Deep NPM—commissioning support in the NHS

The NHS has been the subject of NPM techniques since the creation of the ‘internal market' in the 1990s.^[1223] This involved the introduction of a purchaser/provider split and a system of pseudo-contracts.

It is important to be clear that there is no bright line distinction between deep NPM and the purchaser/provider split under NPM. The precise division between the roles of the purchaser and the provider in a public service contract has always been a matter of debate. For example, in a Private Finance Initiative contract for a hospital, the main contractor—not the public purchaser—will usually be responsible for re-tendering contracts for catering and other services at regular intervals. Thus, even under NPM, private firms could get involved in purchasing. Nevertheless, the deep NPM trend is not just an example of blurred boundaries: as we shall see, it involves a different way of thinking about the public sector's role altogether.

1. The use of external consultants by PCTs

PCTs were formed from the old system of Health Authorities to purchase health services for patients in their local area, primarily from NHS providers but with some use of the private and voluntary sectors.

A study in 2009 found that just over three-quarters of the PCTs surveyed had made use of management consultants to help with their purchasing activities.^[1224] Interestingly, there were examples of consultants being involved at all stages of the purchasing process, including assessing the needs of the local population, awarding contracts, and evaluating providers' performance.

The government sought to institutionalize this use of external assistance by procuring it at national level, through the Framework for External Support for Commissioning (FESC).^[1225] Fourteen firms were hired by the Department of Health through a framework agreement to provide consultancy services for PCTs on an ‘as required' basis. The advertisement in the Official Journal of the European Union (OJEU) invited bids from interested parties with expertise in ‘identifying population health needs; data collection, analysis and distribution to managers and clinicians;

designing care pathways; implementing and managing contractual arrangements in accordance with those needs'.^[1226] After an outcry in the media, the government was forced to withdraw the Official Journal notice and redraft it in order to make clear that the commissioning role itself was not being contracted out.^[1227] The revised version contained the following important passage: ‘Primary Care Trusts are and will remain public, statutory bodies that are accountable locally and nationally for how they discharge their responsibilities. They cannot outsource this accountability'.^[1228] Nevertheless, most PCTs preferred to hire management consultants outside the FESC framework because they found it ‘cumbersome'.^[1229]

The ‘next step' from the use of management consultants to help with commis­sioning functions was to hire a firm to perform all aspects of commissioning. In 2005, Thames Valley Strategic Health Authority suggested that it might invite private firms to bid for the commissioning functions of the Oxfordshire PCT.^[1230] These pro­posals were criticised by the Health Select Committee of the House of Commons and were subsequently withdrawn.

2. Commissioning support for CCGs

CCGs will replace PCTs in 2013 as the purchasers in the NHS. They have been created as part of a drive to shift decision-making away from ‘bureaucrats' and into the hands of General Practitioners (GPs).^[1231] This change has been presented as a way of drawing on GPs' knowledge of their patients' needs, though it seems likely that the government is also keen to give them financial responsibility for their clinical decision-making as a way of achieving greater control over the NHS budget.

An obvious difficulty with the reforms is that CCGs lack expertise in the pur­chasing role: although GPs have close contact with patients, they do not necessarily have the capacity to assess population needs or negotiate and monitor contracts. The government expects the gap to be filled in one of two ways. First, some CCGs might continue to draw on private sector expertise from management consultancies, as PCTs did.^[1232] Second, the government is seeking to create commissioning support services (CSSs) run by the staff who used to work for PCTs.^[1233] This is designed to avoid the problem of staff with relevant expertise being lost to the NHS when PCTs are abolished. Although these bodies will initially be in the public sector, the government expects them to be privatized by 2016.^[1234] If CCGs make widespread use of either of these options, the deep NPM trend looks set to continue, though of course it is possible that some CCGs will prefer to recruit their own purchasing teams.³⁸

Although it is difficult to know what role might be played by management consultants, since it is up to CCGs to contract with them, more information is available about the potential roles of CSSs. It is clear that the NHS Commissioning Board expects CCGs to use commissioning support for all aspects of their activities:

... CCGs... will require support in undertaking both the transactional (eg. contracting and procurement) and the transformational functions (clinicians leading change and improve­ment through service redesign, and engaging with local stakeholders to set agreed priorities) associated with good commissioning.³⁹

Moreover, although this support may be provided on a short-term basis for a specific issue (perhaps a consultation exercise with the local population, for example) it is clear that many CCGs are expected to use ‘one stop' or ‘end-to-end’ services.⁴⁰ This jargon denotes the use of a single CSS or firm to support all the CCG’s commissioning activities.

