Managing to manage healthcare resources in the English NHS? What can health economics teach? What can health economics learn?

Managing to manage healthcare resources in the English NHS? What can health economics teach? What can health economics learn?

Available online at Health Policy 84 (2007) 249–261 Managing to manage healthcare resources in the English NHS? What can healt...

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Available online at

Health Policy 84 (2007) 249–261

Managing to manage healthcare resources in the English NHS? What can health economics teach? What can health economics learn? Angela Bate ∗ , Cam Donaldson, Madeleine J. Murtagh Institute of Health and Society, Newcastle University, 21 Claremont Place, Newcastle upon Tyne, NE2 4AA, UK

Abstract Objectives: : To provide a ‘thick description’ of how decision-makers understand and manage healthcare prioritisation decisions, and to explore the potential for using economic frameworks in the context of the NHS in England. Methods: : Interviews were conducted with 22 key decision-makers from six Primary Care Trusts (PCTs) in northern England. A constant comparative approach was used to identify broad themes and sub-themes. Results: : Six broad themes emerged from the analysis. In summary, decision-makers recognised the concepts of resources scarcity, competing claims, and the need for choices and trade-offs to be made. Decision-makers even went on to identify a common set of principles that ought to guide commissioning decisions. However, the process of commissioning was dominated by political, historical and clinical methods of commissioning which, failed to recognise these concepts in practice, and departed from the principles. As a result, the commissioning process was viewed as not being systematic or transparent and, therefore, seen as underperforming. Conclusions: : Health economists need to acknowledge the importance of contextual factors and the realities of priority setting. Our research suggests that the emphasis should be on integrating principles of economics into a management process rather than expecting decision-makers to apply the output of ever more seemingly ‘technically sound’ health economic methods which cannot reflect the dominating and driving complexities of the commissioning process. © 2007 Elsevier Ireland Ltd. All rights reserved. Keywords: Health care economics; Resource allocation; Health planning; Qualitative research

1. Introduction In healthcare, the availability of resources – money, time, or human capacity – is often insufficient to meet ∗ Corresponding author. Tel.: +44 191 222 3813; fax: +44 191 222 6043. E-mail address: [email protected] (A. Bate).

all the claims (wants and needs) on them. In this respect resources are considered scarce and have to be managed. Given this, healthcare organisations decide what health services to provide and prioritise, for whom, how, and where. This is a global phenomenon and evident at all levels in health services. Despite this, there is little consensus on the appropriate way to manage resources [1–6]. Economics is

0168-8510/$ – see front matter © 2007 Elsevier Ireland Ltd. All rights reserved. doi:10.1016/j.healthpol.2007.04.001


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founded upon the notion of scarcity and so should provide theories and solutions to help healthcare organisations determine what to fund, to what extent, and at what sacrifice [7]. Indeed, promoting and teaching health economics for this purpose is widespread. Attempts to use economic information in prioritisation decisions have been predominantly at the national level in health technology assessment and centralised drug review processes [4,8]. Yet, beyond this, the impact of economic information and health economic methods in prioritisation decisions is debatable [9,10]. In particular, research on the use of economic evaluations by decision-makers in practice has highlighted several barriers to the adoption of health economic methods. These include difficulties in accessing relevant information, lack of interpretation skills, insufficient supply of information in a timely fashion, and the relevance of the information in a given decision-making context [8,11–13]. This has led some to question the usefulness of health economics methods for priority setting at the local level [10,14–16]. In considering such debates, Mooney and Wiseman [17] hypothesise that decision-makers do want transparent ‘rational’ processes and state that “health economists . . . [need to] look into the decisionmakers’ minds and to try to understand what the objective function is with which they are working”. The implicit assumption is that better understanding will lead to better developments in methods and research. Moreover, Jan et al. assert [18]: “because health economic analysis has tended to be largely normative, there has generally been a lack of appreciation of why such decision-making sometimes ‘fails”’, therefore studies “that examine economic decision-making within its institutional context” offer “greater insight into why such failure occurs and ultimately provide a more realistic basis for decisionmaking.” This paper seeks to undertake such an examination. This work is the product of broader research which aims to examine how prioritisation decisions are understood and managed by decision-makers, to explore the potential for using economic frameworks, and to identify how these frameworks can be informed by, and inform, ‘real-world’ decision-making. Specifically, this paper addresses the first two of these in the context of the NHS in England. This involved conducting interviews

