Editor's blog Friday 19 February 2010: Commissioning measures up; UK 'PLC' finances turn down

Do you remember commissioning? (Now there's a question for Sir David Nicholson. Not that he's a big fan of answering questions.)

It can be quite a stretch to remember commissioning, in the current NHS era of Andy Burnhoid's "preferred provider" malarkey - at least, current until the CCP delivers its Phase One judgment on 2nd March.

But we policy elephants can cope, eh?

I used to be a fan of commissioning. To paraphrase Victor Kiam, I liked it so much, I launched a publication and website about commissioning with help from collegaues at NHS Alliance and BUPA Commissioning (as was).

Actually, I still am a fan of commissioning as a concept. For all that the policy trend towards more vertically-integrated services now appears unstoppable, I remain convinced that the commissioning function - that of analysing population health needs; specifying and choosing services; and analysing whether they are delivering and then doing something about it if not - remains crucial to improving the quality, value and appropriateness of services.

But commissioning has come to be seen as a corpse, in its practice-based incarnation by primary care czar DCT. Chris Ham, Richard Lewis and many others have pointed to its deficiencies. PBC is, in practice, excellent in a significant minority of areas, but largely a myth. On here, you will have read Alan Maynard's sermons on PCTs as "toothless bulldogs".

Commissioning Health (slight return)
So I was impressed to see a new publication from the Health Foundation: Commissioning health. A comparison of English primary care trusts: preliminary statistical analysis by Stephen Martin and Peter C Smith.

Martin and Smith suggest that there is relatively little variation in the efficiency of PCTs, which broadly range from about 77-100% efficient (such a wide range being due to their chosen analytical technique).

They describe this work as "unusual in seeking to formulate efficiency in terms of the ultimate objective of healthcare, the production of health. We use as inputs the expenditureincurred by each PCT. As outputs we use mortality indices in two major disease areas: cancer and circulatory disease. We also control for relative clinical needs, using the needs index used by the Department of Health to distribute funds to PCTs".

Various of their summary points are worth quoting in full:
"Efficiency is strongly negatively correlated with allocations in excess of targets, suggesting that PCTs with relatively generous budgets are less efficient in securing health outcomes than their less generously funded counterparts".

"Other things being equal, PCTs with higher levels of deprivation tend to be less efficient. We speculate (but cannot confirm) that this may be because such PCTs experience more recruitment difficulties than less deprived PCTs. Or it may be because the needs adjustment used in our analysis does not fully capture the impact of deprivation on health needs".

"Although we found generally similar levels of efficiency among PCTs, there were a
small number of outlier PCTs that appeared to be achieving significantly lower levels of efficiency than their otherwise identical counterparts, and there is a strong case for further regulatory scrutiny of such PCTs".

"This analysis examines relative efficiency among PCTs, and therefore says nothing about the overall efficiency with which the NHS commissions health. There may be substantial system-wide initiatives that could improve efficiency across the board, and this study should not lead policy makers to the conclusion that further efficiencies cannot be secured".

Everything you know is wrong (maybe)
Now there will be challenges to the data used. Even with such challenges, the findings are startling.

As Health Foundation clinical and D&R director Martin Marshall writes in his foreword, "it is unlikely that significant financial efficiencies can be garnered by ridding commissioning of unacceptable variation. Overall, little evidence is found of relative inefficiency in the way that funds are allocated between the major disease groups, as set out in programme budgeting categories. Many governmental efficiency drives are predicated on the notion of wide variations in the performance of public bodies. But this report comes to a different conclusion regarding PCTs: most appear to be performing at a similar level. This suggests that increased efficiency will only come about as a result of step-changes at system level, not through individual PCTs adjusting their internal processes.

"The message to regulators and performance managers appears to be that within the current commissioning framework there is precious little in the way of extra efficiency to be found by focusing on individual PCTs. In terms of meeting the challenge of the economic crisis, this report seems to add force to the argument that the approach of cuts across the board will not increase productivity and that system-level change in the way commissioning functions and the incentives it offers for efficiency will need a radically different approach in future".

Now this is not all right - Martin and Smith are clear that a small minority of PCTs are performing very poorly on efficiency (see their penultimate quote above).  And Marshall's correlation between the report's findings and the possibility of cuts across the board is unclear to me.

However, in general terms, a strong case is being made here that at least some of what we think we know about commissioning - and about the oft-despised PCTs - is wrong. Food for thought.

The cuts debate
Yesterday's government borrowing figures for January didn't make for pretty reading. There is an amusing analysis of the latest sally in The Potentially Tedious War Of The Economists' Letters here, by BBC economics corespondent Stephanie Flanders.

There is also an insightful review of the situation of protecting services from cuts here in Public Finance, by Tony Travers of the LSE.

Travers suggests that "it seems likely that schools, social care, the police and social security payments will be given significant protection from cuts. ... That could mean cuts of at least 40% to 50% on all the ‘unprotected’ services in the years 2011/12 to 2014/15.  Even if rent allowances and rebates are removed from both sides of the calculations, the reductions required from the unloved services could still be over 30%".

Ouch.

There also seem to be some heroic assumptions about potential savings under way in the Labour-run London Borough of Lambeth, as a political response to Conservative Barnet's EasyCouncil approach.

The mutual debate is going to go through some bizarre twists and turns yet.