proportion of the 20 or so NHS hospital trusts that are presently struggling to obtain foundation trust status will be faced with those very difficult choices. Are you satisfied by the level of clarity that we have over what’s going to happen to that proportion of trusts that don’t make it to foundation trust status?

Chris Ham: I’m glad you raised that, because I think our discussion this morning has reflected the general discussion out there: a strong interest and preoccupation with how the commissioning side will work, and much less attention to the provider side, and our view at the King’s Fund all along has been that the proposals on the provider side are at least as ambitious and much more challenging, in many respects, for the reason your question points to. We think there are between 20 and 30 NHS trusts at the moment that will never become foundation trusts under the current regime, because of a combination of financial problems and clinical problems, and it’s not at all clear how they will be dealt with over the next three years-because it’s three years now, isn’t it, 2014, not two years as originally proposed-to enable them to have some kind of future, because they can’t continue as NHS trusts.

Q269 Joseph Johnson: With the example you mentioned, the South London Healthcare Trust-my constituency falls within its area of responsibility, so I follow it very closely-it is not at all obvious what is going to happen to it. It faces some absolutely appalling choices.

Chris Ham: I think, for the Government, these are much, much more intractable issues than even the ones we’ve been talking about around GP commissioning in future, because you are going to have to find some way of dealing with PFI legacy debt. You are going to have to find a way of dealing with long term underlying financial problems beyond PFI debt, and then find a way of encouraging the successful foundation trusts to consider merger-or a takeover, as it would be-of these failing organisations, or indeed to open up the market to allow more Circles and Sercos to come in to play their part in that process.

Q270 Chair: Is that doable? I think Jo and I have similar situations; is that doable?

Joseph Johnson: Not without writing off the debts.

Chris Ham: I think you have to find some way of writing off the debt.

Chair: They have refused to do that to date, even under the more generous Labour Government.

Chris Ham: In which case we’re not going to get to 2014 successfully with all organisations being in foundation trusts, or managed by private sector companies that want to come in and take them over.

Mr Bacon: An equivalent to the bad bank idea for hospitals, do you think?

Q271 Matthew Hancock: Are those difficulties made worse or better by the reforms? Because the difficulties of PFI debt and badly financial managed trusts or groups of trusts is the problem, that is a legacy. The question is the impact of the reforms on that position.

Chris Ham: To the extent that you’re deconstructing the commissioning side and putting it back together again, and the commissioning side has a part to play, it makes it even more challenging, but the fundamentals remain exactly the same.

Q272 Mr Bacon: PFI debt we understand: we’ve looked a lot at PFI. That’s one specific issue. That aside, these 20 or so trusts that you think will not make it to foundation trust status: in a nutshell, where does the fundamental problem lie that stops them making it to foundation trust status? Is it the wrong kind of patients? The wrong of clinicians? The wrong kind of managers? Where does the fundamental problem lie that stops them getting better?

Chris Ham: It is a combination of financial problems beyond PFI on the one hand, and clinical quality problems on the other. There’s a high concentration of these trusts in London, as it happens, because in London at the moment my recollection is there are 8 foundation trusts out of a potential 30 foundation trusts-a much lower proportion than across the country as a whole-and there are deep historical reasons around London having, many people would argue, excess acute hospital capacity, including highly specialised hospital capacity, certainly compared with the rest of the country. Clare and Shane will have views on this, but our interpretation would be standards of general practice which are variable-some very good, some very poor-but generally not as high as you would see in the rest of the country, which in turn reinforces the dependence on hospital care, because people default to the hospital because of the problems of general practice, and successive commissions over many, many years, have come up with proposals for sorting that out, most recently Ara Darzi and the Healthcare for London Review, which was making some real, real progress with demonstrable improvements in the quality of stroke care and other services until about six months ago, when the Health Secretary said "We’re bringing an end to Healthcare for London because it’s an example of the topdown restructuring of healthcare that is the past not the future."

