World class commissioning: the road ahead

1. World class commissioning: the road ahead Claire Whittington Acting Director of Commissioning Department of Health

2. “The aim of world class commissioning, and therefore the ultimate test of its success,will be an improvement in health outcomes and a reduction in health inequalities”

3. The WCC assurance process is leading to an improvement in PCTs’* % 51 33 • 4 • Prioritisationof key health outcomes • 12 • 1 56 34 • Plans to improve key health outcomes • 1 • 2 • 6 46 43 • Strategic planning • 2 • 10 54 24 • 18 • Financial planning • 3 • Board role in shaping and driving the • commissioning agenda 49 43 • 8 • Strongly agree • Agree • Neutral • Disagree • Strongly disagree WCC is making an impact

4. Frequency • n = 152 • 1 • 2 • 3 • 4 • 1. Locally lead the NHS • 2.Work with community partners • 3. Engage with public and patients • 4. Collaborate with clinicians • 5. Manage knowledge & assess needs • 6. Prioritise investment • 7. Stimulate market • 8. Promote improvement and innovation • 9. Secure procurement skills • 10. Manage the local health system Source: 152 panel scores as of 31 January 2009 (post national calibration) Competency results

5. Panels scored PCTs below their self-assessment, with the largest gaps on competencies 5 and 6 • Self-assessment • Panel assessment • U.K. overall • 2.1 • 2.0 1 • Locally lead the NHS • 2.1 • 2.4 2 • Work with community partners • 1.7 3 • Engage with public and patients • 1.9 • 1.7 • 2.0 4 • Collaborate with clinicians • 1.7/ • 2.0 5 • Manage knowledge and assess needs • 1.4 6 • 1.7 • Prioritise investment • 1.4 7 • Stimulate the market • 1.2 8 • Promote improvement and innovation • 1.7 • 2.0 9 • Secure procurement skills • 1.4 • 1.6 • 1.7 • 1.9 10 • Manage the local health system Source: 152 panel scores as of 31 January 2009 (post national calibration)

6. 78 • Strategy • Finance • Board Panel governance ratings • n = 152 • Red • Amber • Green Source: 152 panel scores as of 31 January 2009 (post national calibration)

7. Comparison of SHAs by competency score National average across all competencies* Competencies Governance (% by rating) SHA Average across all competencies % of sub-competencies scored as 3 Strategy Finance Board SHA Av = 1.64 Yorkshire and The Humber 14 9 1.76 7 64 29 7 86 0 5 South West 1.73 14 64 21 7 0 43 57 13 13 4 North West 1.71 8 38 54 88 0 0 5 East Midlands 1.68 0 67 33 11 0 44 56 9 West Midlands 1.65 18 59 24 6 0 76 24 South East Coast 1.62 0 63 38 13 0 0 50 50 0 South Central 1.59 11 67 22 22 0 11 67 22 4 North East 1.56 17 25 58 0 0 42 58 3 London 1.56 6 74 19 10 3 81 16 3 East of England 1.55 29 71 0 21 14 7 71 21 4 Source: 152 panel scores as of 31 January 2009 (post national calibration)

8. But the financial context has tightened "Tax increases and spending cuts are inevitable immediately after the election, assuming that there are signs of economic recovery by then - and any managers of a public service who are not planning now on the basis that they will have substantially less money to spend in two years time are living in cloud-cuckoo-land." Steve Bundred, Chief Executive, Audit CommissionThe Times, February 27 2009

9. The economic climate • 5.5% growth in both 2009/10 and 2010/11 • Invest to save opportunities • Assuming little or no growth from 2011 onwards • Release efficiency savings between £15-20bn across the service between 2011 - 2014 • Need transformational approach to come through this

10. Commissioners need to lead the way Quality Productivity Innovation Prevention • Focus on improving health outcomes • Prioritise most effective treatments and services • Manage demand and performance • People make healthier choices • The healthier choice is easier • Advice and support for people most at risk • Prioritising reduction in harmful behaviours • Technical efficiency • Allocative efficiency

11. Levers • Clinical commissioning • Transforming community services • Information • To eliminate unwarranted variation • To stimulate debate & change behaviours • Publication of survival rates etc • To produce evidenced based commissioning decisions

12. 1 Community services: 12-fold variation in productivity, starting from a low base Average number of daily visits by nurse in specified period (%) Examples of key levers to increase efficiency • Streamline travel routes • Replace night agency staff with permanent staff • Adjust staffing levels to demand • Standardize process/ interventions • 1–2 • 2–3 • 3–4 • 4– 5 • 5–6 • 6–7 • 7–8 • 9–10 • 10–11 • 11–12 Source: 3-month sample of district nurses in provider arm of a PCT

13. 192 1b PCTs’ prescribing costs: more than twofold variation in prescribing cost per weighted population* Typical sources of inefficiencies • Prescribing cost per weighted population* by PCT. £/ capita, 2006/07 • Unexploited switches to cheaper alternatives with identical outcomes • Avoidable specialist and restricted drug spend • Waste reduction • Lack of formulary • Supply chain inefficiencies • 192 • Median: £151/pop • 85 * Age and need weighted population Source: PCTs spend, Mckinsey analysis

