Category Archives: health care

Learning about Clinical Commissioning from the USA

by Philip Boxer

The following suggestions are quoted from the views of Lawrence P. Castalino on GP Commissioning in the NHS in England, based on the experience in the USA on GP commissioning.  The page references are to his report.  The comments on the right concern the actions that follow, and relate back to earlier material on asymmetric leadership and asymmetric design.

Suggestion Comment
Suggestion 1. GP commissioning consortia and NHS policy-makers should seek to learn from US independent practice associations (IPAs), not just from US integrated delivery systems (IDSs)

  • As the NHS prepares to transfer responsibility for commissioning health services to groups of GPs acting together as commissioning consortia, there are important lessons to be learned, particularly from the experience of IPAs in the US. IPAs are networks of independent physicians who come together to hold a budget from insurance companies, but maintain their status as independent businesses. GP consortia will be much more like IPAs than like the IDSs with which the NHS has been more familiar, such as Kaiser Permanente. Page 19
Alignment has to occur horizontally across the NHS ecosystem, not just within a single sovereign enterprise.
Suggestion 2. To succeed, GP consortia will have to invest heavily in leadership, management and infrastructure.

  • Within the past two decades, the great majority of US IPAs and medical groups failed at risk contracting, including a number of high-profile bankruptcies that disrupted care and cost health insurance plans many millions of dollars. The failures occurred because most IPAs were loosely structured organisations that lacked strong physician leadership, drastically under-invested in management and infrastructure, and failed to gain physicians’ cooperation. To succeed, GP consortia will have to invest heavily in leadership, management and infrastructure. Left to themselves, most GP consortia are likely to under-invest in these capabilities. In the early years, the NHS should provide GP commissioning consortia with generous, ring-fenced budgets to invest in leadership, management and infrastructure. Page 19
Without balance across all of the following four (N-E-W-S), the consortia will fail:

  • Leadership (N),
  • Strategy driven at the edge by the need to manage the patient’s condition through-its-life (E),
  • Accountable know-how (W), and
  • Agile service delivery systems (S)
Suggestion 3. Provide training for GP leaders

  • Highly skilled, full-time non-physician managers will be necessary for consortia, but not sufficient – skilled clinical leaders who spend most of their time on consortium activities will be required as well. The experience of successful IPAs in the US suggests that a consortium with 100,000 patients will need at least two physicians who spend the great majority of their time leading the consortium. Contracting with external organisations is likely to be helpful for GP consortia, but only if the consortia have strong leadership. External organisations cannot substitute for this leadership. Page 20
Clinical leadership is fundamental…  ‘management’ cannot be split off, leaving the clinicians able to remain in a Faustian relationship.
Suggestion 4. Balance quality, patient experience and cost incentives

  • If GP commissioning is perceived to be focused primarily on cost, it will likely generate a strong physician and patient backlash. The NHS should provide consortia with balanced incentives. That is, the consortia should receive financial benefits (or penalties, if performance is poor) based not just on their performance in controlling the overall costs to the NHS of care for their population of patients, but also for the quality of care and for patient experience. The NHS and the Government should take care that communications about the programme to the public and to physicians make clear that it is not just about reducing costs, but also about improving the quality of care and patient experience. Page 21
Accountable know-how in relation to the patient’s particular pathway is about much more than cost.  The process of healthcare must be (and must be expected to be) a collaboration around a social object (the patient’s experience) in the full sense of the word.
Suggestion 5. Incentives for GP consortia to generate cost savings for the NHS should neither be excessively strong, nor excessively weak. GP consortia should have the ability to use meaningful incentives for their member practices.

  • Each GP consortium must be ‘at risk’ in some meaningful way for the cost of care provided to the consortium’s patients; and the individual GPs within the consortium must have something ‘at risk’ as well. However, the risk should be for costs that the consortium can reasonably be expected to control, and should not be so large that it is likely to lead to under-treatment or avoiding the sickest patients. To succeed, GP consortia must be able to distribute savings and quality bonuses received by the consortium differentially to members based on their performance. Page 23
Risk must be defined and managed from the perspective of what is possible for the consortium, and not simply from the perspective of the risks that the Government wants to distance itself from!
Suggestion 6. The consequences for poorly performing consortia should be made clear in advance and should be consistently enforced.

