David Flory, Chief Executive of the NHS Trust Development Authority, has said the current reforms have left the NHS without the management capability it needs.

Over 40% of senior NHS management professionals have lost their jobs or quit in the last few weeks, he said, and the result is the greatest “loss of experience” he has seen in healthcare.

Senior roles in clinically or financially challenged organisations (including hospitals) are getting harder to fill, he said, and the NHS no longer has enough people with “the requisite capability”.

Speaking to the Health Service Journal, Flory said that filling such roles was a major priority for the NHS Trust Development Authority.

The formal abolition of SHAs and PCTs on 1 April followed a year of their functions being wound down, with staff leaving in great numbers. NHS England claims its “running costs” have been reduced by 50% compared to the old system.

“The scale of the change and loss of experience is greater than I’ve seen in any reorganisation before,” Flory commented.

He also warned that “challenged” hospitals increasingly lacked leadership as their number increased. “In that sector the evidence shows us we have not got enough people with all the requisite capability.”

Coming at a time of increasing concern among doctors about the effects of provider competition on NHS services, Flory’s comments will be seen by many as showing that the Government intends to let struggling NHS providers be taken over or replaced by the private sector.

NHS England has announced a new national system for the Cancer Drugs Fund designed to end regional variation in ‘fast-track’ access to cancer drugs.

However, according to the charity Macmillan Cancer Support, the new system has halved the number of indications for which drugs are covered by the fund.

The single national list of drugs approved for ‘fast-track’ funding contains 28 drugs to treat 64 cancer indications, compared to the 129 previously covered by the ten SHAs through the Fund.

The Cancer Drugs Fund, which was established in 2010 and will end in March 2014, provides £200m per year for access to drugs not approved as cost-effective by NICE but requested by doctors for individual patients.

NHS England (formerly the NHS Commissioning Board) took over responsibility for management of the Cancer Drugs Fund from 1 April, ending the regional administration that had seen variations in access to cancer drugs.

Sean Duffy, NHS England’s National Clinical Director for Cancer, said: “Having one consistent method for consideration of overall clinical benefit and funding means that all applications will be assessed by the same criteria. Regional variation of the past is clearly not acceptable for patients.”

Any patient who is already receiving funding for a cancer drug, or has been told they will receive funding as part of an agreed treatment plan, will continue to receive that treatment where clinically appropriate.

The single drugs fund list was developed by the National Cancer Action Team together with the regional clinical leads for the ten former SHAs. A national Clinical Reference Group for Chemotherapy, appointed by NHS England, has approved the proposed list.

However, Mike Hobday, Head of Policy and Research at Macmillan Cancer Support, commented: “It is worrying that the reduced list of cancer drugs that can be funded will restrict access to drugs which were previously routinely available. For rarer cancers, this will be particularly acute.”

Does the CCG guidance signal a return to top-down control?

The Department of Health draft document listing the requirements for commissioners, Securing best value for NHS patients, proposes to make law what had previously been guidance in codes of practice for PCTs and SHAs. What are the implications for local commissioners of “choice and competition” becoming mandatory, with Monitor serving as a watchdog to seek out “anti-competitive” decisions? Is this an attempt to disguise top-down control of commissioning and prescribe the choices of CCGs?

Value-based commissioning
The consultation document states the case for a statutory commissioning framework in robust terms. Local commissioners are facing unprecedented challenges in terms of both demand and supply: the ageing population and the growing prevalence of long-term conditions combined with the NHS “facing one of the tightest funding settlements in its history”. As a result, their primary task is “to secure best value from limited resources”.

The question of value is therefore crucial for CCGs and other commissioners. The draft guidance implies that commissioners cannot be trusted to define value for themselves. It says they need “flexibility” to meet the challenges of commissioning through various methods: “managing providers’ performance, extending and varying contracts, widening choice of qualified provider, and tendering”. However, it argues, commissioners in the past have sometimes restricted themselves by using “bureaucratic processes” and “disproportionate or inappropriate criteria”. It is therefore necessary for external controls to ensure that they carry out “an objective assessment of different options and a rigorous evaluation of different providers”, which “has not always been the case” in the past.

The DH states candidly that “we will not be able to enforce non-statutory, administrative rules in the reformed system, where commissioners and other organisations have greater autonomy… We need to put the rules on a statutory footing so that they are binding on the new commissioning organisations.”

