The big problem confronting commissioning effectiveness for the immediate future is that its engine is broken. That’s not my opinion but that of experts like Monitor, The King’s Fund and The Audit Commission.
First, let us understand that vast sums of money which are involved. Over five percent of GDP passes through either the Payment by Results (PbR) system or is paid to providers as a consequence of local negotiations or block contracts. That’s five pounds from every £100 spent on everything across the whole economy in England. Just imagine the amount of money which is at stake even if there just a small number of errors in the system. We could live with minor rounding faults or the odd mistake with an invoice, but everywhere you go across the NHS, there are signs of what can only be regarded as institutional failure with the billing system.
Here’s some of what Monitor found across 66 pages of well researched work in a report¹ it published in February:
‘The reimbursement system needs significant improvement. We found unexplained variations in the unit costs for the same services between providers. Existing evidence has also highlighted areas where data quality is poor. We therefore don’t know whether cost variation is genuine, due to data quality, or due to differences in how organisations undertake their costing. This means that some providers are under-funded while others are over-funded for particular services. Providers manage this by cross-subsidising across services. This may reduce funding available for other services and have a negative impact on quality.’
‘Poor information hampers the reconfiguration and integration of services, which are intended to benefit patients. If the system cannot measure costs and revenues, it becomes difficult to quantify potential benefits of delivering integrated services between providers and commissioners, where the quality of cost data underpinning these services is particularly poor’.
All of this can get fixed and I’m particularly excited that Monitor with its new role and new powers as regulator is being drafted in to help create some market equilibrium. It’s not quite poacher becoming gamekeeper, but it can bring valuable insights from the work it has done on behalf of the larger providers. No market can be balanced, of course, until it gets its currency right and this will be high up Monitor’s list of priorities.
PbR’s reputation was dented again with a report² published this week by The King’s Fund. Their findings are well crafted as you would expect from the KF. ‘Further developments in payment approaches will need to be supported by high-quality data and analysis. Any system that is not underpinned by reliable data and analysis will lack compliance or risks leading to unintended and unwanted side effects. John Appleby, their chief economist, doesn’t sit on the fence in his blog ‘There seems to be a case for a rethink’³, he says.
All of this is not a great surprise to many of us. For years The Audit Commission⁴ accumulated and published mountains of evidence of how PbR was not only not working, but being abused. To maintain balance, their reports were always upbeat and progressive, but could never conceal the extent of the problem.
Probably everyone who has ever been near the PbR process knows that the system has always been under-invested, built in a hurry and has never occupied a place high enough up the NHS Executive agenda. It’s been developed tactically as a simple payment system, when its more important strategic role should have been to enable commissioners to use the ‘data exhaust’ of the invoicing system to fundamentally attack the real challenge of re-designing care. In September the DH published its plans⁵ for 2013/14, but I am afraid that from a strategic viewpoint, they don’t move things along very much.
All of this confirms, of course, that none of us really knows very much right now about what any episode of care actually costs. But I don’t want to come across as being entirely negative, because some NHS providers are now working hard to discover valuable insights from the data they are collecting and analysing. Can I refer you to an excellent report⁶ published in August by the Nuffield Trust titled ‘Patient level costing; can it yield efficiency savings?’ The findings will be particularly helpful to commissioners because the paper recommends the tracking of the cost of care incurred by individual patients, longitudinally, over an extended period of time.
The great pity is that studies of this type will not be able to contribute their full value while the reimbursement system still includes block contracts, which involve an almost arbitrary annual allocation of money by the purchaser to a provider for a bundle of care services, covering thousands of people. Few commissioners know what goes on inside the ‘black box’ of the block contract, and what inefficiency and wastage sit in there. Also, until episodes are itemised, commissioners will have no idea about what is the cost of an individual course of care for a single patient, rendering impossible the drawing of comparisons or benchmarking, the very essence of commissioning.
All of this means that the provision of mental health care is probably the most opaque part of the NHS. True, it is genuinely full of dedicated people delivering extraordinary care. But if commissioners don’t know what is really being done for patients, or anything much about the service quality and what an individual patient’s care costs, how can anyone really determine how good it is, or what value it offers?
On a very practical level to this very point, my firm has just been asked recently by a CCG to help it understand the impact and cost of depression and other ‘minor’ mental illnesses for patients with long-term conditions. Often, these people have a number of co-morbidities, often including a mental health condition. For many of them, their care is being provided by a number of different providers, some of whom make their data available through PbR, while others don’t. This means it’s currently close to impossible to determine what the aggregate cost per patient is unless you go on the kind of sophisticated treasure hunt that the Nuffield Trust did with their work on patient level costing. Commissioners in the future will have to have made available to them all the data from all of the providers involved in the patient’s care – mental health, community care and even the primary care sector. Otherwise, the future of commissioning and the real benefit it can bring to the NHS will be severely compromised, even doomed to failure.
So far I’ve only been speaking about the money. There is, of course, much more importantly, a clinical dimension to all of this. As we made the point in our proposal to the CCG, how can you truly understand a patient’s situation if you only have some of the data? I quote from our proposal:
‘The relationship between physical and medical conditions appears to be bi-directional: sometimes the onset of depression follows the occurrence of another co-morbidity, sometimes it precedes it. Often, it leads to an exacerbation. More work needs to be done by commissioners – CCGs – to identify mental health sufferers in their communities and understand their status and cost, preferably on a longitudinal basis and over an extended period of time, maybe even until end of life.’
The mantra of one of my most effective bosses was ‘what’s inspected, gets respected’. Another was ‘what gets measured, gets done’. This is the key to the future success of commissioning. You have to get the data right, put the analytics in place and start the journey to being a genuinely knowledge-led enterprise.
Commissioning will only be respected, when as an effective, trusted and everyday fully functioning part of the NHS, it can stand up to providers to secure the delivery of the information it needs. And, you know, despite all the gloom of this blog, I actually feel we could now be on our way. Check out the material in the footnotes for some of the clues.
- An evaluation of the reimbursement system for NHS-funded care Report for Monitor,2012
- How can payment systems help to deliver better care? Kings Fund
- ‘Payment by Results: time for a rethink?’ John Appleby, Kings Fund
- Payment by Results data assurance framework 2012/13,Audit Commission
- Payment by Results in 2013-14, DH
- Patient-level costing: can it yield efficiency savings?
Healthcare Commissioning Services Ltd
4th November 2012