to investigate how decision-making was understood in principle by decision-makers (i.e. how commissioning ought to be undertaken), how this translated into practice (i.e. how commissioning was undertaken), and finally, decision-makers’ reflections on this. The paper draws on the results of the empirical analysis of the interview data to provide a ‘thick description’ [19] of local level decision-making. Thick description allows us to explore and present the uniqueness and complexities of local level decision-making which may otherwise be overlooked in a comparative study. The results are presented under the following themes: (1) strategy – the concepts and principles that guide decision-making; (2) process – the structures utilised in decision-making and methods that drive decisionmaking in practice; and (3) performance – the outcomes of and constraints in the decision-making process. These results are also presented in a schematic model to illustrate how these themes relate to and impact on each other. We discuss these results with respect to the national and international literature on decisionmaking in healthcare organisations, and conclude by suggesting what health economics can learn from such research.

2. Materials and methods 2.1. Context, setting and sample In England, responsibility for making prioritisation decisions has been devolved to Primary Care Trusts/Organisations (PCTs/Os). PCTs receive 80% of the total NHS budget [20] and are charged with commissioning health care and services for their local communities [21]. The role of commissioning has been well articulated by Smith and Mays [22] who have conceptualised it as the ‘conscience’ (setting out what the system should aim to achieve and how) and the ‘brain’ (identifying and implementing the optimal solutions for delivering these aims) of the health system. In fulfilling this commissioning role, PCTs are expected to: assess local health needs; plan and secure health services; improve health, within the framework of National Health Service standards and guidance; and remain accountable to the Secretary of State, through the Strategic Health Authority (SHA) [21]. Moreover, PCTs are required to adhere to the financial duties

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stipulated in the National Health Service Act 19991 [23]. In-depth interviews were conducted in 2004 with decision-makers from six Primary Care Trusts within one Strategic Health Authority (and from that SHA) in northern England. These PCTs are responsible for commissioning healthcare for a total population of approximately 1.4 million and, in 2004, held a combined annual operating budget of approximately GBP£1.8 billion. The average reported budget per PCT was GBP£300 million. 2.2. Data collection The interviews were used to explore perceptions of commissioning; how it was happening, strengths and weaknesses, and the impact of health policy. The interview schedule expanded on similar work conducted in Canada [24] and consisted of semi-structured and free-text questions which were revised throughout the course of conducting the interviews as new themes emerged. The ordering of questions varied and they were never delivered verbatim. In this way, the schedule was used to guide the interview in an informal but purposeful way [25]. All interviews were conducted at the interviewees’ place of work and took approximately 1½ h to complete. The interviews were audio-recorded and transcribed verbatim. Data were collected from 22 participants in total; 14 males and eight females. The roles of participants included executive level management (e.g. members of the senior executive team and the PCT Board, such as chief executive) (n = 6), non-executive management (e.g. lay-members of the PCT Board, such as PCT Board chair) (n = 5), and director level management (e.g. a high level manager who may or may not be on the PCT Board, such as director of public health) (n = 11). For those participants at director level, their role could be further divided into three areas of speciality; public health/medical (n = 5), commissioning (n = 4), and finance (n = 2). 1

This states that “it is the duty of every Primary Care Trust, in respect of each financial year, to perform its functions so as to secure that the expenditure of the trust which is attributable to the performance by the trust of its functions in that year does not exceed the aggregate of [its income]”. Section 97D, National Health Service Act, 1999 [23].


