Commissioning should, in theory, be a key driver of high-quality public services in the 21st century. However, in healthcare, commissioning is sometimes perceived as the ‘dog that doesn’t bark’. For example, the Five year forward view, which set out the NHS’ future strategic direction of travel from 2015 onwards, was largely silent on the role of commissioning.
After 25 years, it feels like the concept of commissioning in the NHS is at a crossroads. Questions over its effectiveness, structure and value for money abound, as do questions about the effectiveness of the internal market. Sustainability and transformation partnerships (STPs, née plans), new care models and accountable care organisations and systems all challenge the concept of a separate commissioning structure and the long standing 'purchaser-provider split'.
It therefore felt like a good time to ask trust leaders and a small selection of those involved in commissioning for their views on commissioning’s future and how it needs to change to deliver better health outcomes.
In the interviews that follow we hear from all the different parts of the provider sector – acute, mental health, community and ambulance trusts – as well as from local government, local commissioning and the voluntary sector. The backgrounds of our interviewees – appointed chairs, commissioners, providers, life-long NHS professionals, elected councillors and charity experts – means that we have a range of different perspectives to consider. Some clear themes emerge.
Before exploring these themes, it is worth briefly reminding ourselves of both the definition and history of commissioning in an NHS context.
So what is commissioning anyway?
Healthcare commissioning is, by definition, a somewhat amorphous concept. Unlike direct healthcare provision, it isn’t a physical service, closely associated to a local building with clinicians delivering and patients receiving something tangible and concrete. It’s therefore not surprising that NHS commissioning has never really entered the public’s psyche. However, the decisions commissioners make are of huge strategic and practical importance.
There is no single definition of NHS commissioning. The Department of Health adopts the following definiton: “[Commissioning is] The process of ensuring that the health and care services provided effectively meet the needs of the population. It is a complex process with responsibilities ranging from assessing population needs, prioritising health outcomes, procuring products and services, and managing service providers.”
On its website, NHS England goes into more detail: “At its simplest, commissioning is the process of planning, agreeing and monitoring services. However, securing services is much more complicated than securing goods and the diversity and intricacy of the services delivered by the NHS is unparalleled.
“Commissioning is not one action but many, ranging from the health-needs assessment for a population, through the clinically-based design of patient pathways, to service specification and contract negotiation or procurement, with continuous quality assessment.
“There is no single geography across which all services should be commissioned: some local services can be designed and secured for a population of a few thousand, while for rare disorders, services need to be considered and secured nationally.”
Commissioning must take place across different footprints – on a local and national footprint and points in between. We therefore need to be careful about making too broad a set of assumptions about “commissioning”.
This definition helpfully stresses the fact that commissioning must take place across different footprints – on a local and national footprint and points in between. We therefore need to be careful about making too broad a set of assumptions about “commissioning”.
The NHS England definition also points to the wide range of activity that can result from a broad conception of commissioning. These activities can range from assessing and defining population health need right the way through to detailed contract oversight. It is here that we encounter our first difference in perspective – where the main focus on that range of potential commissioning activity should lie.
As the provider interviews in this report show, what provider organisations want from commissioning is a strategic planning approach that focuses on health outcomes and meeting population health needs at scale. They worry that commissioning in the NHS has defaulted to low-value, high-cost, tactical contract management, procurement and tendering. This approach also risks missing the intention and value of strategic commissioning – planning to improve health outcomes at a whole population level.
Commissioning in healthcare – a potted history
Healthcare commissioning emerged 25 years ago when, in 1992, the Conservative government introduced the purchaser-provider split creating a so-called 'internal market' in the NHS.
Between 1997 and 2010, the Labour administration entrenched this split, creating 150 primary care trusts (PCTs) that received 80% of NHS funding for hospital, mental health, community and GP services. This meant commissioning had considerable financial clout. In 2009 the ‘split’ was consolidated when PCTs divested themselves of their community services. Local commissioners were responsible for commissioning a wide sweep of services, and stood alongside a smaller centralised commissioning function responsible for primary and specialised care.
