NHS Transformation!

Government's agenda for change

Intended changes within the NHS, compiled from published NHS information, and thoughts of possible issues and consequences.

Compiled by John Moss-Jones
21 March 2011

Since this report was compiled, critisms of the Health proposals have been published, including from the Liberal Democrat Spring conference, the B.M.A., the Royal College of General Practitioners, and the NHS Confederation. As a consequence, it is reported that the Coalition is considering ammendments to the Health Bill.


Complex territory
Beware spin!
Presentation is based on info as of today There will be yet unknown changes.
Intended changes are MASSIVE
Situation in Glos

Complex territory

For most of us, most of our contacts with the NHS are with our GP. Most of us will have very occasional contacts with secondary care - hospitals and clinical specialists. Most of us have no need to understand the complexities of health and the health services, and we don't.

But beyond Gps and hospitals there is a vast territory of health research, organisational and management research, both national and international, a huge international competitive pharmaceutical industry. And also, accounting, auditing, epidemiological data collection and analysis, and many health-centred organisations - the BMA, the Kings Fund, the Nuffield Trust and so on, and specialised agencies like NIII and NICE.

And all this intersects with other central government and local government organisations.


I want here to mention briefly two key intertwined ideological arguments that underlie policies for health systems world-wide:

a. private vs public provision and
b. integration vs competition.

The US is the prime example of almost total private, competitive provision paid for by private, competitive health insurance. It has resulted in superb service and outcomes for those well-covered by insurance. But overall the US health expenditure per capita is about twice that of European countries with worse average outcomes for the population.

The NHS when it was created was a virtually totally public service, highly integrated, but with almost no competition. NHS critics believe this lack of competition has produced, over the decades, an over-bureaucratic, inefficient service, insufficiently focused on patient outcomes.

There is no doubt that competition is a powerful driver of improved efficiency and quality in most economic arenas. The key question is: does competition in health services do the same - overall? Academic research shows that intense competition produces poor levels of integration of providers. The questions are: what levels of competition are optimal, and where is competition best applied.

Beware spin!

All public policy from a government is inevitably guided by ideological intention. In this paper I want to steer clear of politics. However, the statements you have heard, and will hear in the future from coalition politicians, carefully avoid key words: competition and privatisation.

There is another aspect of this problem. As mentioned above, Health Systems, in all developed countries, are seriously complex, and thus difficult to understand for everyone, including politicians and media commentators.

Politicians' statements and media reporting often lack accuracy and clarity.

Presentation is based on info as of today

There will be yet unknown changes.

The proposed Health & Social Care Bill is undergoing parliamentary scrutiny – history suggests amendments will happen.

Intended changes are MASSIVE

Undoubtedly what has been unleashed is the largest and most fundamental change in the history of the NHS. Indeed it would certainly rank as one of the largest organisational changes ever attempted anywhere, given that the NHS has 1.4 million staff, [most commercial companies have less than 100, 000 staff] if it proceeds as currently intended.

But in addition to this structural and ideological change, the NHS continues to apply a programme of improvement: Quality, Innovation, Productivity and Prevention [QUIP]. This programme will increase in tempo and emphasis from now on.

Situation in Glos

For Inf: There a single Primary Care Trust [Glos PCT] commissioning health services for Gloucestershire's population of 600,0000. There are c. 80 practices, c. 420 GPs, two large general hospitals, at Cheltenham and Gloucester, and smaller general hospitals at Stroud and Tewksbury.


A. Current State of NHS
Claimed Key Principles for changes
C. Future NHS

* Commissioning
* QIPP - Quality, Innovation, Productivity, Prevention
* Providers
* Regulation
* Public Health

Current State of NHS

The existing structure: funds travel from Department of Health to 10 Regional Health Authorities, then to c. 152 Primary Care Trusts, which commission services from providers, such as hospitals. RHAs have a supervisory role over PCTs.