2.3. Data analysis Transcripts comprised the formal data for analysis. These were openly coded by one of the authors [AB]. A constant comparative approach was used to identify broad themes and sub-themes [26,27]. Transcripts were read independently by two of the authors [AB, MJM] to develop descriptive themes from which sub-themes emerged. This was facilitated using NVivo software [28]. The themes were validated in two ways. First, joint data sessions between the authors were used to examine whether the evidence supported the analysis in order to confirm (or revise) themes. Second, interim results were presented in several forums including a group of original participants in order to verify the findings, and academic seminars in order to ensure reflexivity. 2.4. Research ethics This research was assessed by the local ethics research committee (reference SLREC1127). Written informed consent was obtained from participants prior to commencing the interview. All data were protected and only available to the research team and every effort has been made to ensure that no individuals are identifiable in the dissemination of this data.

3. Results Six broad themes emerged from analysis of the interview accounts and were used to construct a thick description of PCT commissioning as perceived by decision-makers. These themes of commissioning concepts, principles, structures, methods, outcomes, and constraints are discussed below using anonymised verbatim quotes. 3.1. Commissioning strategy – concepts and principles In discussing their understanding of commissioning, participants revealed no single definition of commissioning. This was highlighted by the interchangeable use of terminology (commissioning, priority setting and resource allocation) both within and across interview accounts. Despite this, a set of common concepts


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and principles emerged that can be used to illustrate how participants understood commissioning. 3.1.1. Commissioning concepts Participants acknowledged that resources were considered to be constrained and scarce. Reference to resources tended to focus on financial resources (rather than human and time). Resources were perceived as constrained because the initial budget allocation received by the PCT was finite (see Box 1, 1.1.). Participants tended to describe this budget allocation as insufficient and resources were portrayed as scarce as there were never enough to fulfil all the demands, needs and wants (generically, claims) placed upon the PCT (see extracts in Box 1, 1.2.). Furthermore, participants emphasised that claims on resources competed for resources (see Box 1, 1.3.1.) and resources were frequently depicted as having to be ‘fought over’ (see

Box 1, 1.3.2.). Moreover, participants accepted that decisions about resource use had to be made and this required making choices about what or who to allocate resources to (and, implicitly, what or who not to allocate resources to), how to allocate the resources, and when (see Box 1, 1.4.). 3.1.2. Commissioning principles Decisions about what, who, how, and when to allocate resources were driven by three common principles. Participants recognised that decisions over claims on resources should: (1) be compared against each other in some way and that this required an element of judgement in terms of assessing the relative “value” or merit of claims (see Box 1, 2.1.); (2) fulfil some common objectives (these included clinical objectives, economic objectives, political objectives, and social objectives) (see Box 1, 2.2.1) which have to be balanced

Box 1: Commissioning concepts and principles 1.0. Concepts: 1.1. Resources are constrained “. . . the health budget is very clearly defined and comes as a cash limited sum with some elements of growth added on an annual basis.” (ID9, Female, PCT Exec) 1.2. Resources are scarce “. . . ultimately it comes back to the fact that there just isn’t enough money around to do everything that we like to do. . . . we’re almost in a situation where we can’t square the circle and there isn’t a balance between local need and the resource that’s available.” (ID25, Male, PCT Non-Exec) 1.3. Claims on resources are competing 1.3.1. “. . . you’ll never satisfy all the demands because they’ll be competing demands.” (ID16, Female, PCT Non-Exec) 1.3.2. “. . .by the time you’ve dealt with some of the main blocks of planning for the next year you’re very often left with relatively small amounts of money to fight over . . .” (ID29, Male, SHA Director) 1.4. Decisions over resource use require choices to be made “. . .we decide how we’re going to spend the PCTs money in the next financial year, who we’re going to give it to and what for.” (ID7, male, PCT Director) 2.0. Principles: 2.1. Claims should be compared and judged against on another “Priority setting is essentially I think about trying to . . . assess the relative value of competing demands for resources for investment. . .” (ID17, Male, PCT Exec) 2.2. Claims should meet a common set of objectives which need to be balanced 2.2.1. “. . .it does feel like you’re spinning a lot of plates in the air at the same time. You’ve got influences coming from all over the place, whether they are economic, whether they’re social, whether, you know, they are to do with political influence. . .” (ID1, Female, PCT Exec) 2.2.2. “. . . it’s about balancing various bits of the jigsaw.” (ID6, Female, PCT Director) 2.3. Claims should achieve value for money “At the end of the day we have £350 m of taxpayers money which I am charged, as accountable officer, for using wisely i.e. not only using properly . . . but also, for the decisions that we actually make, say ‘are we making the biggest amount of impact for the money we get’?” (ID5, Male, PCT Exec)