Not surprisingly, the NHS Commissioning Board is at pains to stress that commissioning support does not involve carrying out CCGs’ statutory commissioning functions.⁴¹ However, some provisions of the Health and Social Care Act 2012 cast doubt on whether this distinction can be maintained in practice. Schedule 2 of the Act inserts a new Sch.lA into the National Health Service Act 2006 to regu­late the practical operation of CCGs. Each CCG must have a constitution which must ‘specify the arrangements made by the clinical commissioning group for the discharge of its functions’.⁴² These arrangements may include provision for the functions of a CCG to be exercised by a committee on its behalf.⁴³ Importantly, a committee may ‘consist of or include persons other than members or employees of the clinical commissioning group’.⁴⁴ Of course, the CCG would itself retain statutory responsibility for the discharge of its functions, but it seems clear from these provisions that there is no statutory obstacle to empowering a committee of people providing commissioning support to perform those functions on a day-to- day basis.

3. Accountability issues

We are now in a position to elaborate the claim, made above, that the contracting out of purchasing under deep NPM poses a serious problem from the perspective breaching state aid or procurement rules: S Gainsbury and G Plimmer, ‘NHS “host” role raises legal concerns’, Financial Times, 18 March 2012.

³⁸ A decision to do this would be subject to NHS Commissioning Board approval: D eveloping Commissioning^ Support, 29,n36.

³⁹ NHS Commissioning Board, Developing Commissioning Support, 8, n 36 above.

⁴⁰ NHS Commissioning Board, Developing^ Commissioning^ Support, 8, n 36 above.

⁴¹ NHS Commissioning Board, Developing Commissioning Support, 9, n 36 above.

⁴² NHS Act 2006, Sch.1A, para.3(1). ⁴³ NHS Act 2006, Sch.1A, para.3(3).

⁴⁴ NHS Act 2006, Sch.1A, para.3(2).

of accountability. The key concern here is that the body with statutory responsibility for purchasing should be in control of and accountable for purchasing decisions, and well-placed to call service providers to account.

The first and most obvious difficulty is that—despite the government’s assertions— it may prove impossible to maintain the boundary between the statutory function of commissioning (which should remain in public hands) and the (potentially private) task of providing commissioning support. Imagine the situation in which a healthcare commissioner has put a service out to tender and is about to choose the successful bidder. Its commissioning support firm would, presumably, prepare a report setting out the legal constraints on the commissioner’s decision and com­paring the advantages and disadvantages of the eligible bids. The ultimate decision might remain with the commissioner, but it is very easy to see how the commissioning support firm could steer that decision in a particular direction. Of course, the distinction between purchasing and provision has always been open to a degree of blurring, but the distinction between purchasing and purchasing support seems even more elusive.

This gives rise to a related problem of conflicts of interest. In the NHS at least, it seems likely that some of the private firms that might become involved in commis­sioning support are the same firms that provide health care services to the NHS. This brings with it the risk that the commissioning ‘arm’ of a firm might persuade a public body to purchase services from its service provision ‘arm’. This might be dealt with in a relatively straightforward way through rules on conflicts of interest.^[1235] However, the problem is more complex where these firms are operating on a national level. It is much more difficult to stop a firm which purchases services in one locality from using knowledge gained there (about its competitors’ prices, for example) for its own benefit in other localities in which it is a provider.

Of course, one response to these concerns might be to say that if the public body uses its contract with the commissioning support firm to ensure that the firm is accountable for its activities, it will still be able to fulfil its statutory responsibilities and prevent bad behaviour. But the problem here is that the public body may find it difficult to obtain independent advice about the contractor’s performance. For example, if the contractor is responsible for assessing the population’s health needs, the only information the public authority will have about the population’s health needs will be from the contractor. How will the authority be able to check the accuracy of the data or the methodology the contractor has used in preparing the data? The only way to do so would be to duplicate the contractor’s efforts, either using the public body’s own staff or by hiring in yet more external advice. This seems wasteful and is likely to increase costs.

Finally, in some situations there is a worry that public bodies might exploit the contracting out of purchasing as a means of avoiding their own accountability. Even ministers have admitted that this might be the case:

[Managers] get in, they have to make a difficult decision, and rather than make it, as they are paid to do, some of them are getting in some management consultants to look at it, paying these management consultants a lot of money, in order to protect the chief executive’s back. That should not be happening.^[1236]

For example, if (due to budget cuts) there is a need to close one out of several possible services, a way of evading responsibility for this decision might be to employ consultants to investigate the matter and produce a report. The public body can then claim simply to be implementing the external, objective report when deciding which services should be closed. This is extremely problematic from the perspective of public accountability. It is the role of public bodies to take these difficult decisions and to face the consequences, either in terms of media criticism or electoral impact. It is not appropriate to use contracting out as a means of shifting the blame.

As we saw above, critics feared that NPM would inhibit public bodies’ account­ability. Deep NPM poses much greater risks in this regard because it involves private firms in commissioning support activities which are hard to distinguish from—or at least highly influential over—commissioning decisions, which are public bodies’ statutory responsibility. We will consider some alternatives in the conclusion, below, after examining the second case-study.

E.