The NHS employs more than 1.4m people. Of those, just under half are clinically qualified, including 120,000 hospital doctors, 35,000* general practitioners (GPs), 400,000 nurses and 25,000 ambulance staff. [* various figures between 34,000 and 40,000 are quoted in published material]

Support for GP’s = 96,000, support for other clinical staff =358,000, NHS infrastructure support = 200,000 =

Central functions - includes clerical & administrative staff working in central functions. The group includes areas such as personnel, finance, IT, legal services, library services, health education and general management support services.

Hotel, property and estates – includes clerical & administrative staff and maintenance and works staff working in areas such as laundry, catering, domestic services and gardens. This group includes caretakers and labourers.

Managers and senior managers – staff with overall responsibility for budgets, manpower or assets, or accountable for a significant area of work. Senior managers include staff at executive level and those who report directly to the board. This excludes nursing, ST&T and ambulance managers in posts requiring specific clinical qualifications.

Total PCT staff is 50,000, which is an average of c.330 staff per PCT.

All figures are approximate.

Total cost of the NHS is around £100 billion per annum.

NHS is divided into two sections: primary and secondary care.

Primary care is the first point of contact for most people and is delivered by a wide range of independent contractors, including GPs, dentists, pharmacists and optometrists.

 Secondary care is also known as acute healthcare and can be either elective care or emergency care.

Primary care trusts

Primary care trusts (PCTs) are in charge of primary care and have a major role around commissioning secondary care, providing community care services. They are central to the NHS and control 80% of the NHS budget.

As they are local organisations, they are assumed to understand what members of their community need, so they can make sure that the organisations providing health and social care services are working effectively. The PCTs oversee c. 35,000 GPs and 21,000 NHS dentists.

PCTs also directly run various elements of the NHS

Acute trusts

There are 167 acute NHS trusts and 58 mental health NHS trusts, which oversee 1,600 NHS hospitals and specialist care centres. Foundation trusts are a new type of NHS hospital of which there are 129 across England.

There are also other agencies controlled by the NHS, for instance the National Institute for Health and Clinical Excellence (NICE), and

Claimed Key Principles for transformation

putting patients at the centre of the NHS
changing the emphasis to clinical outcomes
shifting power from the centre into the hands of healthcare professionals, in particular GPs

C. Commissioning

Commissioning in the NHS 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. 

Currently commissioning is carried out by PCTs.  PCTs will disappear in 2013 to be replaced by a yet unknown number of GP consortia [currently 177 but likely to eventually be between 300 and 500], to be set up by 2011/12, which will be responsible for commissioning. (Note also that Regional Health Authorities which currently supervise PCTs will disappear in 2012)

All GPs are expected to be within a consortium. There will be no specification for number of practices within a consortium, or their configuration.

GP consortia are expected to purchase whatever management, H.R., procurement, planning, accounting, data gathering, analysis and management, contracting etc expertise they need and to format these as they decide. There will be guidance and help in setting up the consortia.

Some consortia may decide to purchase management services from the private sector. Some staff within existing RHAs and PCTs may set up private services, or social enterprises, to offer to consortia. Some consortia may work with existing PCT’s to move from existing model to new model. It is assumed between 50% and 70% of PCT and SHA staff, i.e. 25,000 to 35,000, will transfer to consortia. Reduction of staff through these changes could be up to 25, 000; redundancy cost expected to be £1 billion. All figures are challenged by various parties.

The final model will therefore consist of between 300 and 500 different commissioning consortia each with its own structure, processes and skills mix, though naturally there will be commonalities.

Overseeing these changes will be the National Commissioning Board.

The NCB will have wide-ranging powers over GP consortia including the ability to parachute-in alterative commissioners to replace failing consortia. The board will be able to intervene to change the size of a consortium, to bring in ‘any person who is a provider of medical services’ to help run it, or remove any member of the consortium’s management, if it is found to be failing. Every consortium will be required to prepare a plan at the start of each year for the board, setting out how it plans to hit health and financial targets.