However, perhaps the biggest shake up in commissioning’s history has been the introduction of the Health and Social Care Act in 2012. This saw a focus on commissioning, competition and choice as the three key drivers for NHS reform and improvement. In particular, the 2012 Act established the NHS Commissioning Board, now known as NHS England, as a new central body which would operate at arm’s length from politicians and the Department of Health.
PCTs were abolished and local commissioning was placed in the hands of 211 clinical commissioning groups (CCGs), governed by local clinicians. Health and wellbeing boards were also established to bridge the divide between health and social care and to encourage integration between local authorities commissioning social care and local NHS service commissioners and providers.
What provider organisations want from commissioning is a strategic planning approach that focuses on health outcomes and meeting population health needs at scale. They worry that commissioning in the NHS has defaulted to low value, high cost, tactical contract management, procurement and tendering.
As well as overseeing local commissioners, NHS England is also directly responsible for the commissioning of specialised services (what are known as tier four services). With an annual budget of £15.6bn, specialised commissioning seeks to ensure that highly specialised services are provided across population groups that usually number more than one million - so usually on a national, regional or sub-regional basis - with the aim of ensuring equitable access for all patients and service users. The kind of services that fit under the heading 'specialised' range from renal dialysis and secure inpatient mental health services, through to treatment for rare cancers and life threatening genetic disorders.
We do not explore specialised commissioning in this report. However it must be acknowledged that this also has an important role to play in and impact on the types of services that trusts can provide, an impact on the relationships between commissioners and providers, locally and nationally, and an impact on the strategic nature and efficacy of commissioning overall.
Although the views on commissioning expressed in the interviews are diverse, five key interlinked and overlapping themes emerge:
- the value of commissioning getting closer to people...
- … and understanding local place: the importance of scale and geography
- the need to accept the emerging diversity of approach to commissioning structures
- the rapid blurring of the purchaser-provider split and a lesser focus on the internal market
- the need to focus on commissioning as a strategic function.
Getting closer to people...
The first strong theme coming through the interviews is the importance of putting the patient first, and making the case for service improvement through better commissioning and 'co-production' with patients and the public. Commissioning should be seen as a way to understand individual and population needs and incorporate them into the design and delivery of services.
Anthony Marsh, chief executive of West Midlands Ambulance Service NHS Foundation Trust, rightly exhorts us not to lose sight of patients in our structures: “We must always put the patient at the front of what we do, and work backwards. It does seem that ... we have lost sight of the aim to improve care for patients and to support our workforce to be the very best they can.”
And Cllr Izzi Seccombe highlights what she sees as the difference between local government and NHS commissioning: “...a local authority commissions services to support the person to achieve their goals. The NHS still often commissions for a certain number of units of treatment, rather than using a person-centred approach.”
Jeremy Hughes, chief executive of the Alzheimer's Society, advocates strengthening the link with patients: “Among the biggest opportunities facing the NHS is the opportunity to make the connection between providers and patients stronger.” He goes on to stress the need for balance, too, between the ’N’ in the NHS and local commissioning which “should be about empowerment and planning”.
And West London Mental Health NHS Trust chief executive Carolyn Regan is also clear on the value of commissioning as it evolves: “...there is a big element of co-production, with patients engaged in strategic planning, recruitment of staff, service redesign and evaluation.”
...and understanding places: the importance of geography and scale
This focus on people and patients underlines the importance of place in the provision of public services in general, and for health and social care in particular. Although not clear from their name, STPs are essentially about place, and place-based systems of care. Modelled on a set of defined geographical footprints, they exist to deliver better integrated health and care services to their population more efficiently and effectively, thereby better meeting patient needs. The scale on which STPs operate is now starting to change the shape of commissioners, providers and local government and how they inter-relate.
Geography and scale
Katherine Sheerin, chief officer, NHS Liverpool Clinical Commissioning Group highlights the need to balance operational economy of scale with local engagement, as the shape of providers changes around them: “CCG size and configuration are issues... As providers coalesce, chains of providers develop or as more integrated provision emerges, the system can’t have a plethora of small commissioners trying to solve ever bigger problems. However we mustn't lose local intelligence and engagement. It’s about what works...”
