North West London

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North West London Provider development
workshop 5 May 2006
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Objectives for today

• To set out the challenges of the new world
  post-white paper
• To provide a framework for what provider
  organisations will need to do to be competitive
  in the new world
• To set out the key steps in the longer term
  development pathway

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Timetable for the day
Tea/coffee will be available throughout the
afternoon
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To be fit-for-purpose in the new world, PCTs must
establish their provider units as defined
accounting and accountable entities

• PCT reorganisation and reforms herald the
  introduction of greater plurality and explicit
  competition in primary and community care service
  provision
• PCTs can continue to host provider organisations
  but these will face competition
• Many PCTs will encourage their providers to seek
  greater independence and autonomy
• In the interim, PCTs must establish their
  provider units as defined entities so they can
  compete effectively against other providers
• from 2007 each PCT will be expected to review
  formally and systematically whether local
  services are delivering high-quality, effective
  and efficient care
• This is particularly important if some services
  remain in-house, given potential conflicts of
  interest between PCTs commissioning and provider
  roles

Department of Health (Jan 2006). The NHS in
England, the operating framework for 2006/7
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Newchurchs provider development programme is a
structure against which PCTs and provider units
can measure progress towards these goals

• Programme objectives
• Provide a robust, transparent and auditable
  process for managing development of provider
  services
• Establish a neutral and rigorous framework for
  assessing future options for NHS provider
  organisations
• Support provider organisations in developing new
  capabilities and restructuring current services

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How can providers be successful in the new
world? The nature and scope of competition
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Forces that change industries
Technology
Societal changes
Input costs
Industrial transformation
Competition
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Characteristics of UK NHS
Fixed prices
Differentiation by reputation and
perceived service
A brittle industry
Inflexible capacity
Inflexible demand
Inflexible, high, common input costs
Poor product information
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The evolution of NHS transformation anatomy of
a bubble
Expand supply over long-term trend
Accelerate demand
Squeeze on margins
Reduce prices
Expose structural weaknesses
Force out marginal performers
Reduce entry barriers
Increase number and type of competitor
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Competitive determinants in UK healthcare
Consumer recognition
Changing travel dynamics
Competitive advantage
Capturing the consumer
Service portfolio
Flexible costs
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Competitive vulnerability in primary and
community care
Administrative costs
Capital costs
Non-pay employee costs
20-30 cost disadvantage
Work rate
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Improving your competitiveness Key steps in
Newchurchs provider development programme
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Todays workshop will focus on provider
organisations current competencies and hence
competitiveness
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Demand

• What do commissioners want to buy?
• How does the service stack up against current and
  future needs and demands?

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Performance

• What makes your service particularly attractive?
• How does the service perform against national
  standards or targets?
• Do you know how much your service costs?
• Where does the service not offer value for money?

3
Competitive environment

• Which aspects of the service will face
  competition?
• Who will these competitors be?

So what does all this mean in practical terms?
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Demand a comprehensive analysis of the local
population is required, down to and including the
locality level
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Performance a realistic assessment of what the
provider unit is good at is crucial to any
further development
User external perspectives
Influence of customer experience on
commissioning Actual PBC service use vs.
expressed preferences
Auditing Benchmarking Compliance with
best practice regulations Improvement plan
Sources distribution of service
income Comprehensive cost structure
Clinical outcomes
Costs revenues
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Competitive environment it is important to
understand relative positioning and the drivers
of any differences

• Identify which parts of the service will face
  competition
• Define the nature of the competition
• Identify existing and potential future
  competitors
• Profile each competitor
• Benchmark self-performance against competitors

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Assessing the success of local services in the
new world
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Everyone has an opportunity to attend two market
place sessions to debate the competitiveness of
key service areas
Childrens services
Emergency care
MSK physiotherapy
Diabetes
Dermatology GPwSI
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Assessing the success of local services in the
new world Your feedback
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MSK physiotherapy group 1

• Strengths
• First mover
• Strong relationship with GPs
• Local accessibility
• Cost effective
• Weaknesses
• Full costs not accounted for (indirect and
  overheads)
• Isolation of service (i.e. specialisation)
• Lack of data/information system

• Opportunities
• Expand service to rest of GPs
• Expand to integrate to other services
• Market to private services
• Inappropriate referral may create new business
• Changing GP behaviour about condition
• Carrot to get donkey for other service
• Threats
• GPs using us as a test to then create their own
  business
• Relationship with GPs
• Increase in inappropriate referrals to referral
  centre
• Unknown competitors
• Consultant lack of buy in - decide to provide
  service themselves
• If savings not made, service could be pulled

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MSK physiotherapy group 2

• Strengths
• PBC commissioners have recognised competence of
  provider
• Seen as innovative by PbC commissioners
• Collaborative working
• Preventing hospital admissions PCT savings
• Weaknesses
• Not capturing patient satisfaction and addressing
  the issues
• Costs not known
• Lack of market insight (i.e. measure and
  productivity)
• No business development resources