  • There should be financial consequences, at least to some extent, for the GPs in a consortium that persistently fails. Page 25
The license to practice as a consortium should be subject to performance, regulated by Government against demand-side criteria.
Suggestion 7. To the extent possible, minimise the ‘insurance risk’ that consortia bear.

  • GP consortia’s exposure to ‘insurance risk’ should be minimised by requiring that they have a minimum size (probably 100,000 patients or more); by adequate risk adjustment; by requiring consortia to purchase reinsurance (‘stop-loss’ insurance which is initiated when a claim reaches the threshold) to cover outlier cases with extremely high costs; and by excluding high-cost, low-frequency illnesses from the consortia’s commissioning responsibilities. Page 26
Part of implementing suggestion 5 must include defining what risks can be borne by the consortium itself vs needing to be reinsured.
Suggestion 8. Either ‘real’ or ‘virtual’ budgets can work, but details matter.

  • Giving consortia real rather than virtual budgets – that is, actually giving consortia the funds budgeted – has advantages, but is a high-risk activity. Whether budgets are real or virtual, it is critical that both the NHS and GP consortia have timely and accurate information about expenditure, and that consortia are able to keep track of services that have been provided, but for which payment has not yet been made. Page 27
It is horizontally transparent systems of accountability that are they key.  These depend of good systems of record, but also effective means of using these in support of systems of collaboration.
Suggestion 9. Encourage hospitals and specialist physicians to cooperate with GP consortia and remove barriers to cooperation.

  • For GP commissioning to succeed, the NHS must find ways to give hospitals and specialist physicians incentives to cooperate with GP consortia. In addition, it would be helpful if the NHS made it more feasible for specialists to leave hospital employment and work as members of commissioning consortia. Page 28
Collaboration around the patient’s pathways involves not just effective relationships, but also an agile infrastructure of care providers that can be aligned to new definitions of patient need.
Suggestion 10. Assume that, even if the NHS creates perfect incentives, it is likely to take many years for most consortia to become highly competent

  • Even if the NHS creates perfect incentives, it is likely to take five to ten years for most consortia to become highly competent. The Government should plan accordingly. Experience in the US suggests that organised processes of care and a collaborative group culture are essential for physician groups to function effectively; by definition, these take time to develop. Page 30
This is a process that needs to be supported, and it is a journey, not just a structure!


Managing primary risk needs a collaborative approach to clinical leadership

by Philip Boxer

Practice-based commissioning is intended to overcome the difficulty of driving a health care reform agenda centrally through locating management of the health care ecosystem not at its center, but at its edges where the primary care system meets the individual demands of patients’ conditions. There are a number of difficulties in making this work in practice (see what makes practice-based commissioning difficult in practice?), at the heart of which is the need for a different approach to managing primary risk.

The secondary care system supplies treatments provided by medical specialists to the primary care system. It includes the services of hospitals, but also of allied health professionals such as physiotherapists and orthotists. The primary care system is the customer of the secondary care system, supplying care provided by general practitioners (GPs) directly to patients within local communities, making the patient the customer of the primary care system.

The medical specialists in the secondary care system act as consultants to the primary care physician, and may themselves draw on the services of specialist consultants in the tertiary care system for such things as neurosurgery and cancer care.  Taken all together, these different orders of care system form a health care system through which care pathways are formed for the patient, defined by the sequence of interactions the patient has with the health care system in the treatment of their condition. Can this pathway ultimately be the responsibility of the patient’s GP alone, as the gatekeeper to the health care system?

Change in the governance of the health care ecosystem

The health care system is itself a business ecosystem, being made up of large numbers of operationally and managerially independent organizations that have to be able to collaborate with each other in varying ways depending on the nature of the pathway the patient needs to take through this health care ecosystem.  This need for horizontal forms of collaboration across the ecosystem is true even where its funding is provided centrally by the government: the ecosystem cannot be managed top-down as a planned economy. Nevertheless, health care reform by the UK Government has aimed to achieve some combination of reducing the costs of health care, increasing the quality of patient care, increasing the accessibility of possible treatments within the ecosystem, and broadening the availability of health care itself to a population.

