National Health Service Landscape Review - Public Accounts Committee Contents

Conclusions and recommendations

1.  Our focus in respect of the health reform programme is on accountability for taxpayers' money. With the health reforms still at an early stage, there are some aspects of the accountability arrangements which have yet to be resolved. There are also a number of risks during the three-year transition period which need to be managed.

Areas for clarification

2.  Parliament, and this Committee in particular, needs certainty about who to hold accountable for health spending once the reforms are complete. The different accountability arrangements for commissioners and providers are complex. The Department should provide detailed answers to the following questions:

  • Who will be accountable to Parliament for protecting the interest of taxpayers in a devolved health system? The respective roles and responsibilities of the Department's Permanent Secretary, the Chief Executive of the NHS Commissioning Board, the regulators, Monitor and the Care Quality Commission, and the Accounting Officers for Foundation Trusts require further clarification, along with the arrangements for securing assurance about the propriety and value for money of local health spending. Whilst we understand that legislation underpinning this accountability has been in place for some time, we are concerned at the capacity implications of accountability for, potentially, over 200 individual Foundation Trusts resting directly with Parliament.
  • To what extent will health bodies having a 'duty to engage' locally with, for example, Health and Wellbeing Boards and Local HealthWatch, lead to accountability ? These are key mechanisms for communities to influence the shape of their local NHS services and need to be robust, with clearly articulated responsibilities, for the public and patients to have confidence that there is effective scrutiny over the quality and value for money of those services.
  • What structures will link local GP consortia and the national NHS Commissioning Board, to which they are accountable? The Commissioning Board will not be able to directly oversee several hundred GP consortia; what regional or other structures will be used and how will their cost-effectiveness be secured? Is one regional structure being abolished simply to be replaced by another one?
  • What information will be available to decision makers, the health regulators and the public on the cost and quality of services? Our reports have often been critical of the lack of robust information on the performance of health services; we understand that the flow of information is to be rationalised and streamlined in the Health Information Strategy. The information must be relevant and fit for purpose so that effective accountability can be secured.

3.  There are a number of practical aspects of the proposed reforms which require clarification. This will help us to identify and focus our future hearings on the issues which present the greatest risks to value for money. The Department should lay out in detail the answers to the following questions:

  • How will the treatment of patients with rare and expensive conditions be funded? To what extent will such conditions be funded through allocations to 'risk pools' rather than routine allocations to consortia and how will disputes be resolved?
  • How will continuity of services be safeguarded when a GP consortium or Foundation Trust hospital is failing or has failed? What roles will the NHS Commissioning Board, Monitor and the Care Quality Commission play and how will their actions be transparent to the local communities affected? Who will pick up liability for the debts of independent Foundation Trusts?
  • How will commissioners and providers contract with each other to drive value for money in the system? There seem few incentives for GP consortia to drive better deals or for providers to offer prices below tariff. The Department has said that there will be no competition between providers on price, but there are concerns about what the Department means when it says that it wishes to see prices driven by the most efficient providers.
  • How will the NHS Commissioning Board work with GP consortia to redesign primary care services? How will potential conflicts of interest between GPs' roles as commissioners and as providers of primary care be managed?
  • How will the NHS Commissioning Board work with GP consortia to ensure the proper configuration of acute services so that value for money for the taxpayer and effective quality of healthcare for the patient is secured? This is an issue of particular importance in urban centres where the NHS is presently seeking to redesign acute services.
  • How will providers secure capital funding in future? Capital funding may be provided by the private sector, either through PFI deals or through direct borrowing by trusts. These funding arrangements can be expensive, as recent reports by this Committee demonstrate. Will the Secretary of State ultimately underwrite these borrowing arrangements, and if so, how will the Department manage the residual risk it would bear should a trust be unable to meet its commitments? Who will manage the risk that some trusts reduce their capital spending too far in order to cut costs?
  • How will legacy debts from Primary Care Trusts be handled? The Department has indicated that GP commissioning consortia will not inherit Primary Care Trust debts, but accepts that it cannot guarantee this in all cases.
  • How will the reforms affect existing health inequalities and performance variations for some NHS services? The NHS currently has wide variations in the services patients receive in different parts of the country - for example, there is an eight-fold variation in the extent to which GPs refer their patients to cancer specialists. GPs' new role could help to reduce such variations, through more effective peer engagement. How will the Department and the NHS Commissioning Board monitor the effect of the reforms on service variation? What safeguards will there be against unacceptable variations in services in different parts of the country? How will the reforms drive a reduction in the present unacceptable health inequalities which exist?

Risks during the transition period

4.  The Department acknowledges that it may not be able to achieve all the savings intended under its efficiency programme. The Department said that 40% of the savings were controlled nationally, through pay freezes, central budgets and management cost savings, and it was confident it could deliver these. A further 40% would come from efficiency gains in providers, delivered through setting the tariff. The final 20% would be due to service change such as shifting services from hospitals into the community and these would be the most difficult to achieve. The Department needs to monitor the savings and report regularly on progress against the target.

5.  The Department's estimates of transition costs rely on GP commissioners being ready to take on a certain proportion of former Primary Care Trust staff. The Department has no control over such decisions or the resultant redundancy costs. The Department needs to regularly review the emerging costs of the transition and have contingency arrangements in place if costs exceed expectation. We will monitor the progress and costs of the reforms, beginning later in 2011.

6.  The Department told us there are at least 20 NHS hospital trusts which will struggle to obtain Foundation Trust status. The Provider Development Authority will have the responsibility to bring them up to the required standard but this will be particularly challenging where hospitals are burdened with significant PFI or other debts. The Department should set out its contingency arrangements to ensure the supply of services in areas where trusts cannot meet the criteria to become Foundation Trusts. This should include clarifying the roles of Monitor and the Care Quality Commission in such cases. The Department will need to make arrangements for handling PFI debt in a way that allows all Foundation Trusts to operate on equal terms in the marketplace.

7.  The small size of some GP consortia risks creating inefficiencies in the system. Currently there are pathfinder consortia with as few as 14,000 patients. Very small consortia may lack commissioning expertise and influence over providers, affecting their ability to secure the highest quality services for their patients. They may also have disproportionately high overheads. There is a risk that the funding of £35 per head for the running costs of GP consortia may allow small consortia the scope to be inefficient whilst larger consortia are overfunded for their running costs. The flat rate charge may also lead to some consortia trying to 'game' the system. We will take a close interest in the efficiency of the system in this regard and the Department should take steps to ensure that the level of administrative funding for consortia of different sizes is adequate but not generous, and does not introduce perverse incentives.

8.  Given the pace of change, there is a risk that there is insufficient time to learn the lessons emerging from the new model, for example how the NHS Commissioning Board will organise itself to oversee and support consortia of potentially widely varying sizes. The NHS Commissioning Board will be formally established in April 2012, which will provide limited time for it to learn the lessons of the GP pathfinder consortia, for example, at what scale efficient commissioning decisions should be made for different services. We will expect to see the proposals refined where appropriate to respond to lessons arising from the pathfinders. The Department should set out in detail how and when it will appraise the pathfinder consortia and when those results will be made public.

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© Parliamentary copyright 2011
Prepared 27 April 2011