In other words, what had been top-down guidance needs to become law in order to prevent CCGs from using their “autonomy” incorrectly. By “flexibility” the draft document means readiness to engage with the private sector, using assessment criteria that are not chosen by the commissioner. So the proposed legislation is intended to shape the emerging healthcare market.

Choice and competition
The proposed laws for commissioning are based on the existing principles and rules of PCTs. However, the DH places special emphasis on the need to protect competition – which it clearly views as an area where CCG practice may conflict with the spirit of the NHS reforms. The draft document thus reiterates the principles of tendering and ‘any qualified provider’ before stating its aim “to establish a requirement prohibiting commissioners from treating a provider more or less favourably than others, in particular on the basis of ownership, for example [whether] it is a public, voluntary or private organisation”.

A major proposed rule is: “Commissioners must secure services from providers who are best capable of meeting patients’ needs and deliver best value for money, using choice and competition, where appropriate, as a means to improving quality and efficiency in the provision of services.”

The draft document restates the principles of patient choice laid out in the NHS Constitution. These include the right “to choose any provider in England for a first consultant-led appointment for most elective services” and the right “to request that a commissioner takes all reasonable steps to offer an alternative provider when waiting over maximum waiting times for treatment”. In addition, the DH notes, “the Government intends to increase the choices that patients have”.

Choice and competition are therefore key mechanisms by which “quality and efficiency” can be achieved – with the latter defined not by CCGs, but by an external framework. To back this up, CCGs will need to “act transparently” and “maintain appropriate records” of the decision-making process.

Beware of the watchdog
Making these rules statutory raises the question of how they will be enforced. The answer is Monitor. According to the draft guidance, the economic regulator will be responsible for “preventing anti-competitive conduct” when it is “against patients’ interests”.

Monitor will not engage proactively with commissioners to achieve this, but neither does it have to wait for a formal complaint before intervening – a provision explicitly designed to reduce the need for ‘whistle-blowing’ by providers, which can damage their ongoing relationships with commissioners.

It is proposed that commissioners “shall not enter into any agreement or engage in any conduct which has the object or effect of preventing, restricting or distorting competition in the provision of healthcare services,” unless it is “indispensable to the attainment of the intended benefits for people who use these services”.

These rules avoid stating that Monitor will ‘enforce’ competition, a principle of the original Health and Social Care Bill that was removed following the ‘listening exercise’. By linking the role to patients’ interests, the document underlines its own statement that competition is a means to the end of improved patient care.

Details of how Monitor will enforce these rules are forthcoming, but the document makes it clear that the regulator will report breaches to the DH.

Laying down the law
While it is clearly concerned with managing those CCGs that try to resist the creation of a healthcare market at local commissioning level, the draft guidance also seeks to manage any conflicts of interest that could expose the system to criticism. The final section of the draft guidance states that when a conflict of interests arises, it must be managed “effectively and transparently” by the commissioner. In other words, where it cannot prevent conflicts of interest, the DH seeks to limit the harm they can do.

The most obvious source of such conflict, where a CCG might commission services from a secondary care provider that is represented on its board, is already prevented by the existing rules governing the formation of CCG boards. However, CCGs have been critical of this restriction, since foundation trusts have no financial motive for releasing clinicans to serve on a CCG board where the CCG is not a customer of the trust. The establishment of a healthcare market means that clinical and commercial priorities are always in a dynamic tension: conflicts of interest are a normal symptom of that tension.

Essentially, the draft guidance proposes a model that brings the legal framework of the NHS much closer to that of company law. Legal and financial consultants will have an important role in local commissioning, on both sides: the commissioners and the providers. That classic soundbite of corporate transactions, “Your people will talk to my people”, is likely to become central to NHS service procurement. And as the draft document clearly states, the private and voluntary sectors are likely to be major players in NHS service provision.

The contentious question is: will these rules influence the commissioning decisions of CCGs? To some extent, by laying down “objective” and mandatory criteria for decision-making, they will. If a provider meets the DH’s criteria for quality and efficiency, the CCG will have to give them the contract regardless of other factors such as precedent, continuity or local culture. How providers and their legal teams exploit this framework will impact powerfully on the freedom of choice that local commissioners have.  

