Mis-Placing NHS Funds?

The NHS has traditionally been organized, like most public services, on the basis of place.

This has been both a control and a planning mechanism. It is a planning mechanism because it uses available information about the demographic and health profile of an area and seeks to match provision to need. It is also a control mechanism, that ensures that spending doesn’t get out of control and that the distribution of resources is fair, in relation to need.

Commissioning of services has thus been mainly place-based. Whether it was Regional and District Health Authorities (RHAS and DHAs) 20 years ago, or Strategic Health Authorities and Primary Care Trusts (SHAs and PCTs) more recently, they were rooted in place-based control and planning.

What was new, in the original proposals for the English NHS, is that this place-based system would have disappeared. The intermediate layer (SHAs) that controls the distribution of DoH money would go. Money would flow directly from DoH to new commissioning bodies that would be based on GP practices, groups and consortia that are not place-based. They would have been a confusing mosaic of geographically overlapping units.

The key question would the be – on what basis will resources be allocated to these new units? At the moment this is done, however imperfectly, on the geo-demographic data profiling local populations. There is no parallel system that can tell us what the profile of a consortia’s ‘population’ is, and what their needs are. So the question was simple – how on earth were resources for health care in England going to be fairly distributed according to need under the GP consortia based commissioning system?

This problem had been causing considerable debate within the Department of Health, as efforts were made to see if a patient-based system could be developed that somehow took account of health demographics. It would be fair to say this issue was not exactly ‘resolved’ and whatever system had been devised would almost certainly have led to a very big disturbance in the current geographical balance of resources (which is itself problematic).

This problem has been at least partially shelved by the changes announced to the NHS reforms, as the new, new commissioning bodies will now be geographically, rather than patient, based. They will have a duty to commission for the whole population in a given area, including those not registered with GPs. But they are not going to cover the same geographical areas as current PCTs, so there is still going to be some juggling to be done with funding allocations, but at least the big disruption a switch from place to patient based funding will now apparently be avoided. Probably.

And of course there is still the problem that now the DH is going to have to allocate funds directly, without any regional or local tier, to hundreds of local commissioning bodies. That should prove ‘interesting’.

7 thoughts on “Mis-Placing NHS Funds?

  1. Minor typo Colin: “fairly distributed a cordoning to need under the GP consortia” -> according I assume.
    Always appreciate your work. Thanks 🙂

  2. Colin
    Are you sure they will now be area based rather than person based? I see there is exhortation to have more clear boundaries but have not seen a statement confirming funding will be area based.

  3. Hi Dave

    My colleague Professor Kieran Walshe, here at MBS, who is also an advisor to the Health select committee, assures me the reformed reforms do revert to an area based system, altho I confess I haven’t checked myself.


  4. Dear Kieran

    Following a look at Colin Talbot’s blog I see the DH appears to be reverting to an area-based formula for funding. I’m not sure this or the consequences of it have been fully picked up upon yet. Have you seen it in black and white anywhere?

    I wonder if you agree:

    As far I understand is it would mean Clinical Commissioning Groups (unlike the majority of emerging consortia) would have to be almost entirely made up of neighbouring practices, and defined by their borders, as PCTs. Presumably they would not be funded for any of the member GP practices’ registered population which sits outside this boundary (which some obviously would)? I don’t know how this would be resolved – ie which CCG would pay the bills for their care?

    I guess it would also make it much more difficult for any CCG to ‘poach’ a nearby practice.

    I know there is a lot of talk of CCGs reverting to LA boundaries or close, but I’m not sure this has been actually set out or sunk in with the would-have-been consortia leads!

    Keen to hear your thoughs….


    Dave West | Senior Correspondent | Health Service Journal and Nursing Times

  5. In reply Kieran sent the relevant parts of the Governments response to the ‘listening’ exercise:

    3.45. We will therefore make it explicit in the Bill and in regulations under the Bill that clinical commissioning groups will be responsible for arranging emergency and urgent care services within their boundaries, and for commissioning services for any unregistered patients who live in their area – in other words, they will be responsible for their whole population, not just registered patients, except in respect of those services that the NHS Commissioning Board is responsible for. They will need to work coherently with local partners to best serve local health needs – and in order to achieve that coherence, a significant majority of the registered patients that a clinical commissioning group is responsible for will have to live within the commissioning group’s boundaries.

    3.46. The Forum’s report states that “Better integration of commissioning across health and social care should be the ambition for all local areas.” We agree. As Chapter 5 discusses, clinical commissioning groups will have a duty to promote integrated health and social care around the needs of service users. And we accept the recommendation in the Forum’s report that the boundaries of clinical commissioning groups should not normally cross those of local authorities. Any departure from this will need to be clearly justified.

    3.47. If a commissioning group wishes to be established on the basis of boundaries that would cross local authority boundaries, it will be expected to demonstrate to the NHS Commissioning Board a clear rationale in terms of benefits for patients: for example, if it would reflect local patient flows or enable the group to take on practices where, overall, this would secure a better service for patients. Further, they would need to provide a clear account of how they would expect to achieve better integration between health and social care services.

    3.48. The NHS Commissioning Board would need to agree these proposed boundaries as part of the establishment process. Before establishing any clinical commissioning group, the Board will be required to seek the views of emerging health and wellbeing boards. Health and wellbeing boards may choose to object, and the NHS Commissioning Board will always have to satisfy itself that any such objections have been taken properly into account.

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