14. 5.0 • Technical efficiency • 4 • Allocative efficiency • 3 • 2 The specific opportunities for improvement fall into four areas with a range of mechanisms to capture •  • Mechanism applicable to capture the value • Areas of opportunity • 1 • Drive through cost efficiencies in all provider services • Optimize spend and ensure compliance with commissioners’ standards • Shift care into more cost effective settings • Prevent people from becoming ill through increased prevention • Mechanisms to capture value • Market structure/management •  •  •  •  •  •  •  • Pricing/ reimbursement • Contracting and setting/ enforcing standards •  •  • 

15. 20 The 10 most frequently selected account for 60% of all outcomes chosen by PCTs in the WCC assurance system • Percent • 940 national • outcomes • selected • 54 outcome • choices • 100% = • 20 • 60 • Top 20 • choices • 18 • Top 10 • choices • 18 • Nationally defined outcomes • Outcomes from national set chosen by PCTs * Childhood obesity was the only locally-defined outcome among the top 20, and so is not included in graph on the left hand side of the page. Source: 152 PCT submissions; DoH; team analysis

16. 82,170 • CUMULATIVE Over 80,000 life years and about 60,000 QALYs can be gained over 5 years if PCTs improve their performance by a quartile • Years to life…. • Life years gained* • 9,500 • ~40,000 • 70 • Smoking** • Alcohol • CVD mortality • Cancer mortality • Diabetes** • Stroke • Total • Life to years…. • QALYs gained* • 50 • Smoking** • Alcohol • CVD mortality • Cancer mortality • Diabetes** • Stroke • Total • * By a one quartile improvement relative to historical baseline for PCTs selecting the outcome. PCTs in top quartile improve based on vital signs. • ** 10 year time delay between intervention and full benefit capture • Source: Team analysis – details in appendix.

17. 62 • ESTIMATES A one quartile improvement in PCT performance for these outcomes would result in a 10-15% reduction in health inequalities* by year 5 • Health inequality gap - Cancer mortality rate per 100,000 Health inequality gap – rate of smoking quitters Percent gap* Percent gap* • -10 • -10 • Health inequality gap - Diabetes controlled blood sugar Health inequality gap - rate of admissions for alcohol related harm Percent gap* Percent gap* • -11 • -17 Health inequality gap - CVD mortality rate • Health inequality gap - Stroke admissions given a brain scan • Percent gap* Percent gap* • -10 • -16 Baseline Up a quartile** Baseline Up a quartile** • * Between top and bottom PCTs. • ** PCTs in the bottom three quartiles move up a quartile whilst top quartile PCTs improve at the rate of their Vital Signs ambitions. Source: 152 PCT submissions; DoH; team analysis

18. Assurance Year 2 – fine tuning the system • WCC will not change substantially in the future • The principles, framework and high-level process will be maintained • Feedback indicates four main implications for the future iterations • Focused yet rigorous process • Allocate more time for the process • More resource/support • National consistency • Scope of the • changes • Outcomes: review national list, provide greater guidance for choosing outcomes and introduce more ‘stretch’ • Competencies: clarify criteria where needed, introduce competency 11 • Governance: strengthen and clarify criteria, streamline financial template • Process: extend PCT prep and analytical phases, streamline document submissions and provide greater guidance to panelists on where to focus during the panel days • Better Website • Main • changes

19. Given the current economic climate, Competencies 6 & 11 are being revised • Competency 11 is being introduced . . . • . . . and Competency 6 is being enhanced • Competency 11 – ensuring technical and • allocative efficiency and effectiveness of spend • Competency 6 – prioritise investment in line with funding expectations and according to local needs, service requirements and the values of the NHS a • Measuring and understanding effectiveness of spend • Sub-competency • Additional focus b Based on impact on health outcomes: • Rigorous prioritisation of investment • Named disinvestment b • Identifying opportunities to maximise effectiveness of spend c • Delivering effectiveness of spend sustainably c • Strategic commissioning plans for different financial scenarios to include downside funding *whilst fulfilling health outcome requirements of the population

20. Freedoms and Incentives in 2010/11 • Rewards would apply to top performers from 2010/11, following the conclusion of the second round of WCC assurance • Manage financial risk over a greater period • Access to innovation and development funds • Consider pay flexibilities Financial Support • A lighter touch performance management approach proportionate to overall performance of a PCT; Non-financial • The kudos of being within the high performing group • Creation of a franchising model to facilitate high performing PCTs to take over commissioning functions of underperforming PCTs • Direct input into national policy formulation

21. Intervening in under-performing PCTs in 2010/11 • Those PCTs defined as poor performers after the second round of WCC assurance will be subject to intervention by the SHA, in line with Developing the NHS Performance Regime and The Transaction Manual • New Commissioner Performance Framework to apply from 2010 - with clear thresholds for early intervention - a clear rules based process for escalation, and - based on clear set of performance metrics • Will be working with NHS over coming months to develop the Framework

22. Next steps – prepare for year two June 2009 - Fine tune year two co-production • Competencies – tighten language & focus (3,4 & 10) • Competency 11 • Strengthen governance • Strategy – focus on allocative efficiency September 2009 • Data pack • Web site • Communications & materials Timetable • Sept – Dec 2009 PCTs collate evidence • Jan – Mar 2010 Analytical phase • Apr – May 2010 Panels • July 2010 Publish Scorecards Freedoms commence

23. The road ahead • Clinical commissioning • Integrated care • Partnerships • Managing the health system