The draft commissioning guidelines signal a decisive shift in the culture of the NHS towards a competitive and company-based model. The use of law to enforce the rules of engagement might be seen as a disguised form of top-down management – and is undoubtedly intended to ensure that the NHS reforms are not blunted by rebel CCGs that try to perpetuate old relationships. But more importantly, it is an attempt to change the culture of the NHS by taking it into a legal framework modelled on the private sector. For the pharmaceutical industry, therefore, engaging with the new commissioners will be like looking into a mirror.

The NHS has billions of pounds which is being unused, according to a new report by the Audit Commission.

Research into the NHS’ financial year 2011/12 discovered there was nearly £4bn in ‘uncommitted finances” after PCTs, SHAs and NHS trusts restricted spending.

The NHS Confederation said the money should be given to CCGs across England to help transform local health services.

The report revealed NHS organisations had a combined under-spend and surplus of £1.6bn. However, the number of NHS trusts and foundation trusts in deficit increased from 13 in 2010/11 to 31 in 2011/12. A small number of trusts did report improved finances during the same period.

It also highlighted the financial difficulties NHS trusts have in different parts of the country. The majority of NHS trusts in deficit were either in London or around the south east.

Andy McKeon, Managing Director of Health at the Audit Commission, said the findings show there is “financial room for manoeuvre in the future.”

“The NHS has also delivered the first tranche of its £20bn savings required by 2014/15,” he said. “While nationally the NHS appears to be managing well financially, and preparing itself for the changes and challenges ahead, a number of PCTs and trusts are facing severe financial problems.

“The Department of Health and other relevant national authorities need to focus their attention on the minority of organisations whose financial position is deteriorating, and on their geographical distribution and service standards.”

Mike Farrar, NHS Confederation Chief Executive, said the funds should be used for “big investment in community and primary care” to ensure services can meet demand in the future.

“Fundamental changes to the way we provide care are necessary if the NHS is to maintain financial balance and become more responsive to patients’ needs,” he said. “Doing this will require some difficult decisions and in some cases will require changing or closing down some services, but this can only happen if we build up the capacity in the community and in primary care to enable people to be treated at home.”

The DH’s announcement that PCT and SHA leaders will lose their responsibilities from 1 October may be illegal, according to the healthcare managers’ union.

Managers in Partnership (MiP) has supported criticism by its members of the recent letter sent by NHS Chief Executive Sir David Nicholson to NHS senior managers.

The letter, advising them that the transfer of responsibility would take place six months before the date of their redundancy (1 April 2013), may count as “constructive dismissal”, the union claimed.

Nicholson said that from 1 October, management responsibility for NHS performance would shift to the NHS Commissioning Board and NHS Trust Development Authority.

According to MiP, the letter has “surprised people at all levels in the system” and led to confusion regarding the employment status of NHS senior managers.

The decision had been made without consultation, the union said, and “there may be a strong claim for constructive dismissal”.

MiP has advised its members to seek clarification from the DH regarding their employment status during the transition period, and noted that “different regions are interpreting the letter and acting on it in different ways”.

Following the next meeting of the DH’s HR strategy group on 4 September, MiP will consult with its members regarding such issues as their accountable officer status, redundancy rights and payment in lieu of notice.

Regional directors of the NHS Commissioning Board and Trust Development Authority will take over operational responsibility from PCT and SHA leaders from 1 October.

NHS Chief Executive Sir David Nicholson announced the decision to appoint new NHS leaders six months ahead of the formal transition date in a letter to all chief executives of current NHS bodies.

This will be the “last significant organisational change” before April 2013, Nicholson said, and its aim is to “achieve the right combination of resilience in the current system and effective leadership of the new system”.

Regional directors of the NHSCB and NHS TDA will manage ongoing operational delivery for 2012/13 and planning for 2013/14. They will be accountable to the PCTs and SHAs for current system delivery and to the Board and TDA for future planning and development.

The SHAs and PCTs will retain their statutory functions and governance arrangements until April 2013, but will no longer have operational responsibility. There will be no formal transfer of budgets or staff before then.

Regional directors of the NHSCB will take on management responsibility for the teams managing operational delivery and planning. NHS TDA regional directors will do the same in relation to Foundation Trust activity.