These must also be agreed with new Health and Well-being Boards, giving local authorities and patients a key influence.

The N.C. Board will control payments to consortia including a ‘quality premium’ to reinforce GP’s legal duty to cooperate with consortium policy on cost-effective prescribing and referrals.

The NHS Commissioning Board would be responsible for the commissioning of primary medical, dental, ophthalmic, and community pharmaceutical services

Consortia will commission most health services, and must consider 'any willing provider'.

There is a requirement for Local Authorities to set up

Health and Wellbeing Boards which are intended to lead on improving the strategic coordination of commissioning across NHS, social care, and related children’s and public health services.

D. QIPP - Quality, Innovation, Productivity, Prevention.

Overall costs for Health Services continue to rise due to

* people living longer
* increasing medical technology and pharmacological improvements
* increasing expectations by public

These rising costs are unsustainable in any country. NHS must save c. £20 billion over next five years for these costs alone. Therefore, ongoing productivity improvements are essential at about 5% per annum.

QIPP is based on several years intensive research, and has been running up to speed.

From now on it will receive considerable attention.

It requires major changes in NHS culture and will be a challenge for personnel and for all current practices


Any Willing Provider will allow the involvement of Private Healthcare, and ‘not for profit’ organisations
All NHS Providers to be Foundation Trusts by 2014
Community Services to be separate entities from NHS [Local Authorities]
Significant expansion of Social Enterprise model


Twin regulators

Monitor – Will become the Economic regulator

license providers
regulate prices
promote competition
support service continuity

Will manage the failure regime for Providers

Care quality Commission [continues]

Public Health

local authorities to assume responsibility of local public health improvements
Public Health England, a department within the Department of Health, to be set up to bring together all health protection and improvement functions into one body
the budget for public health to be ring fenced from within the overall NHS budget.

Comments from John Moss-Jones

The announced changes to the NHS amount to a radical transformation of the service.

It seems to me that problems and issues are likely in four arenas:

1. The functioning and effects of a GP Commissioning system.
2. The impact of a competitive environment.
3. Maintaining an effective ongoing clinical service during the change period - over perhaps four years.
4. Possibly more heterogeneous service – geographically, and in varieties of providers

All these are dynamic and mutually interactive.

1. Commissioning issues

It is expected there will be between 300 and 500 consortia. [Thus an existing total of 162 SHAs and PCTs will be replaced by more consortia]

The number of practices in consortia will vary from 2 to 75+, and the number of GPs per consortia will range between c.10 and c. 300. The configuration of each consortium will be unique. But each must carry out approximately the functions now carried out by the PCTs. These functions are many and varied and require H.R., procurement, planning, accounting, data gathering, analysis and management, contracting etc expertise plus overall management and coordination.

The problems of planning and implementing the initial structure, staffing, process design and management will obviously vary with the size and configuration of each consortium. The largest consortium with more than 60 practices and perhaps 300 GPs will be about the same size, and will require similar structures, staff and processes, as existing PCTs. Small consortia of less than 10 practices will be far different in scale and complexity.

An immediate conclusion is that national supervision of hundreds of consortia of a range of sizes and configurations is likely to be more difficult than supervising 152 fairly similar PCTs.

[Note: it is emerging that several geographical areas, including Glos, are likely to have a single GP consortium, coterminous with an existing PCT. However, steps are being taken to prevent PCT's transforming themselves into a consortium [with the addition of GP leadership]

Specific issues

1.   GP practices are private profit-seeking entities, which will be contracting services from a mixture of public and private providers, in competition.   Thus private GP's will be contracting other private providers. Given the total spend is £80 billion per annum, the monitoring and auditing will need to be of the highest order.

