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Critical areas for CPD – topic #2: practice-based commissioning

29 August 2008

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Steve Williams

Independent Healthcare Consultant Director of Primary Care
National Services for Health Improvement

Steve is a former Royal Navy Officer, and joined the health service as a chief management accountant in 1984. He has worked at all levels of the NHS. He was an associate tutor at the Institute for Health Policy Studies at the University of Southampton and has worked for the professional development committee of the Institute of Healthcare Management

“Practice-based commissioning (PBC) is not just about historical data. It is about review and service redesign for the future.”(1)

PBC was established in 2005 and, over the last few years, different standards have evolved. It would be fair to say that some areas are more advanced than others and some are still only just engaging fully in the process.

However, no matter what stage of development PBC is at in your own locality, it is vital to know what is happening and how your practice is to be engaged in the process. At the last Management in Practice Event in June, a poll of delegates revealed that although almost all thought their practice had signed up to PBC, only a small percentage acknowledged feeling actively involved in the process. This is probably not untypical of the current state of affairs.

CPD requirement
Is your practice actively engaged in PBC? State the capacity of the practice’s involvement and the lead for the practice.

Aims and objectives
When your practice agrees to take part in PBC, it should have a clear statement of the reasons why it wishes to commission services. These aims should include the following:

  • An increase in, and a diversity of, the services currently being offered.
  • Breaking the monopoly of existing service providers to offer more choice.
  • Provide easier access to services at more convenient times and locations.
  • Demonstrate a better and more efficient use of NHS cash.
  • Use primary care clinical staff in the decision-making processes.

CPD requirement
Obtain a copy of your practice’s commissioning plan. This will detail its objectives. Does the plan answer the above criteria?

Resource allocation
This is more widely known as the “indicative budget”. However, how the budget is constructed may widely vary from PCT to PCT.

While there was a published funding mechanism, sufficient flexibility was allowed to include locally agreed variations. Therefore the model adopted locally should be sympathetic to, and support, the local delivery plan and ensure that local targets are achievable.

The funding model should plan for contingencies or dramatic shifts in referral patterns. Lastly, the funding model should ensure the matter of risk is assessed and apportioned between both commissioners and providers.
CPD requirement
Do you know what your annual allocation is? Do you understand how the budget has been compiled and what areas
are covered?

Budget detail
Now that you have been issued with an indicative budget, it is important to recognise any anomalies and local variations that could have an impact on the way that you might commission services in the future. For example, the original budget will have been calculated using historic data and will not take into account the impact of utilising new services or provider choice.

Although the practice will be directly responsible for how monies are spent, it still remains a statutory requirement for the PCT to remain within overall financial balance. This has obviously led to tensions where some practices have performed well, but their overall performance has been subsumed where other practices have not succeeded in achieving their targets. This partly explains why there has been a significant difference in PBC uptake around the country.
CPD requirement
Look at your individual practice performance and ask whether your outcomes have been compromised by the performance of other practices. What benefits have you achieved by participating in PBC?

Long-term conditions
Commissioning for long-term conditions (LTCs) is a key area in which important changes can be made. On average, more than 60% of hospital bed days relate to patients with long-term conditions.(2,3) This represents a significant part of the indicative budget.

Many PCTs have considered the issues of patients with LTCs. The Kaiser Permanente model, adopted from abroad, basically puts patients into three levels of care. The key element of this model looks at the concept of self-care. This places more emphasis on the patient to self-manage their LTC. To make this work effectively for both the commissioner and patient, it is important that there are clearly defined patient care pathways and clinical governance arrangements in place.
CPD requirement
Does the practice have any plans about commissioning for patients with LTCs? If yes, detail what they are. If no, consider which conditions would be relevant for your practice population to review.

Initially, payment was the only form of incentive available to practices expressing an interest in PBC. Effectively, all this did was demonstrate that PBC had been universally adopted and probably did not reflect the true level of involvement.

Subsequently, local incentive schemes have been developed. Some are more complicated than others. One of the deciding factors about the level of incentives available seems to depend on the financial stability of the responsible PCT.

It is important to understand how any incentive payments will work. You might believe you have achieved all your own practice objectives, only to find that, due to poor performance by other practices in your group, the overall sums available become reduced or even revoked.

CPD requirement
What current incentives does your PCT offer your practice for engaging in PBC? Have you benefited in the past from incentive payments? How is that money allocated and used in the practice?

Management costs
This area can be quite confusing. Some people think these costs are related only to GPs. Others think they form part of any incentive payments. However, it is clear from the guidance that part of the PBC business plan should identify reasonable management costs.(4)

This should be extended to include relevant practice staff. For instance, if there is a need to undertake regular data validation, this will involve manpower and valuable time. There is a danger that the GPs or managers will be expected to attend regular PBC meetings, which could take up a lot of time. If arrangements are not in place to reimburse practices, this could add up to a significant hidden cost to the practice.

It is possible that some PCTs will wish to retain management responsibility and therefore will recruit commissioning staff, who will be made available to support practices directly.

If this is the case, ensure you receive the level of support needed and are not expected to carry out the work for these people. Ultimately, it is called practice-based commissioning – for it to be effective, practice staff and GPs must be involved.

CPD requirement
How are management costs allocated by your PCT? Identify the staff involved in PBC at your own practice and identify the cost of these staff. Can you identify how this cost is reimbursed?

Any willing provider
One of the interesting factors is that it is possible for a practice to become a provider of certain services under PBC. This allows new local services to be devised, new care pathways created and local competition to be created.

The business case put forward for these services should demonstrate a genuine need. The case will need to demonstrate the involvement of key stakeholders and demonstrate public and patient approval.

These services create a conflict of interest where a practice becomes both commissioner of the services and also the provider. While this is not against the current rules of the scheme, many PCTs have developed separate boards to consider either commissioning decisions or provider services.

