GP Commissioning – the savings don’t stack up

by Peter Smith on July 14, 2010

Back to GP Commissioning  – and I will use the terminology GPCUs (commissioning units) as shorthand here.  Firstly it is worth quoting this interesting if slightly obtuse comment from ‘Rob’ on my previous post.

Potentially, only one sector could possibly really do this at a pace – with the backing of significant (requisite) investment (£ms) and the attraction and promise (no doubt) of significant returns (£ms).

Step forward the global health maintenance and insurance industry…

…and all they(?) would need to do, is figure out how to establish this new layer in this potentially, highly litigious, EU Regulated procurement environment…

…but observers have also noted that if GPs themselves (who are private enterprises) ‘procure’ this layer, it may not fall within the reach of any such regulations, particularly if there are no such precedents (in the UK)…

Interesting points there about the potential involvement of the US type insurers; and also about how EU procurement regulations will apply to all this.  We may return to that another day.

Now, moving onto a purely analytical review of the costs of this change in procurement strategy (becasue that is in effect what we have here).  I can make no comment on the medical benefits or otherwise of this move and certainly none on the politics.  I’m just a simple procurement  person.

So…the PCTs role at present is commissioning – determining what services are required, procuring them and managing the contracts.  The GPCUs role will be exactly the same, minus  a few national services (some of which I beleive are already managed at national level).  There were 150 PCTs; there will be 500 GPCUs.  How much less work will there be for each single GPCU than there is for a PCT?

Well, I can’t see that the fundamental work is really changing – just who will do it.  And the fact that each GPCU will be about one third the size of a PCT in terms of spend / citizens served I don’t think actually makes that much difference to the workload.  Every GPCU will have to undertake the same number of procurement exercises as a PCT currently does for instance, and manage just as many (smaller) contracts.

So let’s say there is some small reduction based on the lower population served; but it is clearly not an order of magnitude change.  So let’s assume that the workload for a GPCU is going to be, say, 75% of that of a PCT.

So if we define the workload for a PCT as 1 unit, the total workload comparison is 150 plays 500 X 0.75 = 375.  Under these assumptions, the new strategy will mean a total volume of work that is two and a half times as much as presently.  Ah, but the GPCUs will be more efficient because the GPs are closer to the patient needs, I hear you say.  Fine.  But just bear in mind that given these numbers, they will have to be two and a half times more efficient than the PCTs just to get back to the same total  resource being needed to fulfil these tasks.

I believe Andrew Lansley has said he will allocate half the costs of the PCTs to the GPCUs to support them in their new commissioning tasks.  So they’re going to do two and a half times more procurement with half the money – that would assume they work at 5 times the efficiency level of PCTs.  OR…lots of GPs will be running procurement activities rather than being GPs.

As I say, I can’t comment on the quality aspects of this proposal.  But the procurement economics look very dodgy.  There is a however simple answer.  Go with GP commissioning but stick with 150 GPCUs or ‘buying organisations’.  Or if you want to save money, even fewer.

{ 2 comments… read them below or add one }

Rob July 14, 2010 at 3:48 pm

It’s the first time my comments have ever been described as being ’slightly obtuse’ while being ‘interesting’! Even so…

…perhaps you could have a go – using your abstract mathematical approach to economic analysis – at determining how the NHS, at the same time as implementing this new model, will deliver £20 billion in ‘productivity’ savings (as described in the White Paper).

Peter Smith July 14, 2010 at 4:50 pm

‘Obtuse’ was a compliment…I think….
And yes, you make a very good point about the £20 B. I guess the question is whether thsoe savings will be measured with the same degree of rigour that has been applied to previous government “efficiency savings”?
In which case, shouldn’t be a problem really….!

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