• Opportunities
• Government drives for getting people back to work
• New revenue streams to support/ mitigate risk
• Threats
• No requirement for service to be commissioned

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MSK physiotherapy areas where service
competitiveness can be improved and key actions
to do this
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Emergency care group 1

• Strengths
• The costs
• Control of patient flow
• Using hospital brand (i.e. familiar)
• Develop services to go up- and downstream from
  urgent/emergency episodes
• Weaknesses
• Cost saving not proven
• Not clear what are the incentives to make AE
  work differently
• Hospital interested in same market

• Opportunities
• No duplication if independent sector provider
• Threats
• Emergence of Emergency Service Trust
  (amalgamation of elements of AE, large practices
  and independent sector)

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Emergency care group 2

• Strengths
• Patient education
• Out-of-hours/weekend service which GPs dont
  offer
• Increase registration, resulting in the reduction
  of AE attendances
• Primary care front end to acute setting
• Primary care model cheaper
• No alternative (yet)
• Staff skills
• Weaknesses
• Patients access another service in neighbouring
  trust (convenience not care issue)
• Risk aversion
• Time takes from plan to results in action
• Evidence
• Location (i.e. front of acute hospital)
• Paediatric information
• Poor marketing

• Opportunities
• Predicted reduction on national AE attendance
  (4 rather than 10)
• Walk-in centre costs 16, AE costs 54 minimum -
  opportunity if meet somewhere in the middle, e.g.
  charge 32, still cost-effective
• Flexibility to act as supplier when GP fixed
  capacity overloaded
• Threats
• Risk aversion
• Local GP co-ops
• Evidence
• There will be alternatives
• Increase GP opening hours
• Pharmacies could provide service

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Emergency care areas where service
competitiveness can be improved and key actions
to do this
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Diabetes group 1

• Strengths
• Patient prospective
• Integrated approach
• Local knowledge
• Skills of the team
• Weaknesses
• Costs are high? - unknown
• Lack of data
• Increased activity not paid for

• Opportunities
• Tout for business
• Link with LA provider
• Pricing
• Threats
• Private providers (Diabetes plc)
• Data sharing
• Local acute hospital hijacks model
• GPs going their own way

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Diabetes group 2

• Strengths
• Innovative ahead of the game
• Established
• Integrated
• Weaknesses
• Managing change
• Outcomes evidence for commissioners
• Increased access points required
• Managing number of referrals, etc
• Fit for purpose

• Opportunities
• Marketing to other areas
• Reduce inequalities further
• Threats
• GPs provide this themselves through practice
  nurses sustainability
• Operating in NHS/culture
• No barriers to competition - somebody could take
  the model of care

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Diabetes areas where service competitiveness can
be improved and key actions to do this
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Childrens services group 1

• Strengths
• Local knowledge
• Professional integrity
• Holistic assessment
• Established practice and governance
• Protection/safeguard children
• Fulfil statutory requirements ECM
• NHS brand trusted and valued
• Weaknesses
• Inflexible staff/resistant to change
• Workforce retirement
• Quality of information
• Lack of detailed community analysis
• Outcome measures
• Link of clinicians to commissioning requirements
• Value! - poor reference costs
• No costs available unit costs
• Efficiencies
• High capital costs

• Opportunities
• Childrens centres
• Seat at table with statutory body (health),
  therefore with commissioners
• Develop while PBC are focused on other areas
• Use the professional intelligence
• Lateral development
• Mobile working/flexibilities
• Model according to users experience/needs
• Economies of scale
• Marketing
• Differentiate assessment and signpost from
  delivery in costing, e.g. layers of services and
  costs to each
• Threats
• Cherry picking bits of provision
• Private providers commercial, e.g.
  pharmaceuticals
• Loose statutory responsibility. Integration with
  local authority loose autonomy
• Conflicting national policy (i.e. ECM and public
  health)

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Childrens services group 2

• Strengths
• Good working relationship between partners
• Current knowledge and understanding of existing
  service
• Loyalty of customers
• Specialisation of service
• Weaknesses
• Fragmentation (low cohesion, low integration)
  within childrens services, high specialisation
• Three different commissioners with different
  agendas
• Top heavy
• Social product
• Lack of information, activity, proof of outcomes,
  profiling and reference costs
• No robust costing models
• Lack of clarity on what is being commissioned

• Opportunities
• Educating commissioners on how to commission
  childrens services accountability
• Development of childrens services in terms of
  defining generalisation vs. specialisation,
  defining what the service does and branding of
  the product
• Helping GPs solve social issues of clients by
  giving bigger picture and relating to hospital
  activity reductions and increases
• Clarity/defining boundaries and roles in joint
  working
• Threats
• GP commissioning without understand/knowledge
• Childrens service agenda could be lost
• Pathfinder trust breaks off
• Breakdown of joint working (i.e. the focus on
  health? Where is the income from?)
• Child development - run by organisation and
  social enterprise

