Myth 6: GP consortia will be forced to use the private sector

The Government's Claim:
It will be up to GP consortia to decide their own arrangements.

The Rebuttal

Consortium commissioners will be able to choose the providers that they will commission. However, there are two questions to be addressed: who are these commissioners, and will there be incentives for them to use the private sector?

The Department of Health has provided no guidelines as to the size and location of GP consortia.  The following graph compares the populations covered by the 233 GP pathfinder consortia and the 152 PCTs (from ONS). The 233 GP commissioning consortia are the first four waves of "pathfinder consortia" and cover nine tenths of the population of England. The 152 PCTs cover the entire population of England (two PCTs, Surrey and Hampshire, have been omitted since these are outliers with populations over 1 million).

The most noticeable feature of this graph is that the pathfinder consortia (light blue) tend to be much smaller than PCTs (dark blue). The median size for GP Consortia is 164,000 whereas for PCTs the median is 282,000. This raises the question of what is the best size for a consortium?

The government's Impact Assessments document that accompany the Bill (section A64) states:

Overall, the future costs are dependent on a number of factors, particularly the number and size of GP Consortia, on which the Department is not being prescriptive. Ultimately, the extent to which GP Consortia can and will join together to perform functions will be the determinant of future costs. Preliminary analysis suggests that if GP Consortia are established with an average size of 100,000 population, in a similar form to PCTs and without any sharing of resources to deliver some functions, then some functions may incur additional costs. This could mean that the savings of £1.3bn a year from reduced administration costs may be partially offset by up to £475 million.

This suggests that size does matter, and the smaller consortia will not be able to commission services as efficiently as the larger consortia. The government is committed to an arbitrary cut by one third in commissioning costs and so this will put immense pressures upon GP commissioners.

In response to the NHS white paper the BMA held a half day event to consider the issues surrounding GP commissioning. The consensus from this event gave a figure on the minimum size for consortia:

The majority of delegates felt that anything smaller than a population of around 500,000 may face difficulties and carry too much risk, while it would not be able to take advantage of the necessary economies of scale to ensure that commissioning was efficient. There was also recognition that commissioning groups would need to be of sufficient size for credible interaction with acute trusts and local authorities. ... It was suggested that within commissioning groups covering 500,000 or more patients, locality arrangements could be put in place to facilitate local engagement and the development of locally relevant patient pathways. Where consortia are smaller than this, it is likely that they would need to collaborate with their neighbours and where appropriate form larger federations.

Furthermore, a study by Civitas says:

In 10 European countries analysed, seven have seen a consolidation of commissioning organisations over the past 15 to 20 years, two have seen no change. In only one country (Spain, due to devolution) has the number of commissioning organisations increased. In all countries apart from Switzerland the average population coverage of a commissioner is above 300,000 people.

This suggests that a commissioning consortium should be above 300,000, that is, around the size of (or larger than) current PCTs.

None of these estimates for commissioning consortium sizes suggest that the median pathfinder size of 164,000 is optimal. The smaller consortia will thus have three options:
  1. Merge with another consortium. In this case the consortia lose their original identity.
  2. Cluster with other consortia and share the commissioning.
  3. Purchase the commissioning from the private sector.
While it is true that no consortium will be forced to use private sector commissioners, the drive to save one third of commissioning costs (compared to PCTs) and the economies of scale means that the smaller consortia (from the graph above, that means most consortia) will need to either cluster or buy private sector commissioning.

In March 2010, Sarah Wollaston a Conservative MP and a former GP wrote in the Sunday Telegraph:

the consortia are doomed to fail and will have to hand over their commissioning to the private sector

Dr Wollaston clearly thinks that the intention behind Lansley's GP commissioning is to privatise commissioning.

We are told incessantly that GPs will be in control of commissioning, if that is the intention then why will GPs be allowed to outsource commissioning? When commissioning is being performed by a private company, how can that be described as GPs being in control? The private sector commissioners have close relationships with the private sector healthcare providers (private hospitals) and there is a real danger that private sector commissioners will have an incentive to commission private care.

Even commissioners based in the GP consortia will be under pressure to use the private sector. The economic regulator, Monitor, will impose competition on GP commissioners. The recently appointed chair of Monitor, David Bennett, has said (in an article in The Times - no link due to paywall):

"I worked for a very long while in lots of different countries in the energy sectors, in power and gas, doing exactly this sort of thing. There’s lots of evidence of benefits being produced … Some people talk about the idea that foundation trusts could link up into chains and there are some arguments for doing that.

It is too easy to say, 'How can you compare buying electricity with buying healthcare services?' Of course they are different. I would say ... there are important similarities and that’s what convinces me that choice and competition will work in the NHS as it did in those other sectors. We, in the UK, have done this in other sectors before. We did it in gas, we did it in power, we did it in telecoms, we’ve done it in rail, we’ve done it in water, so there’s actually 20 years of experience in taking monopolistic, monolithic markets and providers and exposing them to economic regulation".

Bennett, who will be making decisions over whether your GP commissions your local NHS hospital or the private hospital 20 miles away, has stated blatantly that he wants a regulated market like there is in electricity supply: a market that is solely private companies.

We already have an idea of the sort of decisions that will be made over competition in healthcare through the pronouncements of the Department of Health's Co-operation [sic] and Competition Panel. This organisation has shown that it will force a private sector provider on a commissioner if it decides that their rules on competition were breeched.

Further, David Cameron wrote in February:

We will create a new presumption ... that public services should be open to a range of providers competing to offer a better service. ... But everywhere else should be open to diversity; open to everyone who gets and values the importance of our public service ethos. This is a transformation: instead of having to justify why it makes sense to introduce competition in some public services ... the state will have to justify why it should ever operate a monopoly.

So Cameron is actually saying that the government will impose private providers on to the NHS since there will no longer be a "presumption" that NHS hospitals should provide the care.

The Bill does not force GPs to use the private sector, however, the sizes of the pathfinder consortia compared to PCTs indicate that the majority are too small to be able to perform commissioning and a likely effect of this is that they will buy in commissioning from the private sector, who will use private sector providers.

Even if GPs use their own commissioners they may not be allowed to use NHS hospitals. The reason is that Monitor has a duty to apply competition law and it is headed by a businessman with a zeal for the private sector. Further, David Cameron has said that he does not think that NHS hospitals should be the default provider, which heralds the possibility of the government legislating that Monitor can force GPs to use private hospitals.