2.  Another question is about the abilities, competencies and inclinations of the GP's to manage commissioning.  GP practices rarely have more than say 20 staff and the administration lead is by a practice manager. GPs have excellent clinical education and training and are clinically highly experienced. But generally they will not have the knowledge, skills, understanding of the accounting, planning, contracting, data analysis, HR etc - do not make light of this - - so all this will have to be done by similar, or perhaps, the same staff who are now in the PCTs.  

At the moment a PCT has c.330 such staff; consortia will have staff in the range, say 40 to 250 staff.  Obviously the management problems will be of greater scale than running a practice.

3.  How will 50, or 100, or X00 GPs in a consortium exert their leadership and decision making over commissioning?  Given that practices are in competition, even though weakly, and that they all will have different clinical opinions, priorities and different circumstances in their patient register, one would imagine it could be difficult to generate mutually agreed policies.

And how will the GPs [c.50 to X00] in a consortium relate to, manage and lead their cohort of professionals - accountants, procurement, data process etc specialists? Some of whom may be in sub-contracted commercial companies?

Perhaps a consortium will have a 'CEO' to be the overall leader and manager: a GP? or a professional Manager? And how will such a person relate to the large 'team' of GPs in the consortium?

4. Another imponderable is the probable change in perception of GPs by the public as they take on more commercial decisions. If things go wrong locally, who takes the flak?

2. Competition issues

The overall supervisor of the scheme, 'Monitor', is charged with encouraging competition.  

For obvious reasons, an effective health service depends on the clinical education and ongoing clinical training of its medical staff of all kinds. By and large doctors, specialist and nursing staff are well trained and experienced. But inevitably a national health system must also have well educated, trained and experienced professionals in a range of services - accounting, planning, contracting, procurement, data processing and analysis, human resources and so on. The media and politicians often denigrate these professionals, and/or confuse terms such as manager, boss, administrator, leader, bureaucrat and 'back-office' staff. All these terms have specific and different meanings, but all managers or leaders are not bureaucrats, and one must be careful with 'back-office' references in a hospital setting.

Best management practice in every organisation is always a striving to become more efficient and more effective; every function in every organisation can always be improved in effectiveness and quality. In commercial organisations competition and the profit motive are continuing pressures for these improvements. This pressure is a major inherent element in the commercial culture. The principal pressure for this environment comes from degree of success in a competitive market place: the customer calls the tune.

It has always been difficult to produce the same effects and culture in the public sector, partly because of the lack of, or weakness of, competition, and partly because of difficulties of measuring overall effectiveness and quality of public services.

The coming changes in the NHS are intended to increase the competitive environment. A problem of a competitive health system is that its 'customers' generally are poorly informed medically, and have insufficient information to make clinical choices, even if those choices were available. Also, health outcomes need to be observed and measured over many years, and are influenced by a range of other factors - diet, exercise, stress, housing and so on. In other words, competition between health providers is not a parallel model to competition between 'normal' commercial companies. It will need great care to ensure quality and safety standards enter into the contractual obligations, and are tightly monitored/enforced: price competition alone is not the same as price competition with tight and monitored quality and safety standards. [Note: it has been recently announced that there will be no price competition]

All NHS hospitals must become Foundation Trusts, sometimes referred to as Foundation Hospitals. Decision making will be devolved from central government to local organisations and communities. In essence these hospitals will have a high degree of autonomy. Each such Trust will have a Board of Directors with the overall management responsibility, and a Board of Governors representing the interests of the members and partner organisations in the local health economy.

Although Foundation Hospitals will not be private they will be in competition for contracts with private providers.

Although it is impossible to predict how this new pattern of commissioning and provision will develop, it is likely to be more heterogeneous and competitive than the NHS has been hitherto. It is likely to lead to differentials in provision across the country. Other unknowns are the extent, and patterns, of expansion of private health providers, and future consequences of such expansion.

In this model it is possible for a hospital to fail financially. How such a serious situation would be dealt with is no doubt exercising minds at a senior level.

