Working out what’s essential in a healthcare provider

By Edward Bramley-Harker

Today Monitor, the healthcare regulator has released a consultation document that outlines the process that commissioners and providers in the NHS will have to go through in order to determine which services will be classified as essential or “commissioner requested”. This is a really complex topic for the sector.

This government is committed to opening up the market for healthcare provision to a range of providers.  This is an important driver of efficiency and quality improvements.   Inevitably some providers will fall short, exit the market and be replaced by better alternatives.   The challenge for the NHS is how to allow healthcare providers to fail, while still ensuring patients have access to essential health services; this is especially important in rural areas where there are few providers.

At the moment the issue is fudged.   When providers get into trouble, the organisation is usually supported or rescued by the Department of Health. This doesn’t always address the underlying issues, can be costly and may distort incentives to succeed because the system knows that failure is currently tolerated.

The approach proposed by Monitor is to focus only on protecting those services in healthcare that are essential—i.e. if the services were not available in their current location, patients would be harmed because there was no alternative.  These services would be subsidised during a transitional period but failing non-essential services would no longer be supported by the taxpayer. For taxpayers this should be a good thing.  It should also sharpen incentives to avoid financial failure.  

The documents released today outline how Monitor expects commissioners to approach the task of identifying essential services, and how providers can get involved in the debate.  In its most simplistic form the process can be boiled down to the following.

• Define what services you are talking about and for which provider(s)
• Determine whether the absence of services from that provider will materially harm patients 
• Identify the alternative ways of treating patients 
• Determine whether there are other providers within a clinically safe travel time 
• Determine whether these providers could together supply an effective service to patients
• Determine whether any new providers could enter the market quickly
• Consider the impact of a decision to protect the service or other services in the provider, or the provision of an integrated service to patients. 

Decisions will rightly vary locally and commissioners will need to engage with providers and other stakeholders throughout. While commissioners are in the lead, providers can also request a review of the current designation of a service. 

Where commissioners designate a service as essential, providers will be subject to additional regulation to reduce the risks of failure; this includes contributions to the risk pool from both providers and commissioners. As a result providers will want to minimise the regulatory burden they face.

My view is that forward looking providers will be able to steal a lead on others by using Monitor’s toolkit to review what is truly essential in their organisation. They can then use this information to engage with commissioners and restructure their activities in order to reduce their exposure to regulation and risk pool fees. Commissioners will also want to assure themselves that they are not spending money unnecessarily protecting services when viable alternatives exist.

www.pwc.co.uk/health  

Contact details:
Email: Edward Bramley-Harker
Tel: 0207 804 5684

 

Comments

[Andrew Statham]

Ed

I'm struck that the model PwC has been developing could be applied to a wide range of public services with only minor modifications to meet the requirement of citizens jury as discussed in Paul's blog below.