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against one another (or, in economic terms, be tradedoff against one another) (see Box 1, 2.2.2.); and (3) be made in such a way as to maintain financial balance and achieve value for money. Indeed some participants positioned this in terms of suggesting that the PCT has a sense of duty to do this, both towards the tax payer (as the funder) and the population served by the PCT (as the user) (see Box 1, 2.3.). These results illustrate the commissioning strategy and constitute the first stage of the schematic model in Fig. 1. Here, the commissioning concepts and principles are exemplified as a set of normative statements about what guides commissioning decisions.


attributed to one structure – the PCT Board – that was often referred to as the ‘final hoop’ through which decisions would have to pass before being ‘signed-off’. This role was recognised by participants (both Board members and non-Board members) as removed from the ‘day-to-day’, ‘nitty-gritty’ commissioning work, conducted by the other structures (see Box 2, 3.3.1.). This role, therefore, was often described as a veneer for commissioning decisions made elsewhere within the organisation (see Box 2, 3.3.2.).

Two themes emerged from interview accounts in relation to undertaking commissioning in practice: commissioning structures and commissioning methods.

3.2.2. Commissioning methods The interview accounts revealed that there was no prescribed method for commissioning and consequently no single method could be identified as being used. Rather, commissioning appeared to be driven by several methods, elements of which were used within all the PCTs. Five typologies emerged from participants’ descriptions of commissioning. These present commissioning as ‘evidence-based’, ‘political’, ‘backroom’, ‘clinical’, and ‘historical’.

3.2.1. Commissioning structures This analysis is restricted to the PCT structures (formal and semi-formal) identified from interview accounts and their roles in the commissioning process. Formal structures constituted the PCT Board and the Professional Executive Committee (PEC) who were accountable and responsible for decision-making. Semi-formal structures were essentially multi-agency stakeholder groups though their constituency and remit tended to vary between PCTs and over time. In general, though, semi-formal structures were not accountable but their work fed into the formal structures through the PEC and Board. The roles of structures identified throughout the interview accounts were distinct and divisible into three main functions. First, structures provided a supportive function in commissioning. In particular, participants emphasised the ‘bottom-up’ support of the semiformal structures portrayed as doing the “legwork” and working out the fine detail (see Box 2, 3.1.). Second, structures provided a forum for considering and debating commissioning decisions prior to making recommendations. For example the PEC was depicted as a structure predominantly used to discuss and validate decisions with clinicians (see Box 2, 3.2.). Third, structures provided an endorsing function. This role was Evidence-based commissioning. We use ‘evidence-based’ as a generic term denoting the use of data, and/or information in commissioning. In terms of data, participants referred to the use of routine data, such as epidemiological data (e.g. incidence, prevalence, morbidity, and mortality measures), secondary care data (e.g. activity, length of stay, and mortality measures), and primary care data (e.g. consultation, referral, and prescribing rates). Evidence and information included: analysis of primary data (e.g. needs assessment, clinical and cost effectiveness analyses); national policy documents and guidance from the Department of Health (DH) or the National Institute for Health and Clinical Excellence (NICE); and local reports from the SHA, PCT, public health, and local authority. Additionally, there was also reference to tacit or experiential evidence, such as professional expert, or user/carer opinions (see Box 2, 4.1.1.). There was no reference to conducting original research or the use of research outputs. Evidence was utilised in two ways: (1) to predict or identify ‘problem’ areas by highlighting needs and gaps in the provision of resources (see Box 2, 4.1.2.) and (2) to justify or ‘lend weight’ to decisions on the provision of services or drugs (see Box 2, 4.1.3.). However, participants suggested that evidence-based