But as discussed in the difficulties in implementing practice-based commissioning, innovation within the health care ecosystem has continued to increase the variety of possible treatments available, increasing the variety of patients’ conditions demanding treatment, and therefore the variety of (horizontal) pathways needed.  If the agility of the health care ecosystem is defined by the variety of patient pathways that it can support (i.e. type III agility in organizations), then as the demand for agility within the health care ecosystem increases, so top-down approaches become ever less effective as they are overwhelmed by the variety of patients’ demands on them. This is the driver for moving from N-S dominant to E-W dominant forms of organization, with the history of reforms to the NHS reflecting this in the way changes to the governance of the ecosystem have made the Easterly role of the primary care physician ever more important to the way the ecosystem is aligned to the needs of the patient (the stages in this evolution can be described using patterns of evolving enterprise architecture).   So given the difficulties in implementing practice-based commissioning, what more does the GP need to become effective in his or her East-West role?

The need for a different approach to leadership

The faustian pact made with clinicians by the top-down driven PCTs left the clinicians free enough to do what they could for their patients as long as they generated the aggregate results wanted by the PCTs.  The problem with this faustian pact, however, was that it prevented the health care system from learning about how clinicians were to manage the care pathways that went beyond the scope of individual clinicians or practices.  Thus abolishing the PCTs may have been necessary, but it will not be sufficient for practices to go wholly East-West dominant, since the clinicians will need new forms of support if they are to be effective in how they manage these more complex pathways in the through-life interests of their patients’ conditions.  At the same time, the Government (or in the US the insurance companies) will not allow money to be used in this way unless they can hold clinicians accountable for the way they use their know-how to manage these pathways in the through-life interests of their patients. It has the danger of becoming a stand-off, with the clinicians simultaneously agreeing with the changes while needing to buy themselves time while they work out how to manage in this new environment!

Which brings us back to the ways in which clinicians are enabled to manage primary risk. In order to be effective, their leadership has to become systemic, able to bring together the different roles needing to work collaboratively in the interests of the through life management of the patient’s condition. Such an approach depends on the availability of systems of engagement that can support collaborative working around the patient’s condition.  But more than that, it needs a collaborative approach to leadership that does not seek to place the burden of responsibility on the GP’s shoulders alone:  it needs an asymmetric approach to leadership.

What makes practice-based commissioning difficult in practice?

by Philip Boxer

The UK Government wants practice-based commissioning in order to sustain an effective focus on the increasingly chronic conditions of an aging population – in a way that can hold clinicians accountable (see the Executive Summary in Practice-based commissioning: budget guidance for 2010/11. But why has it proved so hard to make happen in practice: Practice based commissioning: what future?)? And why do doctors appear to be resisting the pace of the latest changes (UK national Health Service reforms mobilise doctors)?

What’s the problem?

“To Err is Human”, in considering how to build a safer health care system, identifies three types of error[1]: type I errors of execution in the way some particular treatment is administered; type II errors of planning in the way treatments are combined to treat a particular patient’s condition; and type III errors of intention in understanding what the particular patient’s condition really is. The first two of these are used to argue for securing the better operation of health care systems and for evidence-based approaches to defining patient pathways through them. But however well these two are managed, the quality of health care ultimately rests on the way treatments are aligned to the patient’s actual condition. Practice-based commissioning aims to improve the quality of care in general practice by enabling the responsibility for this quality to rest as close as possible to the patient within the GP consortium.

