Conclusions and recommendations
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
- 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
- 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
- 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
- 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
- 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
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
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
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.