Health Education England will take on responsibility for workforce planning, education and training from 31 October 2012. Public Health England will take on its functions from January 2013. The new arrangements will not affect the schedule or roles for CCGs or local authorities.

How does the NHS Operating Framework influence pharma’s engagement with the NHS?

Economics continues to dominate the healthcare headlines. There has been much conjecture in recent weeks about NHS spending and how crucial promises of a ‘ring-fenced’ NHS budget appear to have been broken. Treasury statistics show that frontline spending on the NHS has increased by £3.4 billion since last year. But opponents claim the £1.6 billion surplus reported by PCTs and SHAs in 2011/12 has not been ploughed back into the health service – breaking David Nicholson’s 2010 vow that ‘every penny’ saved by the NHS would be reinvested in patient care. The DH says the surplus is being made available in the 2012/13 budget. With the NHS facing up to the realities of the ‘Nicholson Challenge’, the political debate over healthcare spending will run and run.

Operating Framework

The latest NHS Operating Framework clearly outlines the spending plans for 2012/13. It confirms that SHA/PCT surpluses will continue to be made available during 2012/13 and final year-end surpluses will be carried forward to the NHS Commissioning Board in 2013/14. PCT surpluses are expected to be made available to the relevant local health systems in future years. Conversely, PCTs carrying a legacy debt will be required to clear it during the year. Incoming CCGs will not be responsible for PCT legacy debt but they are expected to work closely together to ensure the situation does not arise.

PCT recurrent allocations will grow by at least 2.5% in 2012/13. PCTs are required to set aside 2% of their recurrent funding for non-recurrent expenditure. SHA clusters will hold these funds, with PCTs required to submit business cases to access them. The cost of organisational change during 2012/13 will need to be met from the 2%.

Tariffs and incentives

The framework outlines developments to the payment system in 2013, to incentivise the realisation of QIPP efficiencies and drive the quality and integration of services. Payment by Results has been expanded to encourage best clinical practice and better patient outcomes. Best practice tariffs are extended to:

• Incentivise more procedures being performed in a less acute setting
• Incentivise same-day emergency treatments where appropriate
• Increase the payment differential between standard and best practice care for fragility hip fracture and stroke
• Promote the use of interventional radiology procedures

Quality improvements are also incentivised in areas such as adult mental health, chemotherapy delivery, HIV services, podiatry, trauma, maternity care and paediatric diabetes. CQUIN is also being developed to provide a stronger incentive to deliver QIPP objectives. The amount providers will be able to earn for incremental quality increases above the standard contract will rise to 2.5% – across all standard contracts. Existing national goals for VTE risk assessment and responsiveness to the personal needs of patients will remain. In addition, two new national goals are introduced:

• Improving diagnosis of dementia in hospitals
• Incentivising the use of the NHS Safety Thermometer

Planning and accountability

The final chapter of the Operating Framework outlines the accountability arrangements for the final year of transition to the newly structured NHS. In 2012/13, the DH will continue to work through SHA clusters to hold PCT clusters to account – handing the baton for accountability over to the NHS Commissioning Board in April 2013. The framework warns that NHS organisations must improve the quality of services provided through the year, while delivering transformational change and maintaining financial stability – with under-performance likely to include ‘intervention from the centre.’
In 2012/13, the key accountability arrangements are:

• The current statutory framework – where SHAs and PCTs remain the statutory units of accountability
• The NHS Constitution – securing patient and staff rights
• Contracts between commissioners and providers
• CQC – regulating NHS providers
• Monitor – ensuring Foundation Trusts are meeting their terms of authorisation and delivering against priorities

Transition plans

The transition to the newly structured NHS is a dominant theme throughout the 2012/13 Operating Framework, and measures to plan for it within the current accountability arrangements are clearly articulated. In fact, given the ambitious nature and close proximity of the reorganisation, details around the planning arrangements for the final year of transition are surprisingly brief.

‘As the industry waits for clarification of individual CCG plans, broader strategies designed at PCT cluster level are already available.’

According to the framework, PCT clusters are each required to develop an integrated plan for the period 2012/13 to 2014/15. The plan should have a clear focus on quality and the national priorities outlined in the Operating Framework. The narrative should be supported by ‘data trajectories for each PCT’, and bring together elements around QIPP, finance, activity, workforce, informatics and transition to the new structure.