Q273 Chair: Has the Kings Fund done a calculation for these trusts-which Jo and I obviously share-of how much is involved: money? Because I think the basic problem is a financial problem.

Chris Ham: We have not. I believe that NHS London has done that for the trusts in London that fall into that category.

Chair: But you haven’t done it for the 20.

Chris Ham: No.

Chair: You and the Department of Health know very well which these 20 are.

Chris Ham: The Department has set up this new provider development agency-I don’t know if it came up in your hearing with Una and David-dealing with this group of 20 to 30 NHS trusts and managing the transition between now and 2014. That will be the body that will have all this information at its fingertips.

Q274 Nick Smith: One of our worst afternoons here was listening to a PAC report on pathfinders in areas of multiple deprivation about six months ago where it seemed that there was slowness at introducing the Department of Health’s strategy on helping out in those areas. Do you think the new regime will help at all to address some of the issues that came up in that report, going back to poor GP provision, and addressing real needs of areas with multiple health and economic deprivation?

Chris Ham: Can I clarify: pathfinders in the NHS lexicon today means GP commissioning consortia. I think you were referring to the other kind of pathfinder, which was what the previous Government set up around tackling health inequalities?

Nick Smith: Yes. On, the health inequalities agenda, I am interested in seeing whether or not this new regime will make some difference.

Chris Ham: I think Clare knows more about this than I do but I think whether the reforms will help or hinder there depends rather less on the GP commissioning and how that goes forward and more on the Government’s proposal on public health, and you will know that public health is migrating away from the NHS: local authorities will employ public health staff, will have that broader responsibility in future. There was an interesting paper in the Lancet last week commenting on this and raising some questions about whether that’s the right way to go. I think the issue for us is, while there are real benefits in directors of public health focusing on health inequalities alongside housing, leisure, transport and the broader agenda local authorities can bring to bear, we must not create this artificial divide between what the public health staff are doing and what primary care teams are doing in the NHS, because those primary care teams you might say are the foot soldiers in the fight around prevention and tackling health inequalities. They know their patient populations, they are really well placed working with public health to make more progress in future, and if you move public health to local government you risk creating a bigger division between primary care and public health.

Q275 Chair: I was going to ask that question: how do you GPs see the accountability to your local health and wellbeing board?

Dr Gordon: Those two things are separate: the health and wellbeing board is responsible for the co-ordination, or encouraging the co-ordination of strategy across the area. Public health will have very specific roles that Chris has just alluded to. There’s a real need to retain some public health input into GP consortia to allow us to focus our commissioning in the areas that deliver the best benefit on equality and the inequalities agenda. I think that’s absolutely vital.

Q276 Chair: How will you be accountable to the health and wellbeing boards? How will that work?

Dr Gordon: We will have membership on the health and wellbeing boards.

Chair: That is a different question: that is how will you control. How will you be accountable to them?

Dr Gordon: Well, the accountability as proposed is not accountability; it is a duty to engage with them. So we will have membership on there which will give us an input and an intelligence function which will put us in touch with the local population.

Chair: But you don’t see yourselves as accountable to them?

Dr Gordon: The legislation as it currently is does not propose accountability to health and wellbeing boards. It proposes a duty for us to engage with them.

Mark Davies: I think this particular issue was around having to share commissioning plans and proposals with health and wellbeing boards. It was this interaction with the wellbeing board.

Dr Gordon: Certainly, the development of joint strategy for the area of the joint strategic needs assessment, the joint strategy for health and wellbeing, will involve the consortia, and public health, and the local government planning together how we commission services.

Q277 Chair: But there’s no accountability locally, really?

Dr Gordon: That is my understanding of the legislation.

Chair: Do you agree with that, Chris, and are you happy with that?

Chris Ham: There is no formal accountability from GP consortia to health and wellbeing boards; the formal accountability is upwards to these subnational offices of the NHS commissioning board itself.

Chair: And what is your view of that?

