1. Priority setting in the reformed
NHS
Dr Judith Smith
Head of Policy
HSMC, University of Birmingham
30 September 2011
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2. Agenda
• The current financial context
• NHS reform
• The challenges of priority setting in this new context
• Critical issues raised
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3. The current financial context
• Years of unprecedented funding increases ended in April
2011
• Effectively flat real terms funding for the next four years
• Against backdrop of wider economic recession
• Demand continues to rise, especially for unplanned and
emergency care
• More people living longer
• Rise in levels of chronic conditions and obesity
• Health inflation running ahead of general inflation
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4. The Scale of the Challenge
Annual real terms growth in UK public spending on health
14.0%
Real terms growth
12.0% population growth
growth in 80 plus population
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
-2.0%
-4.0%
-6.0%
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Source: Nuffield Trust (IFS and HMT data)

5. Health Spending
UK Public Health Spending as a share of GDP
10.0
9.0
8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
% of GDP
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Source: Nuffield Trust (IFS and HMT data)

6. The Efficiency Challenge (£ million)
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7. The challenge ahead
•Reversing the reduction in overall NHS productivity
•Addressing large and unaccountable variations in clinical
practice
•Stemming the increase in emergency admissions
•Actually making the shift from hospital to community care
•Dealing with the duplication and fragmentation that occurs in
care that crosses provider and budgetary boundaries
•£20billion of efficiency savings by 2015
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8. The ultimate priority setting challenge...
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9. The White Paper Liberating the NHS
•Key policy proposals reflected Conservative manifesto (GP
commissioning, national board, focus on outcomes, changes
to public health)
•Overall diagnosis of the NHS’ ills was:
- weak commissioning
- a need for more competition
- too much micro-management and central control
•Response to the White Paper was muted at first but became
vociferous over the autumn....
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10. © Nuffield Trust

11. The ‘policy pause’
• Announced in early April, reported in June
• Health and Social Care Bill put on hold
• Government responded within a few days
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12. The changes brought about by the ‘pause’
From central to local control
• Restoring the Secretary of State role as in current
legislation – although still being debated
• Strategic health authorities last until 2013, and into clusters
from this autumn
• PCT clusters to stay and apparently to form part of
regional element of the NHS Commissioning Board
• NHSCB with key role in authorising CCGs, mandate for the
NHS, where competition will apply, etc.
Feels like the centre is regaining ‘grip’ and the NHS
Commissioning Board looks to be very influential
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13. The changes brought about by the ‘pause’
Commissioning
• Clinical rather than GP commissioning
• Take on commissioning role ‘when ready’
• Clinical senates and networks to inform commissioners
• Local health and wellbeing boards with more clout
• Geography of local authorities to be followed
• CCGs responsible for unregistered patients
Risk of competing complex accountabilities, and
dampening enthusiasm of commissioners
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14. The changes brought about by the ‘pause’
Competition
• Monitor with a duty to promote the integration of services
• Focus on preventing anti-competitive behaviour, rather
than promoting competition ‘as an end in itself’
• Some slowing down of ‘any qualified provider’ approach
• Focus on choice now appears predominant
• Not clear about exposure of the NHS to EU competition
law
Arguably not that many concessions, but overall
emphasis has changed towards integration
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15. The challenges of priority setting in this new context
1) It has to be about the whole spend
• Has to move beyond comfort zone of new and marginal
expenditure
• Need for review of total spend locally
• Will need to develop extensive and sophisticated local
funding and service priorities
• And within a narrative of (probably changed) future service
models
• Mechanisms for doing this in an inclusive way with the
NHS and the public will be critical
• And will have to involve providers alongside
commissioners
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16. The challenges of priority setting in this new context
2) Clinical commissioners can learn a lot from PCT
experience
• Not starting from a blank sheet, as the new HSMC
research shows
• Can adopt and adapt work developed by PCTs – tools,
approaches, forums, ethical frameworks
• PCT clusters can help by capturing, reviewing and sharing
such experience
• NHSCB will be critical too – how far will they ‘write the
menu’ for local commissioners? And what support will
they give to the overall priority setting process?
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17. The challenges of priority setting in this new context
3) Clinical commissioners are likely to be vulnerable in
this area
• This was difficult for PCTs, especially in relation to the core
spend, and they were larger entities with several years of
experience
• There will be less management capacity for CCGs
• And hard choices have to be made in the financial context
• GP commissioners vulnerable as setters of local funding
priorities and yet also carers of individual patients
• How will this tension be worked out by CCGs?
• How will a CCG manage the performance of its practices
in relation to adhering to priorities set?
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18. The challenges of priority setting in this new context
4) Robust governance of local commissioning is critical
• The research shows that PCTs struggled to engage the
public and patients in priority setting decisions
• And this was in a time of plenty and with PCTs who
operated with the corporate board model of governance
• Debate about CCGs and the Health and Social Care Bill
points to the need for CCGs to be robust enough to
withstand judicial review
• Implications for the membership and role of CCG boards
• Healthwatch will play a role – as yet to be defined
• Health and Wellbeing Board will also be a player in this
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19. The challenges of priority setting in this new context
5) The NHS Commissioning Board can provide vital
support and guidance
• The NHSCB will set the overall framework for
commissioning – outcomes focus, national priorities,
funding allocations, authorisation of CCGs, etc.
• How far it sees its role as setting national templates for
commissioning is yet to be seen
• Will the NHSCB, or local CCGs (or both) be subject to
scrutiny and challenge for priority setting decisions?
• How will NHSCB work with NICE, and use its guidance?
• How local or national will NHS commissioning be?
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20. The challenges of priority setting in this new context
6) Local authorities will be key stakeholders in local
priority setting
• Priority setting in health will move beyond the NHS
• Health and wellbeing boards – their governance and
functions need clarifying alongside those of CCGs
• HWBs likely to play a role re scrutiny of decisions – and
councillors will be members
• Public health moves to local government – could be an
opportunity for joined-up priority setting
• How will public health specialists advise commissioners on
priority setting in the reformed NHS?
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21. The challenges of priority setting in this new context
7) Priority setting applies across the continuum of
commissioning
• CCGs will not be the only ‘game in town’
• Although £60bn may eventually be commissioned through
CCGs, some £50bn will be commissioned elsewhere
• The ‘continuum of commissioning’ will still be with us – but
who will determine this for a local population?
• What networks/consortia of commissioners will arise? And
how will these set priorities across wider populations?
• NHSCB outposts or PCT clusters may lead this process,
and/or groups of CCGs
• And don’t forget personal budgets and patient choice...
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22. The challenges of priority setting in this new context
8) Competition and choice influence priority setting
• How will policy on choice and competition interact with
priority setting work?
• Will individuals’ decisions drive priorities, or will it be their
GPs as agents of local people? Or will it be the NHSCB?
• We have got accustomed to ‘priority setting’ as a public
body/professional activity on behalf of patients and the
public
• Key question about how far policy will encourage individual
choice, budgets, AQP decisions etc, and change the
nature of what we think of as ‘priority setting’
• Will all pose a challenge to Monitor, CQC and NHSCB to
ensure a population has a comprehensive service offer © Nuffield Trust

23. Critical issues raised
• When will CCGs actually be authorised to take on
significant financial risk and commissioning?
• How will PCT clusters go about priority setting in the
interim (and the interim may be long-term)
• What will be the role and approach of the NHSCB?
• Will we see the NHSCB increasingly setting a ‘benefits
package’ for the NHS?
• Where will priority setting take place as the money runs
out?
• What will be the role of Monitor and the CQC, as providers
(or patients) effectively become priority setters?
• Will we actually have local commissioners in future?
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