The idea of “any willing provider” is to allow all activity undertaken by the provider to be paid in accordance with the agreed tariff. There is no guarantee about the level of work to be undertaken, but if local commissioners see the positive outcomes being achieved by the service, then they are likely to continue using the services in the future.

One aspect to consider is that if the service does become successful, you need to consider how to replace the clinical time within the practice and put plans in place to account for the possibility that the service will be reduced or stopped in the future.

CPD requirement
Does your practice provide any services under PBC? If yes, how are these services funded and how do you deal with replacing GP time in the practice? If no, in what areas do you believe that your practice could provide services in the future?

World-class commissioning
It seems strange to talk about world-class commissioning when everything about PBC is about local services. Basically, this concept looks at key principles that drive the commissioning process.(5) These are:

  • Being recognised as the local leader of the NHS.
  • Working with local partners.
  • Creating good public and patient relations.
  • Involving clinicians in the commissioning process.
  • Undertaking and understanding local needs assessments.
  • Prioritising how resources are invested locally.
  • Actively creating a local competitive market for services.
  • Improving quality and clinical outcomes.
  • Establishing high-class procurement procedures.
  • Managing information and systems effectively to support future plans.
  • Managing finances in a robust manner, ensuring value for money and allowing continued development of services.(5)
  • Adopting the above principles in your local commissioning plans will ensure that you develop a local commissioning process that is world-class.

CPD requirement
Look at each of the key principles listed above and identify how your practice meets these criteria in its current commissioning plans.

1. Williams S. General practice – it’s your business. London: NSHI Publishing; 2006.
2. Department of Health. Ten things you need to know about long-term conditions [homepage on the internet]. London: DH; 2008. Available from:
3. Williams S. A guide to practice-based commissioning. Kent: Magister Publishing; 2006.
4. Department of Health. Practice-based commissioning: practical implementation. London: DH; 2006. Available from:…
5. Department of Health. World class commissioning: competencies. London: DH; 2007. Available from:

Applying those skills in practice …

Tina Khanna has been the practice manager at the Slade Green Medical Centre in Kent for nearly two years. The practice operates out of two surgeries, with a list size of more than 7,000 patients. Here, Tina kindly shares her experiences of PBC in relation to the competencies outlined on the preceding pages …

Is your practice engaged in PBC?
I would like to think that our practice does engage in PBC. For the first couple of years it seemed that the commissioning work we did went fairly unrecognised, although this was more to do with the fact that the PCT was in financial difficulties. One of our partners has agreed to be the vice chair of our locality group. We have also agreed to participate in setting up a locality-based patient forum to ensure that there is transparent public and patient involvement in the local commissioning process.

Do you attend PBC meetings?
I am fairly new as a practice manager. Prior to this job I worked in a hospital, which had completely different processes to what I do in general practice. Initially, I had to concentrate on getting to grips with running the day-to-day operational requirements of the practice. So to begin with, I did not attend many meetings. Now I try to attend most PBC meetings. Normally one or more of the partners will be in attendance too.

What are your main PBC objectives?
I have to admit that we have received assistance in preparing our business case for PBC. However, I do understand more about the process and this year I was involved in putting forward objectives for agreement within our plan. Of the six objectives that were put forward in our current plan, four were accepted. This has included looking at areas such as obesity and LTCs.

Have you received your annual budget, and do you receive regular financial information?
We have received a budget, although this has undergone a number of variations since it was first published. As a practice, we haven’t actually formally accepted the budget, due to the fact there have been a number of changes and these need to be discussed with us. Unfortunately, we do not receive regular financial information. We have also had to deal with changing information systems. I am currently involved in verifying data on the new system, which does take up a lot my time.

Do you fully understand the composition of your budget?
I have to be honest and say no. I have other staff in the practice who deal with financial issues, including budgets. However, at a recent practice meeting our partners wanted to know about how the detail of the budget works. I have arranged for the PCT manager responsible for setting the indicative budgets to come and visit our practice at one of our weekly management meetings.

How do you commission for LTCs?
At the moment, we are working with our community nursing teams to look at how patients with LTCs can be effectively managed. By using these integrated teams we are able to manage our referrals better. We are also able to use various services that have been set up locally, which means that patients can self-manage their conditions.

Do you receive incentives for participating in PBC?
Our PCT has introduced a local incentive scheme. However, this incentive scheme is not just about PBC activities but includes prescribing and other areas too. So it is fair to say that by being involved in PBC there is an opportunity to gain financial incentives. However, even though we achieved a similar performance last year, no incentives were awarded to us due to the PCT’s financial deficit.

How much does it cost the practice to manage PBC?
No one has actually calculated the true cost of this. Before I started at the practice, the previous manager was allocated one half-day per week to undertake PBC duties. However, despite undertaking various duties, the practice did not receive any reimbursement for this time. Our PCT has stated that monies will be made available to support management costs, but it is not yet clear how this money will be distributed.

Does your practice provide services as well as commission them?
We have put forward an application to provide vasectomy services. One of our GPs is accredited to perform this work. Initially, it was our intention to provide these services to our own patients, but our plan has been submitted to include the rest of our locality with the possibility of being extended to include the rest of the PCT practices.

We will also be planning to include minor surgery in the future. At the moment, we are waiting for our proposal to be accepted. However, we will be ready to start the services immediately if approval is received.

Do you understand the principles of world-class commissioning and how this will work locally?
While I am aware of “world-class commissioning” as a saying, I really have only been concentrating on what we have been working on as part of our local PBC plan. Others in my practice are aware of the wider concepts and I am informed of any factors that may have implications on what we are doing locally. I do accept that I still have a lot to learn about PBC, but I am looking forward to the challenges ahead.