In meeting the challenge of Health Care Reform, Tom Flynn and I identified three corresponding kinds of benefit delivering step-change improvements across the UK’s NHS (a version of these relating to business is in the three agilities). These benefits came from minimising the scope for the health care system to make each type of error:

  • Type I Benefits – defining current demand for treatment and realigning care pathways to deliver them more effectively.
  • Type II Benefits – re-organising referral protocols and the configuration of clinics to improve patient pathways with respect to particular conditions within existing demand catchments defined by the Primary Care Trusts (PCTs).
  • Type III Benefits – extending the organisation of the clinical service to include re-organisation of the way patients’ demands were themselves defined by focusing on the through-life management of patients’ chronic conditions.

The orthotics pathfinders, carried out for the Purchasing and Supplies Agency of the NHS, were used successfully to test this approach in practice (for example as reported to the Scottish Parliament). They established that the scale of Type II benefits were significantly greater than Type I benefits because of the role that could be played by the orthotics clinic within the larger Primary, Acute and Long Term Care contexts. It was expected that this would be even more true for Type III benefits, but the Type III benefits could not be achieved until alignment to patients’ needs could be addressed within the larger NHS system, including collaborating with community-based services.

Practice-based commissioning was intended to deliver this alignment, with the map of medicine pathways going a long way towards defining how these Type III benefits might be achieved for patients. So why the continuing difficulty? The answer would appear to be partly structural differences between the way PCTs and GPs’ practices defined value; and partly a lack of the appropriate forms of support for sustaining the through-life focus on patients’ conditions needed by the clinicians.

Using the wrong model of value

In their 2006 book on Re-Defining Health Care speaking primarily of the US health care system, Porter and Teisberg argued the following:

“Health care is on a collision course with patient needs and economic reality. In today’s dysfunctional health care competition, players strive not to create value for patients but to capture more revenue, shift costs, and restrict services. To reform health care, we must reform the nature of competition itself.”

Central to this reform was value-based competition, something Porter enlarges on in his more recent challenge to outdated approaches to value creation and their failure to create shared value. Creating shared value means focusing on creating value in the life of the patient as well as for the provider – in terms of the above, creating Type III benefit. This argues that the continuing difficulty is because the implementation of the reforms is using the wrong model of value: managing the direct value created by providers rather than managing the indirect value created for for patients (creating value in ecosystems enlarges on the tension between these two kinds of value).

The ‘model of value’ means here the whole way in which the health care system is enabled to deliver health care, with the shift towards a primary focus on creating shared value representing a shift from a supply-side focus on markets for treatments to a demand-side focus on delivering value to individual patients.

Not supporting clinical leadership

The lessons from developing effective joint commissioning showed the importance of being able to align managed care in community and hospital settings to the through-life management of the patient’s condition within the context of their day-to-day life. This joint approach is fundamental to the practices of Kaiser Permanente, with the role of clinical leadership central to successfully transforming health care. These lessons are repeated by the early lessons in implementing practice based commissioning, showing the importance of a number of different things needing to come together: strategy, clinical engagement, managing the finances, information, and supporting practices and governance.

Current evidence on the implementation of GP consortia suggest, however, that the emphasis is still much more on migrating the top-down funding away from the PCTs to the GPs, than it is on how the GP consortia themselves need to manage health care expenditures in a different way. But in order to secure type III benefits, East-West dominance is necessary in the way GP consortia are run, in turn requiring four things:

  • Central leadership that understands the need to delegate authority to the practices where the patient’s needs are defined (i.e. asymmetric leadership), including the need for balance between these four things;
  • Practices that can focus on the through-life needs of their patients’ conditions (i.e. strategy-at-the-edge);
  • Agile health care infrastructures capable of being aligned to the particular needs of individual patients (i.e. agile infrastructures); and
  • Data platforms enabling practices to generate the multi-sided information they need if they are to be held accountable for the through-life performance of their patients’ health care (i.e. making it in GPs’ interests to be held accountable in this way).

A top-down focus enables clear progress to be made on the first two of these, while limiting the third to the forms of agility supporting Type II benefits (e.g. 18 week patient pathways). But a top-down focus prevents the fourth movement from vertical to horizontal forms of accountability (e.g. GP consortia could inherit PCT debt). This is perhaps why the GPs appear to be resisting the pace of the latest changes.