Scale of operation is high on the list of provider concerns too. As Nick Moberly, chief executive of King’s College NHS Foundation Trust, puts it: “...one important issue linked to all of these emerging changes is that of scale. Increasingly, as STPs take hold and sub-regional planning takes place, we have to ask whether CCGs are operating across too small a geography.”
STPs are essentially about place, and place-based systems of care. Modelled on a set of defined geographical footprints, they exist to deliver better integrated health and care services to their population more efficiently and effectively, thereby better meeting patient needs.
The geography and sense of place is where NHS commissioning and local government have a meeting of minds, according to Cllr Izzi Seccombe: “We have found many shared values. CCG commissioners have a clear sense of place, and of the patient as a whole person with assets beyond their health challenges.”
Most interviewees focus on integration, in its many different guises, as being fundamental. For example, David Evans, chief executive of Northumbria Healthcare NHS Foundation Trust, argues that the imperative is to overcome the divisions and create a joined-up delivery system: “I believe we have to change. The current system cannot deliver ... the divisions between primary, secondary and tertiary care used to seem straightforward. A [single] system for managing, commissioning and funding pathways must help.”
Cllr Izzi Seccombe is looking to the opportunity of STPs: “STPs need to be an inclusive partnership to improve population health and services. If they are not, then the chances of them achieving their objectives are slim ... There is real potential for STPs to reshape services for the benefit of their local communities, but they need to be genuine partnerships between health, local government and the community and voluntary sector.”
Diversity of approach and experience
Our interviewees recognised and welcomed the diversity of approaches now opening up for commissioners and providers across the country. There is also great potential for local partners to lead and shape bespoke arrangements that better meet local needs through STPs, new care models or devolution deals.
As Anthony Marsh commented: “...[the diversity of approach] need be no problem if there is an absolutely clear direction of travel within the Five year forward view.” Or as Carolyn Regan pragmatically puts it: “Let’s welcome diversity in delivery and organisational forms that meet local situations shaped by local players, including patients, carers, residents, better.
We know one size does not fit all, and we know there are some issues with commissioning, geographical or care model boundaries.”
Interestingly, contributors were keen to ensure that, as a sector, we learn from the past and do not welcome new approaches just for the sake of it. We should not see STPs as “a shiny new project” as Jeremy Hughes put it, or yet another layer of bureaucracy, which was Anthony Marsh’s warning. We must adapt the system to accommodate STPs fully, and that includes adapting commissioning. There would be little point in just adding STPs as another layer in an already crowded, diffuse and confusing system structure, though we must fully and properly work through the required changes.
Equally telling was a recurrent focus on learning from recent initiatives in commissioning, which, however well intentioned, had not delivered. While many contributors to our report commended efforts to move to outcome-based commissioning, for example, they frequently cited the need to learn from the experience of the Cambridgeshire older people’s contract and from recent NHS 111 procurements.
Carolyn Regan rightly emphasised the important of diversity in experience and encouraged “staff [to gain] experience of commissioning and providing ... we need a blend of experience that understands both sides of the table.”
Purchaser-provider split – does it really matter?
When done well, commissioning performs a key, strategic, function. However, many interviewees queried whether the purchaser-provider split had actually had its day, what contribution it now made and, by extension, whether the existing structures in health and care are fit for purpose. These questions have become particularly important and relevant given the new national policy focus on place-based collaboration, exemplified by STPs and the move to accountable care models.
We are beginning to see large and rapid shifts in the previously rigid boundary between commissioners and providers, and whether or not that boundary should remain (or even matters) is a live question.
When done well, commissioning performs a key, strategic, function. However many interviewees queried whether the purchaser-provider split had actually had its day, what contribution it now made and, by extension, whether the existing structures in health and care are fit for purpose.