Chris Ham: It is a logical way of making the commissioning side work, as it is all part of the NHS. The consequence following on from that is a much weaker role for local authorities in relation to GP commissioning and the NHS commissioning as a whole than many people had expected when the White Paper first came out.

Q278 Chair: Have you got a view, Dr Gordon?

Dr Gordon: I guess it’s a question of how many masters you are trying to serve, which is the problem we create having dual accountability. I think we as consortia are going to be looking very much to the support of the health and wellbeing boards in making sure our strategies are coordinated, and therefore you will get that buyin to the larger local community and stakeholders.

Q279 Chair: We all agree in theory about having the patient at the heart, but one way of ensuring some sort of patient voice is through the elected representatives locally. You can argue the pros and cons of that. Another is the role of patients within the consortia, and it just seems to me that that is weak. Any of us who have used the health service at all know that even the most articulate and tough middle class person needs an advocate at present, and I am not sure the new system will give you anything better.

Matthew Hancock: Actually, it is also accountability from patients. Given that there will be overlapping geographical GP groups there’s accountability down to patients. But this is really getting into quite a level of policy, isn’t it?

Dr Gordon: There are two strands which will ensure that. One is the authorisation process, which will look at whether we have patient representation within consortia, and there will still be the oversight and scrutiny role of local Government.

Dr Gerada: As long as we never lose sight of the fact that most of the people that use the health service are sick, mentally ill, deprived. The likes of us around this room will find our way through, whatever the organisational systems are, and it is important. You asked about health inequalities and whether these reforms will make them better or worse. I don’t know. What I do know is there have been enormous changes addressing health inequality: the quality and outcome framework for the GP contract has addressed health inequalities; the public health indicators around equality and outcome framework-like cervical smear rates, immunisation rates-are dramatically improved. We have had fantastic medical directors who have been sweeping through, dealing with very poor performers and getting rid of them, to use an awful term. So we have had some really great changes. Whether this will change it or not, I don’t know. I hope that it will improve things, but unless we start to address the fundamentals, which is numbers of GPs in deprived areas, the time taken to see the patients, the complexity of services, the variability of services that we have because of bad stuck in bad, then we won’t move anywhere.

Q280 Stephen Barclay: Can I just clarify that: did you read the NAO reports?

Dr Gerada: Yes I did. I only read the bit in relation to health, I hasten to add.

Stephen Barclay: What the report showed was health inequalities had increased.

Dr Gerada: They did say that, but there were also some areas where they had improved, such as the QOF.

Q281 Stephen Barclay: I’m not disputing that. One would hope that if you more than doubled the health budget to £110 billion, there would be some improvements. I think most people around this table would accept that premise. The point, and what was so disappointing about the report, was that, notwithstanding the political will-and I don’t for a minute dispute that there was a political will to address health inequalities-health inequalities actually went up.

Dr Gordon: But the money went into hospitals, not into primary care, which is the principle by which you address inequality.

Q282 Stephen Barclay: That is why I was asking earlier about the number of GPs in the most deprived areas.

Dr Gordon: That will depend on how we are able to commission that, and whether we are able to commission it at all, giving that the contracting of general practitioners lies with the commissioning board.

Q283 Chair: There are two final areas I think we need to cover. One is the transition costs, and the other is the transaction costs, so if we go to the transition costs first, to get from the old scheme to the new. Are you all confident that the money set aside will be sufficient to enable you to do that? It is £1.4 billion––anyone got a view?

Chris Ham: David Nicholson has managed this part of it very well in difficult circumstances, because I think we’re getting to a better place around the transition arrangements: the PCT clusters, giving security to experienced leaders and setting aside some money from the budget, top slicing to pay for those transition costs. Whether that money will be sufficient, again, frankly, none of us knows. We are very much in the same position that Kieran Walshe from the University of Manchester articulated six months ago, that in rough terms-it’s a very wide range-we think the transition costs will be in the range of £2 billion to £3 billion. Now, the Department’s estimate is lower than that. I think it will come out in the wash, and maybe what’s been done recent will reduce the overall cost. But there are the concerns about how long the payback will be on that, and it relates to your second point: will the new system ultimately be that much cheaper to run with the regulatory arrangements being set up and the cost of running those

Q284 Chair: Go on, on the second point.