Shadow CCGs must support the plan, so they have a strong base on which they can develop their own planning for 2013/14. Likewise, the integrated plans need to reflect the outcomes of local Joint Strategic Needs Assessments. As with the NHS Outcomes Framework, emphasis is placed on integrating all care sectors – with PCT clusters urged to ensure that the public health transition elements of their plan are supported by local authorities.

Implications for pharma

The Framework stated that all PCT clusters’ integrated plans needed to be prepared – and approved by SHA clusters and the DH – by the end of March 2012. These plans are of major importance to pharma. They will contain vital information on the priorities, population needs and long-term ambitions of local health organisations. With the four-wave process to authorise 212 CCGs in England well under way, further data on the specific needs of individual local health organisations will emerge in the coming months. The requirement to publish Commissioning Intentions, updated JSNA and a whole variety of other forward-looking documentation as part of the authorisation phase promises to provide pharma with a comprehensive view of its market environment at the local level. But as the industry waits for detailed clarification of individual CCG plans, broader strategies designed at PCT cluster level are already available.

At a time when finances across the NHS are being squeezed yet the bar for quality and clinical outcomes is being raised, insight into the challenges facing key customers is a valuable commodity for medical sales professionals. The transition of the NHS to a new structure can be a catalyst for proactive medical sales professionals to improve their environmental monitoring, and significantly develop their understanding of customer need. The challenge for the industry is to ensure that key account managers speak in the same language – the same currency – as the customers with whom they seek to engage. The nature and scope of that currency is defined in national documentation such as the NHS Operating Framework and NHS Outcomes Framework, and within the vast local plans that are emerging as the NHS transition gathers pace. And well beyond it.

Success is about finding a common currency with your customers. The clues are out there.

The DH plans to retain some PCT and SHA staff for up to a year after April 2013, when those bodies are abolished.

New DH guidance allows for staff retention “in agreed posts” to help manage the transition process.

The staff in question may number several hundred nationally, and may be housed by an existing arm’s length body.

The measure builds on the Retention and Exit Terms Scheme agreed with the health unions, whereby many staff will be redeployed in new NHS organisations including commissioning support services.

According to Retention Terms for Business Critical Staff, a PCT or SHA can request for “an individual or group of individuals” to be kept on if they are “required to close down a particular activity”.

The transitional roles must be ones that “if not filled, will result in an unacceptable risk to the organisation concerned” because the staff have “scarce skills and knowledge” or the roles would be difficult to outsource.

These roles may include financial activities, as well as areas of expertise (such as risk management) that need to be handed over to new organisations.

Staff in these ‘business critical roles’ will be paid bonuses for taking on “additional responsibilities or a wider portfolio” as part of the transition.

John Restell, Chief Executive of health management union Managers in Partnership, commented: “Some of our members are already managing with much reduced staff, and maybe this is a bit too late for them.”

There was more likely to be widespread use of interim management during the transition, he said.

CCGs may go the way of GP fundholding, according to senior NHS manager Sir Robert Naylor.

The Chief Executive of UCLH said the new structure would create “a vacuum of strategic leadership and direction”, making further reform necessary.

He also claimed that “rationalisation” of services was already being arranged between providers “behind the scenes”.

Speaking at the King’s Fund, Naylor said: “The jury is still very much out on whether the latest commissioning arrangements will last any longer than fundholding did.”

Whoever won the next general election, he said, it was inevitable that another NHS reorganisation would be needed to provide “strategic leadership”.

In the absence of SHAs, Naylor argued, the CCGs would not be “cohesive enough” to determine healthcare priorities in major cities.

He was sceptical of the ability of the NHS Commissioning Board to provide the necessary “strategic leadership”.

Speaking at the Commissioning Show in the same week, Naylor said: “My main fear is that GP commissioning will lead to ever-increasing fragmentation.”

His experience of London-based commissioners indicated that their concern was with day to day service issues, and they were unable to make strategic decisions on issues such as “the future of cancer care”.

Those decisions were being made “behind the scenes in discussions between providers”, he said.

An example was the way UCLH had “swapped” services with the Royal Free Foundation Trust, with one taking on neurosurgery and the other liver surgery.

The NHS operating framework provides the blueprint for the NHS in England. Pf examines its objectives around quality and reform.