3. Change issues

Undoubtedly what has been unleashed is the largest and most fundamental change in the history of the NHS. Indeed it will certainly rank as one of the largest organisational changes ever attempted anywhere, given that the NHS has 1.4 million staff. [c.f. most commercial companies have less than 100, 000 staff]

Organisational change has many facets. Change can involve ownership, structure, processes, skills and skill mix, culture, motivations and incentives, personnel. Change in any of these produces change in most of the others.

Structural change, that is redefining tasks, responsibilities and authority, is the easiest to describe, is most talked about, and tends to occur in steps, with relatively long static periods between. Changes in skills and skill mix, processes, motivations and culture are more difficult to define, are more interactive and dynamic, and take long time periods to establish. In particular the inevitable cultural, psychological and relationship changes in this NHS transformation will be difficult for staff at all levels, and will require the highest calibre of management, planning and implementation, all linked to and dependent upon ongoing effective organisational development and training.

4. Maintaining an effective ongoing clinical service during the change period - over perhaps four years.

There will need to be high calibre management and professional attention to ensure effective and safe ongoing health services during this organisational transition. Inevitably the abolishment of the SHAs and the PCTs and their replacement by GP Consortia, with all the inevitable detail changes in personnel, relationships, skills, processes and so on will have knock-on effects on the providers of clinical services.

As mentioned above there are bound to be cultural and psychological/social change problems which will require excellent ongoing organisational development/training, and human resource management.

All this is a formidable challenge, and high risks are involved.

5. As mentioned above, it is likely that the changes will result in a more heterogeneous service – geographically, and in varieties of providers. If so, political pressures may arise to deal with this. In addition the management and accounting of this more complex mix will be challenging.

Appendix 1 Current PCT Functions

Below are key functions in brief. The detail for each amounts to many items.

* Strategic Leadership and Planning
 Responsibility for ensuring that services for their population are commissioned in a way which delivers improved health, better clinical outcomes, excellent patient experience and productivity, and reduces health inequalities.

 *    Partnership, engagement & advocacy  
Ensuring continuous and meaningful engagement with the public and patients to shape services and improve health. Work collaboratively with a range of partners to commission services which will improve health, and reduce health inequalities.

* Providing or securing services
Ensure there is a full range of providers which provide choice, and which secure the desired outcomes, quality and value for money

* Monitoring and Evaluating.
Ensure contract compliance and continuous improvement in quality, health outcomes, and value for money.

* Accountability and Assurance
Accountable for ensuring  and demonstrating high quality services, and ensuring the most effective and efficient use of resources.

* Workforce
Ensuring the organisation develops the capacity and capability to commission outcomes that deliver high quality care and give value for money.

* Estates and IT
Ensure the PCTs estate & I.T. are effective and enable the delivery of high quality and cost effective care.

Appendix 2. Timetable. as of 21 03 2011

NHS Commissioning transition timetable

Now to March 2011
PCTs to involve GP practices and emerging consortia, with other clinicians, in the 2011/12 contracting round and the broader commissioning cycle from 2011/12 onwards

December 2010
Initial GP consortia pathfinders identified

January – March 2011
Delegated responsibilities of pathfinder consortia confirmed with PCTs

January 2011 to March 2012
Further pathfinders identified and emerging consortia encouraged to become increasingly involved in commissioning and take on increasing delegated responsibilities

In 2011/12
NHS Commissioning Board set up in shadow form as special health authority

June 2011
PCT clustering arrangements in place

April 2012
All GP practices in GP consortia and start of NHS Commissioning Board authorisation of consortia

April 2012
NHS Commissioning Board established, takes over relevant responsibilities

April 2012
SHAs abolished and responsibilities allocated to bodies in the 2012/13 architecture

April 2012 to March 2013
NHS Commissioning Board to work with GP consortia that need further support to be ready to take on full statutory responsibilities

April 2013
Authorised GP consortia take on full statutory responsibilities.
April 2013 PCTs abolished.