3.2. Commissioning process – structures and methods


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Box 2: Commissioning structures and methods 3.0. Roles of structures as: 3.1. Providing the legwork for commissioning “So we have a planning system underpinning the Board and the Professional Executive Group for all of the major clinical priority areas and other areas involved in the NHS Plan. . . .and those planning groups do all the legwork . . .” (ID1, Female, PCT Exec) 3.2. Providing a sounding board for commissioning “The role of the PEC quite clearly is to be a place where clinicians and health professionals voices can be heard and can take part in decision-making” (ID8, Female, PCT Non-Exec) 3.3. Providing the veneer for commissioning 3.3.1. “. . . these things are very much part of the bread and butter of the executive team and effectively the staff. And that’s not really the role of either me or other non-executives to get involved in the day-to-day nitty gritty.” (ID25, Male, PCT Non-Exec) 3.3.2. “. . . we’ll report to the board about whether we think what’s been agreed, what the financial impact is of that on financial balance, and all that. But the board isn’t going to truly get into the details I think. I think that’s a veneer I think.” (ID11, Male, PCT Director) 4.0. Methods: 4.1. Evidence-based commissioning 4.1.1. “Obviously there’s more detailed analysis within each of the care streams because you rely on them to do that detailed work, both on historical spend and trends; previous investments; needs assessments; NICE guidelines; national targets; what users and carers bring to the fore as their priorities; what the professionals and trusts themselves are bringing together, so it’s a real mix. But we try and make it as evidence based as we can. . .” (ID9, Female, PCT Exec) 4.1.2. “. . . in trying to identify needs and service gaps etc. they will be using a lot, you know, the core statutory collected information whether that is hospital activity data, morbidity and mortality data, or anything that the public health department normally provides. . .” (ID1, Female, PCT Exec) 4.1.3. “. . . the PEC developed a series of statements around decision-making that would inform it decisions. . . .it’s a list which has things on like: is this value for money?, is it good clinical practice? does it fit with national priorities? has it been tested out with users and carers? and such, so they have almost a check list.” (ID20, Female, PCT Director) 4.2. Political commissioning 4.2.1. “The key thing that drives us has to be what comes through from national and SHA policy and that’s what tends to go into the LDP [local delivery plan], so that might be the public service agreement targets or other NHS planned targets, or NSF targets. It is the central imperatives, the central objectives which we tend to look at.” (ID31, Female, PCT Director) 4.2.2. “. . . there are obviously must-do’s in relation to the NHS plan and meeting waiting time targets . . . by and large the local priorities have been the national priorities of access and waiting times, NSFs. The sort of hang em’, flog em’ issues.” (ID6, Female, PCT Director) 4.2.3. [talking about what goes into the local decision-making and planning process] “. . . what the SHA hints, suggests, arm twists, that we actually should be thinking about.” (ID5, Male, PCT Exec) 4.2.4. “In that sense we [the SHA] appear to be just another voice in the system, we’re not controlling it but we are just pointing out that the relative priorities that they have appear to be inadequate compared to their mission id you like, and their statutory responsibilities.” (ID29, Male, SHA Director) 4.2.5 “If we fundamentally disagree with the way that they [the PCTs] want to allocate the resources then we would have to pull them in and say that we disagree and argue the case with them why. And we’d expect them to agree with us that they’ve got to balance their freedom against the priorities that are set both commonly by all the PCTs and Trusts in this area and ourselves, and their local initiatives.” (ID27, Male, SHA Non-Exec) 4.3. Backroom commissioning 4.3.1. “. . . clearly there can be a smoke filled room, I guess with the NHS it wouldn’t be, but instead a smoke free room in which a bunch of fairly influential people say ‘so we’ll do it like this then’.” (ID11, Male, PCT Director)