Nick Moberly’s view is clear: “I certainly see a blurring of the traditional roles of commissioner and provider ahead. Historically commissioners have bought specified units of service... Increasingly they will be analysing their populations, stratifying according to risk and setting outcomes-based measures ... allocating providers block sums to deliver those outcomes.”
This perspective accords with David Evans’ view that the logical solution is the move in some parts of the country, including his own, to greater collaboration via an accountable care organisation or system.
Carolyn Regan similarly welcomed recent developments which saw “the blurring of payer and provider roles and responsibilities.” Jeremy Hughes favoured retaining the split but still advocated for “payers and providers to get better at talking together ... and to look at changing care across the whole of England rather than in individual, institutional silos.”
However, dismantling these boundaries does come with risks and conflicts that will need careful management. Nick Moberly believes that shifting to accountable care-type structures will alter the balance of risk: the model of moving to block payments in return for outcomes “...means effectively seeking to transfer a great deal of risk to providers.”
However Cllr Izzi Seccombe believes that the way health separates commissioning and provision institutionally, as well as functionally, may be over-done. For her: “Local government’s clear distinction between commissioning and provision means we don't necessarily see it as an insuperable conflict of interest if both are located in one organisation.”
Commissioning as a strategic function
What is clear – both implicitly and explicitly from our interviewees – is the need to elevate commissioning to focus on the strategic and ensure it delivers as much value as possible. We need to shift our perspective upwards and outwards. We need to embrace longer term, population-level issues, rather than focusing on the more ‘insular’ issues of tenders, procurement and contracts. Our current fixation seems to be micro not macro; tactical not strategic.
What is clear – both implicitly and explicitly from our interviewees – is the need to elevate commissioning to focus on the strategic and ensure it delivers as much value as possible.
Cllr Izzi Seccombe argues for the local government approach to commissioning: “Ultimately there is useful learning for the NHS from local government’s approach to commissioning. It is about so much more than contracting and purchasing, and when seen in this light, the role and value of commissioning can be truly appreciated.”
Against a backdrop of rising demand and severe financial constraint, the need for commissioning to be streamlined and effective is more important than ever. The commissioning infrastructure was built up in a time of plenty – the 2000’s – when there was money to spend. Now, we need to ask whether we are allocating too much scarce resource on functions which are not directly patient facing.
Should more of the commissioning pot be spent on delivery? Anthony Marsh asks the question: “We need to think about whether, given the substantial cost of commissioning, it really provides value for this investment. How does commissioning improve and add value?”
Whatever happens in the future, and whatever the structure, our interviewees broadly agree that there will always need to be some form of commissioning function. As both Katherine Sheerin and Nick Moberly, respectively, sum it up:
“Some of what we do now may happen more in the provider sector in future, for example service redesign, but we will still need strategic oversight and a way of holding the system to account.”
“There will continue to be a role for a party in any health system to understand population health needs, determine outcomes and allocate funds.”
The themes that emerge from the interviews are enduring and should form the basis of conversation at every level – local, regional, national – about how we create the strategic commissioning function that all our interviewees feel we need.
Fundamentally we must ensure that we:
- focus on the magic formula of balancing economy of scale with patient involvement and clinician engagement
- recognise and respect the diversity of approaches that are now emerging. Variation can be seen as a negative but diversity must be embraced. What works in Wigan will not necessarily work in Winchester
- derive maximum value from our commissioning structure, mindful that we should maximise the resource devoted to patient-facing care
- learn from other sectors including, but not exclusively, local government, with its different, longer and, perhaps, more strategic experience of commissioning
- rule nothing out. Our next steps should be an enabling framework: a direction of travel rather than a set of prescriptive directions
- finally, set our sights on creating a strategic commissioning function that considers the needs of the population and then strategically plans to meet them within the available resources.
The next five years will be as challenging as the last. Commissioning is central. We do not need arguments about whether or not commissioners should be scrapped or whether the purchaser-provider split is dead. We need to fast forward to 2022, to work out what we want to have achieved for our populations by then, and identify the new approach to strategic commissioning that will help us do that.