Chris Ham: On the second point-this is all of us looking into the crystal ball and the crystal ball inevitably is pretty cloudy on these occasions-but our reading is that if you look at what is set out in the Bill, it, first and foremost, is about creating the architecture around economic regulation of the market, the powers of the new Monitor being very different, much more powerful than the old Monitor ever was. That economic regulator is expected to deal with OFT and the Competition Commission on economic regulation, with the Care Quality Commission on quality regulation, and, by the way, with the NHS commissioning board to agree on tariffs and price setting in the new system. The new Monitor is going to have to employ lots of very talented people with skills in regulation, finance, the law and so on to be able to discharge the many responsibilities that have been set out in the Bill. Our view is that will mean significant transaction costs in the system.

Chair: More than at present?

Chris Ham: I would not say more than the present: we simply do not know.

Q285 Mr Bacon: I want to go back to public health for a second. As Professor Ham alluded to, it’s been moved across, of course, to local authorities. Dr Gerada, from what you’ve been saying about GP practices, it was to me slightly surprising when I heard it was being moved across to local councils. My instinct would have been that’s perhaps a job that GPs would do rather well. Do you think that more public health responsibility is something that GPs would be well equipped to take on-leaving aside for the moment that some areas in the inner city don’t have enough GPs, which is obviously something else that would need to be addressed, because that’s also where the greatest health inequalities are? Do you think that, in general, GPs would be well equipped to take on greater public health responsibilities?

Dr Gerada: Yes, absolutely.

Q286 Mr Bacon: So if it turns out in say three or four years’ time, that local councils haven’t done such a good job of public health with these health and wellbeing boards-or even if they don’t spend more money, because so far as I can see it’s not ring-fenced, from local discussions I’ve seen it’s not necessarily going to end up being spent on this. Could you just say what you think GPs, had they been given the task, would do?

Dr Gerada: Yes of course, and at the college we have established a centre for commissioning to help support our members in getting skilled up, and one of the work streams is around public health and working with the Faculty of Public Health, trying to skill up GPs in their public health role. We have already created, a few years ago, a GP with special interest framework in public health, and we want to take that forward. Bear in mind also that GPs only have three years’ training, so we’re now going to have to put into all of this commissioning and public health, but we at the college firmly believe that public health and the ability to take a population view, the ability to do needs assessment, should be integral to the role of the GP, and in future we’ll be there, and we’re hoping to set that up.

Q287 Chair: Maybe NAO can help, but the evidence is that where we’ve had GP commissioning, to date, when we looked at the health inequalities, the actual expenditure on public health, and therefore investment to reduce inequalities-smoking cessation, statins, all that sort of stuff-was less. Am I right in this? As I remember, as I recall the health inequalities paper, it looked as if those areas where there’s been some GP commissioning, from past evolution, there was even less expenditure on those interventions that we know work, that would reduce those inequalities.

Dr Gerada: Well, that shows, then, the failure of GPs.

Chair: So why should we have confidence in the future?

Dr Gerada: I do have confidence in the future-no, I have confidence in the provider side. Where there’s been greatest innovation and greatest shift in services is where GPs have got together and actually looked at what needs to required from a service-not necessarily about smoking cessation services or giving somebody a statin-but about setting up substance misuse services, services for the homeless, services around sex and domestic violence. Those are the issues that are public health issues, although they may not come under the banner of public health.

Q288 Chair: But to be honest, the simple things that a GP could be doing now without additional powers would be stopping people smoking and making sure they don’t die of respiratory diseases and strokes and things like that, and what was so extraordinary in the health inequalities was these three interventions could, between them, reduce health inequalities-correct me if I’m wrong on this-by 15% or 20%, and they’re just not happening.