What is difficult in practice

So what might be proving difficult about practice-based commissioning in practice? The delay in giving primary focus to supporting clinical leadership probably reflects an uncertainty over whether or not it is really necessary to make the change to the axis of accountability as implied by practice-based commissioning, from top-down (vertical) to edge-driven (horizontal) accountability.

If so, it will result from the difficulty in grasping Porter’s and Teisberg’s “economic reality”: that the primary emphasis of the health care system must move from the top-down control of treatments to supporting systems of engagement with patients’ conditions that can enable GP consortia to be held accountable for creating indirect value: value in the life of their patients.

[1] These are described in greater detail in ‘Unintentional’ errors and unconscious valencies

Managing Primary Risk and the Value Deficit

by Philip Boxer

The UK Government is proposing to remove the superstructure of Primary Care Trusts (PCTs) and Strategic Health Authorities (SHAs) and delegate authority to the General Practitioners (GPs) at the edges of the health care system.  How will GPs manage?  How will they be held accountable? And how will they balance what is collectively affordable by the nation with the good of the individual patient?  It will be some time before there will be answers to these questions, but I propose that the issues can be usefully framed in terms of how GPs manage primary risk.

Primary risk and the value deficit
The traditional use of ‘primary task‘ is in terms of the primary task of the organization. For example, the primary task of the PCT is to provide healthcare for its patients.  The funding for the PCT is determined by a formula related to the characteristics of the people within its defined territory.  The healthcare needs of its patients are determined by the GPs caring for those patients.  The primary task is realized through the way the PCT organizes and holds accountable the services it provides to its patients.

In practice, there is always a gap between the services available to treat the patient and the patient’s particular needs – what we shall call a value deficit, the value being the value to the patient of the services provided.  ‘Value’ here is the way the patient values the services provides, which may or may not be expressible in monetary terms. Value in these terms is therefore to be distinguished from the costs of the services provided.

A recent study by McKinsey’s of the costs of chronic healthcare in Germany showed over 80% of costs arose from patients with conditions that were chronic: GPs were having to manage services through the life of the patient’s condition, with the ways in which this through-life management was provided having a significant impact on the through-life costs of the patient’s condition.

The organization’s perspective on primary task therefore becomes insufficient to address the variation at its edges arising from GPs varying through-life management of their patients’ conditions.  The organization also has to find ways of managing primary risk: the risk that for any given patient’s condition, the value deficit will be unacceptably large.

The need for organizations that can support East-West dominance
Those of you familiar with the principles of asymmetric design will recognize the need for East-West dominance in the design of an organization capable of managing primary risk, since the average proscriptions of North-South dominance only hold the doctor accountable for aggregate measures of performance.  East-West dominance becomes necessary if the through-life costs of treating patients’ conditions are to be managed across such variation, as evidenced by the performance of Kaiser Permanante.

So getting rid of the SHAs and PCTs may make sense if they have been judged to be unavoidably North-South dominant.  But we still need to consider how the commissioning processes of GPs are to support East-West dominance. This was something that we began to consider in the Orthotic Pathfinder Projects, and in the platforms needed to support them.

In managing primary risk, doctors are familiar with the need to avoid errors of execution (treatment applied wrongly) and errors of planning (wrong combination of treatments) with respect to their patients’ conditions. But holding doctors accountable within East-West dominant forms of organization also means enabling them to avoid errors of intent (treating wrong condition).[1]

The systematic under-use of treatments found in the Orthotics Pathfinders was not because the doctors didn’t understand what the patients needed.  It was because the North-South dominant systems of accountability under which they worked had perverse incentives built into them that made it impossible to provide through-life treatment of their patients’ conditions, other than at personal cost to themselves.

I guess what is unacceptable at the level of the individual cannot be assumed to be addressed by adopting the same approach at the level of the government of averages. I guess the present UK government assumed this when they abolished the SHAs and PCTs, but they nevertheless appear to have replicated the same difficulty for practice-based commissioning: East-West dominant forms of governance really are different to North-South dominance forms of governance!


[1] For more on the different nature of errors of intent, see ‘Unintentional’ errors and unconscious valencies.