Commissioning in the English NHS: will it deliver

1. Commissioning in the English NHS: will it deliver? Chris Ham University of Birmingham

2. The main types of health care system Market systems (e.g. US): private finance and provision dominate Beveridge systems (e.g. UK): tax funding with mainly public provision, and integration of funding and provision Bismarckian systems (e.g. Germany): social insurance funding with mixed public/private provision, and contracts between insurers and providers

3. Experience of commissioning In market based systems, health insurers are the equivalent of commissioners In Bismarckian systems, sickness funds take on this role In Beveridge systems like the NHS and NZ, the purchaser/provider split meant moving away from an integrated approach to the establishment of a commissioning role

4. Experience of commissioning (2) US health insurers and European sickness funds are often competing for members They are therefore oriented towards understanding the demands of members and responding to these Traditionally, they have been passive payers of providers, and not active intelligent commissioners of care

5. NHS experience The NHS has experience of commissioning going back to 1991 Various models have been used: DHAs, fundholders, locality commissioning, multifunds, total purchasing pilots, PCGs, PCTs, practice based commissioning Commissioning is often described as the �weak link� in the NHS reforms

6. A tiered approach NHS experience strongly suggests the need for a tiered approach Practice based commissioners can contribute alongside PCTs and PCT consortia e.g. for specialised services Private sector expertise may also be able to contribute e.g. in relation to data analysis

7. The NHS today Enthusiastic uptake of PBC is limited PCTs are still putting in place the skills and expertise they need to negotiate on equal terms Private sector involvement is at an early stage World class commissioning is an ambitious aim

8. International experience There is no country where commissioning is done consistently well In Europe, the sickness funds are starting from behind us In Beveridge systems like NZ and some of the Nordic countries, experience confirms the evidence from the NHS In the US, value based purchasing is a work in progress

9. Some theory Transaction costs economics explains why health care commissioning is so difficult Where the product is complex, there are strong arguments to �make� rather than �buy� The costs of a commissioner/provider system are often high, and need to be justified by the benefits Williamson and others argue that in these circumstances integration may be preferable

10. Integration In the US, integrated systems have demonstrated high levels of performance Examples include Kaiser Permanente, the Veterans Health Administration, and the Alaska Health Service Through integration, these systems minimise the use of hospitals, provide more care closer to home, and achieve good patient outcomes

11. Kaiser Permanente KP integrates (1) the full range of services, (2) GPs and specialists, and (3) funding and provision KP uses one third of the bed days as the NHS for people aged 65 and over There is a strong focus on chronic disease management, in the appropriate setting KP is an integrated system in a competitive market

12. The VA The VA was in deep crisis in the 1990s It has been transformed over the last decade to become an exemplar in the US The VA has changed from a hospital based system to an integrated system Like KP, it focuses on chronic disease management Bed day use has been reduced by 50%

13. Lessons from KP and the VA In neither organisation is improvement driven by commissioning as we understand it KP and the VA are both vertically integrated systems that �internalise� contracting KP and the VA give priority to clinical leadership and the alignment of incentives and objectives

14. What are the implications? Doing commissioning well has been a challenge both in the NHS and other countries Many of the lessons on commissioning have arisen from NHS experience, or from US managed care The experience of integrated systems raises questions about whether we are going in the right direction

15. Risks for the NHS Patient choice, surplus hospital capacity and PbR will suck more resources into hospitals The incentives, time, management support and information will not be available to support effective commissioning The reforms will be imbalanced and will not deliver the vision in Our Health, Our Care, Our Say

16. Following up c.j.ham@bham.ac.uk Thank you