Dr Gordon: There’s two different points there: I think you’ve made an assumption that where there was GPs involved in commissioning, they had control over those issues, which I don’t think is correct.

Chair: I think they did.

Dr Gordon: I don’t think it’s correct, certainly not in my experience. We are in practice-based commissioning, marginalised to work on elective conditions, by and large. That’s a gross generalisation, but I don’t think that’s a correct assumption. I think we do need public health input. I think it is a discipline that does the big picture stuff very well; we as general practitioners often need some help with that. I think it’s the synergy of the two again. As Chris was saying about the input of expert managers, the input of expert public health specialists has been vital to our local success in improving exactly the sort of inequalities you are talking about: for instance, through the NHS health checks programme, which we have led with the help of public health.

Q289 Stephen Barclay: Two quick questions on accountability, just really benefiting from the expertise of the four of you. I raised previously my concerns around European qualified doctors working in the United Kingdom who do not meet adequate English language ability, and the Department has said it has got no ability to put a test on that, and in its note to our previous hearing they say "the responsibility lies with the employers of doctors to ensure that they have adequate skills". I don’t know whether the royal college has done any work and has got any legal advice, particularly on the interpretation of the 1983 Act, but I would be interested, if you have, whether you could share that with us, but also your thoughts on that as an issue.

Dr Gerada: It is a very important issue, and the royal college has just recently, under my predecessor, published a document looking at out of hours, and one of the most important areas was the ability to speak the language that’s required. As far as I understand it-I have had discussion with the GMC around this-we are going to try and take this forward, and when these doctors come and want to be put on the GMC register, there will be an understanding and a selfdeclaration that they can declare that they can speak the language adequately to meet the needs of our population. Now, you may say that’s not enough, but it’s a start, and then it’ll be down to the responsible officer locally.

Q290 Stephen Barclay: What I’m driving at is that the GMC told me it has legal advice which supports the view that the 1983 Act could be amended, but the Department of Health don’t want to share that, which is why they won’t share it with me. I don’t know, but that is what it tells me. It is more than three years since my constituent was killed by a German out-of-hours doctor. We are talking about making changes in the future, but it’s still the case now that someone who’s qualified in Europe can come here, and incidentally, if they’re banned here they’re not banned in their own country, which strikes me as odd. We are particularly interested in whether the royal college has any legal advice on this issue that you can share with the Committee?

Dr Gerada: We have not got any legal advice. As I say, we have a report that came out under my predecessor which we are now going to turn into a good practice guidance: that is about all we can do. It is my understanding, though, that the GMC’s advice about being able to shift the Act is what you’ve heard: there is some movement on that.

Q291 Stephen Barclay: Because the French interpret European law in a way that does allow them to apply French language tests. So the same European law, one would assume, could be interpreted in a constructive way here.

Dr Gerada: I’m not a lawyer, and as I said we haven’t sought legal advice, but it would seem reasonable that a patient in this country would be consulted by a doctor who could speak their language, and, on the basis that the law should make sense, that would seem reasonable.

Stephen Barclay: Would you mind sharing with the Committee a note, just on what the royal college position is on this specific issue?

Dr Gerada: Yes, of course, absolutely.

Q292 Stephen Barclay: Another issue which I have been trying to get some figures on is the use of special severance payments by foundation trusts. This is particularly the sacking of clinical staff for nonclinical reasons, often with a gagging clause, a confidentiality clause, attached. What are your thoughts on the extent to which there is an issue there within foundation trusts, and particularly also around GP consortia and whether GP consortia would be able to use special severance payments moving forward.

Dr Gerada: I would not have a view on that I’m afraid.

Chris Ham: No, I’ve got no awareness of that issue.

Chair: Okay, thanks very much indeed, and just to be clear, we’d like that note as soon as possible, but I’m not sure it’s absolutely 100%;. It isn’t relevant, really, to this evidence session, so we’ll be treating it outside of the evidence session.

I thank you all much indeed for giving your time and being so clear in your evidence.