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NHS Reform: Understanding the changes and challenges Pharmaceutical Sales Management June 2006

The latest round of reforms has pulled the rug from beneath the carefully constructed sales strategies devised by the pharmaceutical industry to capitalise on the emergence of PCTs. `What next?` the industry asks

The resignation of NHS stalwart Sir Nigel Crisp occurred amidst rumours of war regarding the state of funding in the NHS. The subsequent declaration of an overspend, leading to redundancies in a small number of trusts, seemed to confirm some of the `pushed rather than jumped` rumours surrounding his departure. Despite the assurance of the Health Secretary that he had left at a propitious moment, the departure of the Chief Executive in the middle of the current reconfiguration of services seemed erratic, to say the least.

It has not been plain-sailing ever since. Whilst it is true that the majority of trusts are in financial balance and that the overspend equals only around 1% of the total budget, for any health care professionals to face redundancy seems utterly at variance with the investments of the past few years, in the main designed to increase the number of key personnel. (Public confidence has not been much assuaged by the Health Secretary`s repeated assertion that the overspend is the same as a person who earns £20,000 per annum ending the year only £200 in debt. The comparison is strained.)

The debt does seem to have overshadowed the reconfiguration itself, presenting the pharma industry with something of a double whammy: which organisations will be left (or more importantly, which of our key contacts will still be in post), and which of the new organisations will have any money to devote to innovative (i.e. under patent) technologies.

With a whiff of irony, it was Nigel Crisp himself who announced the reconfiguration, at the NHS Confederation conference last June. He focused on the need to improve the commissioning of services and spoke of allowing PCTs to develop in a similar way to NHS trusts which have achieved foundation status. He envisaged a smaller number of more efficient PCTs.

A month or so after the conference the DH published its proposals: PCTs would reduce in number by about a half (303 to around 150) and the number of SHAs was set to fall to around 10. In October 2005 all strategic health authorities put forward their plans for reconfiguration, followed by the inevitable public consultation which concluded in March 2006.

The DH recently announced the new strategic health authorities (there will be ten) and they will run from July 2006. In May, we can expect to learn the new structure and number of PCTs.

So, what on earth is going on? Why is it now expedient to `reconfigure` organisations which themselves are still fairly new? Or, what has gone wrong to precipitate yet another NHS reorganisation?

Overspending may indeed be the least of the problems facing the new NHS. Commissioning and service provision seem to be the two most immediate bugbears. The DH`s desire to move the NHS away from a `provider driven` to a `commissioning driven` service is well known and it may be said that it is the robustness and efficiency of commissioning arrangements that has caused the DH to look, again, at the structure of PCTs. The DH is adamant: it not only wants the reconfiguration to recoup an administration saving of £250m, but also to create a much more efficient commissioning round and delivery of services. (PCTs will need to reduce their management and administration costs by around 15% per annum to achieve the proposed savings of £250m.)

The reorganisation goes hand in hand with the (re)emergence of GP commissioning, itself an attempt to put commissioning in the hands of those service providers closest to patients; to mitigate the effect of any intermediary between the two. Despite local enthusiasm, it should be noted that GP commissioning will not allow GPs to operate carte blanche, as the PCT will still be responsible for commissioning contract management, as well as supporting the whole process (especially in the fledgling stages).

The rationale underpinning the proposed mergers extends beyond the boundaries of healthcare. 150 PCTs will better reflect the similar number of social services departments; the intention being that the two will work more effectively together. Ten SHAs will work more closely with the nine government offices of the regions. An ageing population and a perceived problem with the health and well-being of children, combined with the acknowledged link between poverty and ill health, has made such closer relationships expedient and long overdue.

It was originally the intention that PCTs would completely withdraw from direct service provision, clearly not the most well thought out proposal as it was hastily diluted to a discretionary rather than a mandatory requirement. Now, wherever possible, PCTs should allocate resources to other service providers and not provide those services themselves. This, of course, leaves the service provision door wide open for private as well as public operators.

