Mergers offer no guarantee of ‘savings’ for NHS

Civitas, 23 September 2010

The HSJ revealed yesterday that  eight London Primary Care Trusts, under guidance from NHS London and the Department of Health, are to effectively merge to ‘save £48m’. This comes after Sir David Nicholson, NHS Chief Executive, last week wrote to NHS managers effectively encouraging Strategic Health Authorities, such as NHS London, to ‘direct’ PCTs to share management functions and merge in all but name.

Such a move is understandable in light of the Coalition Government’s plans to disband PCTs from 2013 and hand over commissioning powers to new consortia of GPs, but is likely to add to the chaos of reorganisation rather than diminish it.  It may be effective in London, where PCTs have for sometime collaborated in the commissioning of secondary care, but elsewhere,where they have not, past evidence suggests big problems: reduced financial control and lower quality care.

Recent analysis conducted by the independent think-tank Civitas of the last time PCTs were merged, in 2006, showed that in the 222 PCTs merged there was:

• A sharp drop in ‘quality of services’ ratings on the Healthcare Commission’s Annual Health Check.  The percentage of merged PCTs rated ‘good’ or ‘excellent’ fell from 34% in 2005/06 to 12% in 2006/07.

• A fall in the percentage of merged PCTs rated ‘good’ or ‘excellent’ on ‘use of resources’ from 5% in 2005/06 to 4% in 2006/07.

By comparison, significantly improved performance was registered in the 80 PCTs that were not merged.

• In terms of ‘use of resources’, the percentage of PCTs that were not merged rated ‘good’ or ‘excellent’ jumped from 15% in 2005/06 to 34% in 2006/07.

• In terms of ‘quality of services’, the percentage of PCTs that were not merged rated ‘good’ or ‘excellent’ improved from 35% in 2005/06 to 39% in 2006/07.

Overall, it took a period of three years before the relative performance of PCTs that were merged reached pre-merger (i.e. 2005/06) levels against those that were not.

There is, in other words, a significant risk that the merging of PCTs being proposed by the Department of Health and SHAs significantly harms health system performance: that is financial management and quality of care for patients.  This risk is amplified by the widespread changes currently being invoked throughout the NHS as a result of the White Paper Equity and Excellence: Liberating the NHS.

Who exactly is going to be accountable for financial control and monitoring quality of care during the period of transition from PCTs to GP consortia: PCTs as they exist now, larger conglomerates of merged PCTs, SHAs, the Department of Health, or the GP consortia ‘under construction?  No-one seems to know.

With such unclear lines of responsibility and accountability it is very easy to envisage costs spiraling out of control at just the time the NHS can’t afford it; and just at a time PCTs need to be getting a real grip on spending and using the market to switch poor quality, high cost, services to more appropriate settings.