The Operating Framework for the NHS in England 2012/13 is an important document for UK medical sales professionals. It outlines the national priorities, system levers and mechanisms that the NHS in England must focus on to improve patient care. The strategic framework details expectations for the NHS’ ongoing efficiency challenge and the transition to the new commissioning and management system. It sets out the planning, performance and financial requirements for NHS organisations and the basis on which they will be held to account. With QIPP imperatives at the heart of the strategy, proactive pharmaceutical companies that can demonstrate an ability to help NHS customers deliver efficiencies and improve qualities in areas of national priority will be best placed to succeed.

The Framework identifies four key themes for NHS organisations in 2012/13:

1. Putting patients at the centre of decision making in preparing for an outcomes approach to service delivery
2. Completing the final year of transition to the new system
3. Accelerating the delivery of the QIPP challenge
4. Maintaining a strong grip on services and financial performance.

Quality - a focus on outcomes

The Operating Framework says that the NHS’ model of delivery must be overhauled in 2012/13 to become a system driven by quality and outcomes. It identifies the Outcomes Framework as the catalyst for this – with its focus on clinical outcomes and the reduction of health inequalities driving changes in culture, behaviour and service delivery. The Outcomes Framework sets out the improvements against which the NHS
Commissioning Board will be held to account from 2013/14.

These measurements are set out within five domains:

Domain 1: preventing people from dying prematurely.

Domain 2: enhancing quality of life for people with long-term conditions.

Domain 3: helping people recover from episodes of ill health or following injury.

Domain 4: ensuring people have a positive experience of care.

Domain 5: treating and caring for people in a safe environment and protecting them from avoidable harm.

The Operating Framework details a range of indicators for each domain, all of which are explored in the NHS Outcomes Framework. These will be supported by NICE quality standards, which provide definitions of what high-quality care should look like for a particular pathway of care. The document also advises NHS organisations to meet the service specific outcomes strategies that have already been published in areas such as mental health, cancer, COPD, asthma and long-term conditions.

Each domain in the NHS Outcomes Framework has a strong relevance to pharma, whether through the development of medicines to treat disease in priority areas, or via collaborative service design to move care closer to patients’ homes and reduce hospital admissions. Organisations that are able to show how their innovations can improve a care pathway or be used as part of a redesigned service will enjoy
more positive NHS engagement.

The Operating Framework identifies dementia and care of older people as a key priority, and sets clear goals to integrate health and social care. It also highlights examples of initiatives where NHS organisations have successfully improved services in line with each of the four key elements of QIPP; quality, innovation, productivity and prevention.

Reform - the transition blueprint

The Operating Framework outlines the key milestones for the reorganisation of the NHS. Whilst the headlines are widely known, it is interesting to track current progress against a timetable that was set out many months before the Health & Social Care Act was passed. The Framework notes that by
the end of 2012/13:

“The NHS will have transformed the commissioning landscape into one focused on local clinical decision
making, with the development and authorisation of CCGs, assisted by commissioning support vehicles and overseen by the NHS Commissioning Board. Local authorities will take the lead role in public health, alongside the new Public Health England. Central to the new system will be the establishment of Health & Wellbeing Boards (HWB), who will provide local systems leadership across health, social care and public health. Alongside this, developments will continue to the provider landscape, through the extension of Any Qualified Provider (AQP), progress with the NHS Foundation Trust (FT) pipeline and the establishment of the new NHS Trust Development Authority.”

Key 2012/13 objectives in the transition are as follows:

• PCTs and SHAs will remain statutory organisations until April 2013. They will be held to account on delivering performance and support the development of new organisations for clinical leadership. Clinical Senates and networks will be established
• PCTs will support CCG authorisation and the transition of power before March 2013
• HWBs will be established in shadow format, becoming statutorily operational from April 2013. They will act as the local system leader through JSNA and HWB Strategies
• CCGs must be coterminous with a single HWB ‘as far as possible’
• CCGs must: play an active role in planning and budgeting, develop relationships with local partners
  including social care, deliver their share of the QIPP agenda and identify how to secure commissioning support services in line with their running cost allowance
• Public Health England will become a statutory executive agency from April 2013
• NHS Trusts are expected to achieve FT status by April 2014
• PCT clusters should start to offer patients choice of AQP in at least three services that are local priorities. There should be a presumption of choice for most services from 2013/14.