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Practice Based Commissioning

14th May 2007

04092006_consulting_room1.jpgWhat is practice based commissioning?

Having addressed performance issues such as waiting times for treatment, and begun reinventing the provider-side of the healthcare market through Foundation Trusts, ISTCs and a greater role for the ‘third sector’, the reform agenda in the NHS is now turning its attention to developing ‘first rate commissioning’.

Practice based commissioning is the mechanism the government has chosen to make sure that primary care through it’s purchasing power can more effectively drive service change, performance improvement, and make sure local needs are met in the best way. It involves indicative commissioning budgets being devolved right down to GP practice level, with frontline clinicians from that practice getting involved in decisions about how and where services should be provided, and who should provide those services. When looked at alongside self-managing Foundation Trusts, stronger local commissioning is the missing part of the jigsaw to achieve the government’s aim of a devolved, self-managing health system.

As well as making a more direct connection between local health need and investment, practice based commissioning is expected to drive

• patient choice by moving away from large contracts between PCTs and ‘monopoly’ local NHS Trust providers

• the shift of care from hospital into community settings set out in the Our Health Our Care Our Say white paper

• service redesign to hit the 18 week wait target

• productivity improvements and generation of cash releasing savings that can be re-invested into patient services

Practice based commissioning is likely to apply mostly to hospital services covered by Payment by Results, mental health, and community services, and also prescribing.

How does it work?

PCTs set indicative budgets for practices who wish to participate, based amongst other things on their share of historic activity levels. PCTs must also provide practices with information about local public health need, cost-effectiveness of treatments, patient activity, and with training and development in commissioning. The practice must provide the PCT with a commissioning plan, and produce a business case for approval by the PCT for any service changes and developments it plans to use its commissioning funds to leverage.

Practices are expected to work closely with providers to set out their commissioning intentions, agreeing clinical protocols, and redesigning parts of the care pathway to shift them out of hospital and provide them locally where possible. If the practice intends to shift whole episodes of care and not commission them from hospital providers, then the practice can retain the full national tariff value to spend on alternative services in the community.

Work is ongoing to ‘unbundle’ the tariff to make sure that practices can still retain some financial savings when only part of the episode covered by the tariff is shifted from hospital to the community. PCTs can also offer incentive payments or loans to practices to pump prime schemes that will help make this shift and release cash that can be reinvested.

Department of Health guidance last year said that practices should be allowed to keep 70% of any overall savings they generate from commissioning to reinvest in patient services (such as meeting the 18 week wait and local priorities) as an incentive. The other 30% could be used at the PCT’s discretion, including clearing local deficits. PCTs so far have been unwilling to stick to this guidance, saying the statutory duty to break even must take precedence when deciding how to use savings generated from practice based commissioning.

To make sure patients have a choice of provider, practices should not award exclusive contracts with guaranteed activity volumes to a single favoured provider. Instead practices are expected to develop a local market of providers, including the private and ‘third’ (voluntary) sector, who will compete under patient choice to supply treatment.

How is it different to GP fund-holding?

Although on the face of it practice based commissioning is reminiscent of GP fund-holding from the 1990s, there are some important differences:

• Any savings that are made must be reinvested in patient services. Many argued that savings from fund-holding were too often reinvested in GP premises.

• Price is now fixed under Payment by Results. Fund-holders previously were able to negotiate and agree separate prices for treatment with each provider.

• Practice Based Commissioning has been designed to be more equitable, with practices benefiting from the same level of investment whether they are involved in PBC or not. Fund-holders used to be able to access more investment than non fund-holders.

• There should be less bureaucracy than under fund-holding, with contract administration remaining central at PCT level.

What progress has been made so far?

Although practices will not be obliged to get involved in commissioning, the plan is that a significant part of PCTs’ historic commissioning role will be devolved through Practice Based Commissioning. By December 2006 all PCTs were reported as achieving ‘universal coverage’ for Practice Based Commissioning, with 96% of GP practices taking up incentive payments to help them get started. These figures sound impressive, but simply mean that most PCTs and practices have begun to put arrangements in place to support Practice Based Commissioning, not that it is actually already underway. There are still no figures for the volume of services being commissioned via practice based arrangements.

An early review by the NHS Alliance in July 2006 found that PCTs already using Practice Based Commissioning had managed to generate savings of more than £1m which could be re-invested in patient services.

However, the NHS Alliance said at a conference in December 2006 that data quality was still poor, and was hampering PCTs from setting meaningful indicative budgets with practices. They also found that money was being top-sliced from budgets, contrary to central guidance, before being allocated.

More information

For more information about Practice Based Commissioning go to:






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Article Information

Title: Practice Based Commissioning
Author: Sue Knights
Article Id: 1704
Date Added: 14th May 2007

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