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Childrens Service areas where service
competitiveness can be improved and key actions
to do this
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Dermatology

• Strengths
• Track record
• Low waiting times
• Clinical supervision from consultant
• Weaknesses
• Overheads
• Costs
• Management controls
• Management capacity to develop services
• IT

• Opportunities
• Collaboration across geographical boundaries
• Sell the model to clusters and neighbours
• Income generation
• Doesnt need high tech infrastructure
• Marketing to local workers
• Paediatrics
• Threats
• Acute and private providers and PBC clusters
• CMS payments for national rent
• Capital charges
• Lack of level playing field

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Dermatology areas where service competitiveness
can be improved and key actions to do this
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New forms of provider in the new world Potential
new contract and organisational structures
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Since 2000, the government has introduced new
contracting routes to support service
commissioning and provision

• Four contracting routes are available to enable
  PCTs to commission or provide primary and
  community medical services within their area
• General Medical Services (GMS)
• Primary Care Trust Led Medical Services (PCTMS)
• Personal Medical Services (PMS) which include
  Specialist Personal Medical Services (SPMS)
• Alternative Provider Medical Services (APMS)
• These routes offer PCTs the flexibility to
  develop services offering greater patient choice,
  improved access and greater responsiveness to
  specific community needs
• With the exception of SPMS, each of the four
  routes can be used to provide
• Essential services
• Additional services where GMS/PMS practices
  opt-out
• Enhanced services
• Out-of-hours services
• A combination of any of the above

Contract
Contract
Contract
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Different types of contracts have different
freedoms associated with them
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Such contractual flexibilities will bring an
exponential increase in the number and range of
providers organisational structures
From this
Traditional service provision models
Direct management by the PCT
Provided by an NHS trust
Commissioned by PCT provided by care trust
Voluntary independent sector providers1
Local authority
To this
Either, dependent on ownership
Part of the wider NHS family
Independent of the NHS

• GMS practices
• Care trust
• Foundation trust
• Community NHS trust
• Integrate with NHS acute trust
• Wholly-owned subsidiary of existing NHS
  organisation
• Arms-length business unit within PCT
• Locality management within PCT
• SPMS limited company

• APMS private company
• APMS public company
• Voluntary organisation
• Local authority

• Social enterprises/ community interest
  companies2, including co-ops and mutuals

1 Includes GPs 2 Exist to serve the community
assets and profits must be permanently retained
or transferred to another community interest
company or charity
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Focus on social enterprises

• Businesses that trade with a social and/or
  environmental purpose, reinvesting profits in the
  business or community
• Value led, market driven
• A democratic management style with stakeholders
  taking part in decision making

• Our health, our care, our say supports social
  enterprise as one type of provider model
• DH social enterprise unit formed, headed by Sue
  White
• New fund being introduced in April 2007 to
  develop new health and care models
• Social enterprises may take different business
  forms, e.g. companies limited by guarantee,
  industrial and provident societies
• Foundation trusts are a form of social enterprise
  (mutuals)
• Introduced in July 2005, community interest
  companies are a new type of legal entity for
  social enterprises, which must pass a community
  interest test
• Examples of existing social enterprises include
  the Eden Project, Cafédirect and Jamie Olivers
  Fifteen
• Healthcare examples include Local Care Direct,
  SCA, East Elmbridge and Mid Surrey PCT nursing
  and therapy services

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But new organisational forms do not come without
challenges

• It will require cost and time to establish new
  organisations especially if you are an early
  adopter
• Social enterprises will need effective financial
  processes
• and effective governance arrangements,
  demonstrating accountability to stakeholders
• Non-NHS organisations will need to participate in
  procurement processes to secure NHS contracts and
  may face difficulties
• Their scale and longevity may not meet tender
  criteria
• They may not be able to access finance to fund
  development and growth
• They may not be competitive on price
• There are also issues around potential failure
  and success

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Table discussion new contract and organisational
structures

• Discuss examples of new contractual and
  organisational arrangements that are either in
  place or being considered locally
• For each, you may wish to think about
• The services that they cover
• The outcomes they seek to achieve
• Their staff base and leadership
• Why that particular contractual and/or
  organisational structure is appropriate
• Whether a similar contractual and/or
  organisational structure might be appropriate for
  other local services
• Which features of any service need to be resolved
  before organisational structure can be
  considered?

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Planning next steps
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Provider development planning

• In your organisation groups
• What do you need to do when you get back to your
  PCT in terms of planning for provider
  development?
• Who do you need to involve in this process?
• What will the key milestones be?
• What is your key first objective?

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Review and close
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Thank you