The purchaser/provider split for healthcare was introduced early in the 1990’s, tied into the ideas around greater efficiency through competition between providers in some kind of market; good providers would thrive and bad ones would fail and be replaced. The split had an additional implication, it made performance management and policy development easier.  It was relatively easy to set targets for providers and then manage their performance against them; although difficult to do the same with commissioners.

Commissioning has replaced purchasing but all the many efforts to make it work appear on the evidence to have failed.  The costs have not justified the gains.

With social care the situation is far more developed with the local authorities acting as purchasers, contracting for the services and in-house (or public) provision virtually extinct.

In England (In Wales and Scotland the systems are very different for healthcare) the optimal situation would be for each defined population to have one strategic planning (commissioning) body and one care provider (either a single body or an alliance of bodies working together). In due course the provider could then be merged into the commissioner to further reduce transaction costs and overheads.

The separation of providers is obviously essential to creating a market. But if the market structures in health are removed and some public provision of social care is reintroduced should there still be a split?

Just on practical grounds removing the split appears to be problematic and possibly insoluble.  In England there are around 250 large public bodies (Trusts) providing acute, tertiary, mental health, community and ambulance care and thousands of providers of social care.  There are many private providers and many GP Practices. There are 210 Clinical Commissioning Groups plus the commissioning parts of NHS England, and 153 local authority commissioners of social care.

If the alignment was to 153 public bodies which both planned and also provided all the services for a defined population the scale of organisational change would be huge and thousands of contracts with private providers would have to be bought out in some way with the capacity moved into the public sector.

Aside from the huge cost and disruption of another massive reorganisation, there are arguments for keeping an explicit separation even in a publicly provided system:

  • There is always some separation of functions so it is better to make this obvious and transparent
  • Commission must be population based but provision often is not – eg specialist services
  • Commissioning requires long term views and should be taken by enduring bodies, providers may need to change organisational form
  • Without a split and powerful commissioners then decisions about allocation of resources and setting of priorities will be skewed by the vested interests of the large hospitals and consultants.
  • It is better for decisions about allocation and priorities to be taken by separate bodies which are fully democratically accountable – which may not be appropriate for provider functions.

An alternative is to have a single local body which pools all the budgets for care, brings commissioning together on a locality population basis, but to leave the providers as separate bodies.

Bringing services back into public ownership as contracts expire or are terminated, reducing the number of provider bodies and having provider bodies better aligned to localities and providing all care services (vertical integration) can all be encouraged and supported but progress would have to be slow and locally determined if destabilisation is to be prevented.

In this new settlement the split between commissioning and providing is minimised and, although it remains, it no longer facilitates an internal market or choice based provider competition.  There would also be no legal or other inhibition preventing collaboration between commissioners and providers.

So is the solution to find the best ways to manage a system where most providers are public bodies but where they are separate bodies?

If we go down that route how does the money flow?  How does accountability work? What drives improvement?

The Essex Problem

The current landscape in Essex illustrates the problem.

There is a County Council and two Unitary Authorities which deal with social care (and education, Public Health) and there are 12 District Councils dealing with Housing and Environmental Health.

There are 5 CCGs and NHS England local outpost also does commissioning of primary care.

Each of the 3 tier one local authorities has contracts with many providers of social care and there is some minor residual care functions provided in house.

There are 5 acute trusts (3 of which are FTs) which deal with services for patients outside the County.  They provide some speciality services funded separately.

There are 2 Mental Health Trusts (both FTs) and one provides services on contract for another entirely separate population.

All the Trusts sub contract work to other providers through contracts.

There are numerous providers of primary care and community care many in the private sector, and the usual spread of GP Practices of various kinds.

The ambulance service is Regional.

If you do not have any separation of providers (ie no commissioner provider split) then you have to resolve all this complexity so there is a single body which both plans and also provides all the required services for Essex.

Even if that could be done it is obviously a huge reorganisation with all the legal complexities over staff and asset transfers and contract novations then is it actually worth the effort – what gain is made?

So the inference is you wind up with some kind of internal market even though the vast majority of provision is through public bodies.

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7 Comments

  1. This seems to be the big issue – WHO actually is running the “National Health Service”?

  2. brizcox says:

    The salient issue for me is the accountability and transparency of commissioning. the more complex and professionalised the commissioning arrangements the removed and inaccessible they become for tax payers and consumers. The experience of social care in developing the purchaser/provider split has meant that for users of social care the ability to exercise choice, hold commissioners to account and manage quality has become seriously devalued.

    A secondary issue in my view is that innovation often comes from providers since they have the close and personal relationship with users/patients. If innovation, quality improvements and personalised responses are being driven by providers what is the point in investing the power and control in commissioners? I think this is a critical and fundamental flaw in the model.

    1. Irwin says:

      Excellent and salient points. Don’t have an answer but we need one!

  3. eric says:

    There are many good points here but my experience of trying to improve services in Essex since 1989 has demonstrated that the split creates too many problems.

    Quite simply, the climicians who provide services have all the relevant knowledge of how the service works and the commissioners do not.
    My attempts to improve services through the contracting process meant the commissioning teams of providers and purchasers (managers with no clinical experience) were talking in a vacuum and all either side was intersted in was getting more for less with little regard to quality.

    We do need radical change – to establish quality of service as the top priority – quality is an elusive point for many but the Ryal Colleges can provide guidance & criteria.

    The solution will be to organise the NHS into regions that manage all aspects of health i.e. all the whole range from primary to tertiary care, employing and managing GPs District Nurses, Hospital staff etc then we can have real cooperation

    1. Irwin says:

      That’s a reorganisation on a scale never seen before. It does not deal with social care, accountability, funding or performance management issues at all. It is an old solution from the 80s surely we can do better.

      1. Yes WE can, we can introduce the REINSTATEMENT BILL that was written by one of Britain’s leading health experts Dr Allyson Pollock, anything else is just pandering to Neo-Liberal market theology and has nothing to do with health care.

        1. Richard B. says:

          It isn’t a Bill. Most of the difficult parts are missing. When the rest is produced we could ask sensible questions about whether reorganisation on the scale suggested is possible or justified and how it could be implemented and paid for – reorganisations costs £3bn and set the NHS back a couple of years. When we have some proper proposal we could discuss it what we have so far is just some old ideas recycled in legal speak.

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