Commissioning and the purchaser-provider split

GP Commissioning is a consequence of the ‘purchaser-provider split’. In simple terms this defines GPs as purchasers (of health care) and hospitals as providers.

This is an artificial distinction. It doesn’t reflect what actually happens.

GPs provide at least as much care as hospitals. For example, in the last 3 months of last year I saw 807 patients and referred 51. Less than 7%. Of the referrals I made, many were for diagnostic or management advice and the patient will be sent back to me (and my practice team) to continue looking after them ourselves. Very often, hospital specialists ask me to perform investigations, trial or administer treatments, test for alternative diagnoses and so on. Both GPs and Hospitals are providers of health care. In actual fact, the whole array of health professionals and patients themselves work together as co-producers of health care.

The distinction between purchasers and providers is artificial. It has been introduced to create a health care market.

This artificial split has created new problems that weren’t there before. One is that hospitals have ‘perverse incentives’ to perform excessive investigations and procedures which they can bill to GPs. See this previous post for details.

Another problem is that hospitals have no incentive to work with GPs to reduce referrals. Recently I worked with a local neurologist to teach other GPs about the management of migraine. An audit of PCT referrals suggested that up to 40% of referrals could have been avoided and the patients managed effectively in primary care. The ‘purchaser-provider split’ has destroyed any incentives for hospitals to reduce the numbers of referrals because that would reduce their income. The pressure is unprecedented for at least 3 reasons.

  • One is that the hospitals have to become foundation trusts and make an operating profit or go to the wall.
  • The second is that they have to do this at a time of £20bn worth of cuts which is has never been done before in the NHS. (Excellent analysis from Richardblogger here)
  • Thirdly, they are now operating in a competitive market where new entrants (referred to by the government as ‘any willing providers’) will be able to pick off the easy, profitable work that hospitals do and offer it to GP purchasers (GP Commissioning Consortia, GPCC) who will be under pressure to save money and under threat of EU competition law if they choose their local hospital rather than a cheaper competitor.

GPs on the other hand have enforce the £20bn cuts by ‘purchasing’ less care which means referring less patients and/or referring to cheaper ‘providers’. Certainly there are good grounds for referring less, as my audit of headache referrals showed, and my colleagues’ audit of gynaecology referrals showed (also 40% unnecessary). But, GPs who over-refer need support and training, and cooperation with the local hospital (provider) to work out careful clinical protocols and pathways. Without this, there is a serious risk that patients who actually need to be referred, will not, because of the need to save money.The purchaser-provider split is not just bad for hospitals and GPs, but bad for patients, stuck between purchasers and providers each with different financial incentives rather than their patients’ best interests. More worrying for patients is that the risk of medical errors is significantly higher when GPs and hospitals are not communicating and collaborating closely.

With the proposed changes the incentive for the hospital to help safely reduce referrals has gone, because they’re now trying to encourage more referrals to generate income and avoid going to the wall.

No hospital doctor wants to over-investigate or operate when it is not clinically indicated. No GP wants to hang on to a patient they’re worried about when they ought to be referring. But to introduce financial competition at the time of severe financial cuts forces clinical decision making to be compromised by financial considerations.

It doesn’t have to be this way. One of the first articles I wrote was about the Mayo clinic.

The Mayo Clinic in Northern Minnesota offers exemplary care at costs within in the lowest 15% of costs for the whole US.  It does this by removing financial incentives from clinical decision making, by paying staff salaries or fixed fees instead of linking pay to procedures and by significantly improving the level of teamwork by facilitating communication and collaboration between all the professionals involved in patient care. Costs were reduced and there were less unnecessary investigations and less clinical errors.

If Lansley was interested in improving efficiency, quality and safety he wouldn’t be introducing via GP commissioning an artificial split that will do exactly the opposite.

He should be facilitating collaboration between public health, social, primary and secondary care. This will give the much lauded increased clinical involvement in management with the added bonus of a range of clinical perspectives.

He should remove financial incentives to over-treat or under-refer.

He should give responsibility for these multidisciplinary teams to look after geographical areas and decide between them who is best placed to provide the care patients need.

And he should wholly reject the purchaser-provider split.

Now read: The colossal waste in commissioning costs by Wendy Savage published in the Guardian on 20.01.2011

6 responses to “Commissioning and the purchaser-provider split

  1. I too am concerned… especially at the speed of the change to the structure of the NHS but………..

    You blog is confusing.
    Your example of migraines demonstrates that referral of secondary care is often unnecessary. Surely a competent local surgery controlling their own budget should/would not refer to a hospital if it was not necessary? If the local surgery is not competent then that is a problem that needs to be fixed. Why hasn’t it been fixed? If they controlled their own budgets then there would be a greater incentive to fix the heart of the problem.

    All I read from the critics of this NHS re-organisation is just criticism. No one seems to be suggesting a better alternative. The current status quo is not sustainable. Increasing costs of medical procedures and drugs as well as the increasing age of the population will make the cost of the NHS spiral out of control. It already costs an average of £4000 per household. It can’t keep going up like it has for the last 10 years.

    If the government’s proposals are wrong then what is the right solution.

    • Thanks for your comment. If you come in to see me with severe migraines and I say that you don’t need a brain scan and a referral, you are not to know that my decision is based on clinical or financial reasoning. Referral rates are complex. There is evidence that some GPs with special interests in a speciality refer less than average because they manage more themselves, whilst others refer more because they worry about rare diseases or have over optimistic views about specialist interventions. A rational way to reduce referrals is by significantly improving hospital/GP collaboration. It’s been woeful for years.

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