Always on the market for a good euphemism, the DH has resorted to `contestability` as a means of making palatable the inevitable competition that such an open system will encourage. Contestability should improve patient choice, with the best and most efficient service providers rising to the surface and the rest sinking into the tar pits. It remains a moot point.

So what will be left for PCTs to do, with so many of their current functions outsourced? The DH intends that they assume a more administrative and managerial role than at present. Performance management and agreement of local provision will be a factor, especially with those services provided by the independent sector.

A cynic might be forgiven for believing the role of PCTs to increasingly match those of the old health authorities (commissioning, performance and fund management, etc) whilst at the same time wondering what will be the fate of the proposed 10 strategic health authorities. Public health and the integration of health and social care, as mentioned above, seem to be the residual functions set aside for the new SHAs, though whether or not further savings can be achieved by the merger of the SHAs and the government offices of the regions remains to be seen.

For the NHS itself the road to reconfiguration must, at times, have seemed more akin to the road to perdition. Change, no matter how well intentioned and effective, is temporarily disruptive. New systems take time to bed down and for inevitable teething problems to be addressed. No such respite for NHS staff, caught between the higher than ever expectations of an informed public and the attempts of politicians determined to modernise a health care system that, at times, has bordered on the moribund.

There were challenges to the proposed reconfiguration, some questioning the legality of the changes, others the need for the further reform of an already much modified system. A fundamental criticism was that the changes to date do not seem to have delivered the service improvements envisaged by it`s architects. That being so, is there a requirement for even more drastic change, or perhaps a need for quiet reflection?

In many respects, changes to service provision are driven by the technological developments that make those changes possible. At the moment, the real axis of change is the IT programme which will make the varied and supposedly interrelated parts of the modern NHS work together. For example, supplementary prescribing can only operate to its full extent if there is a secure electronic patient record available to the prescriber. Choose and Book can only succeed if patients and GPs have an updated and available database of NHS trusts setting out the details required for the making of an informed choice. As with the now established new GP contract, the technological infrastructure of the system is integral to its success.

So, if the situation for those on the inside is less than certain, what are service providers to the NHS to make of the latest round of changes?

The pharma industry, in particular, has had to work hard to adapt its sales strategies to new NHS structures. From 1999 to the present it has accommodated the new demands placed upon it by the emergence of primary care groups and PCTs, as well as new and influential organisations such as the National Institute for Health and Clinical Excellence. National service frameworks and priority disease areas have rationalised the availability of resources for `Cinderella services`, as well as placing downward financial pressure on more mainstream technologies.

The learning curve continues, with GP commissioning the current focal point of attention. GP commissioners will form into commissioning groups, which themselves will create new responsibilities for healthcare professionals as well as establishing new formularies. If the money will follow the patient, then these groups will be an important method of delivery. The industry will need to understand and identify both the new groups and key personnel if inroads are to be maintained.

What about the future? No one should be short sighted enough to believe that reform will ever reach its conclusion. Reform is cyclical, not linear. The intention is to free the patient from the need to be tied to an individual doctor, practice or hospital; this is the essence of contestability: competition not just between sectors in a predefined area, but between all sectors. An understanding of the potential for current healthcare boundaries to become obsolete should sit within the planning of all pharma companies; perhaps looking to a time when the concept of a pre-defined trust or health authority `area` in which a group of patients is captured appears as nothing less than an anachronism.

Key point summary

* The current funding `crises` in the NHS will refocus the efforts of managers and clinicians to achieve economies
* The number of strategic health authorities will reduce from 28 to 10, in July
* The announcement as to the new number of PCTs is expected in May
* Commissioning and service delivery are at the core of restructuring
* All reforms depend upon the success of an integrated and secure IT system
* GPs will commission directly, forming localities (groups of GP commissioners, buying services together)
* The pharma industry must familiarise itself with the new structure of the NHS, especially new commissioning arrangements in GP practices and new personnel who will assume responsibility for commissioning
* The restructuring of the NHS will continue

John Chater
Binley`s Editorial and Development Manager
For more information please e-mail:
or telephone: 01268 495650

Editor's notes:

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