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Box 2: (Continued )

4.3.2. “. . . my guess at the moment would be that a lot of the big decisions, the major investment decisions, for the next year would be agreed between the Chief Execs and the Strategic Health Authority . . . but us, at the different level, won’t really know how they came to that decision.” (ID10, Male, PCT Director) 4.4. Clinical commissioning 4.4.1. “. . . if you look at investments . . . it has been where there have been committed clinicians and people who are willing to dig their heels in and kick and fight for their particular service area and it hasn’t always been ‘well this is actually best value for money, this makes best use of what tax payers are paying in, this achieves better quality of life outcomes overall’.” (ID31, Female, PCT Director) 4.4.2. “We have to take account of known trends in resource use in areas like prescribing, for example, which again we might not have explicitly chosen to spend our money on, but is a reflection of individual, you know, it’s been a clinical decision determined by GPs. . .” (ID17, Male, PCT Exec) 4.5. Historical commissioning 4.5.1. “. . . the majority of resources that the PCT get are spent on, you know, the same basis that we spent [them] last year. . . . so the vast majority is just sort of recycled.” (ID7, Male, PCT Director) 4.5.2. “In fact a lot of what we do is based on historical reasons. We do a lot of stuff that the health authority did before us.” (ID8, Female, PCT Non-Exec) 4.5.3. “there’s a tendency to simply look at the marginal new money rather than the totality of the resource . . . recognising that at the moment we’re dealing with a fixation of the marginal new monies.” (ID24, Male, PCT Director) 4.5.4. “I mean the biggest problem about resource allocation is that you can’t necessarily achieve rapid shifts in the balance of resources between what you might like to do ideally in terms of resource allocation and reflecting priorities. Because essentially you’ve got an enormous burden if you like, or under-burden, of established activity which isn’t necessarily overtly prioritised.” (ID25, Male, PCT Non-Exec)

commissioning was not necessarily practised to the extent that they would have liked or deemed to be appropriate. Political commissioning. Many participants portrayed national and local politics as dominating commissioning. Reference to national politics was discussed in two ways. Firstly, changes in national government (and therefore policies) and reorganisations of structures and roles were perceived as perpetual and integral to ‘life’ in the PCT. One participant noted, “. . .the only constant thing in all that we do is change.” (ID6, Female, PCT Director). Constant change resulted in instability for organisations and individuals who presented themselves as spending most of their time learning about forthcoming changes, reacting to them, or recovering from them. Secondly, indirect references to politics were discussed in terms of the impact of centralised guidance, planning, and monitoring. Those cited in interview accounts included national policy and planning guidance issued by the DH (e.g. the National Service Frameworks, the NHS plan, Public Service Agreement targets), as well as guidance and targets issued through the special health authorities (e.g. inspection and key

performance indicators monitored by the Health Care Commission and mandatory guidance on the provision of technologies issued by NICE) (see Box 2, 4.2.1.). These are referred to collectively as national drivers hereafter. The national drivers were discussed both positively and negatively in the interview accounts. Participants emphasised the laudable clinical and moral aims upon which the national drivers were perceived to be founded and referred to national drivers as providing a clear direction for commissioning that was based on the collective achievement of a common set of goals. However, participants also considered national drivers to be contradictory, sometimes irrelevant, narrow in focus, highly prescriptive and inflexible. Moreover, the national drivers were typically described as “the mustdo’s” and it was suggested throughout the interviews that the PCTs tended to focus on reacting to and directing/allocating resources towards the national drivers first and foremost. Phrases, such as the “hang em’, flog em’ issues”; the “hanging offences”; or “P45-ers”2 , 2 In the UK a P45 is a Tax form received from an employer on leaving their employment. It is therefore often associated with being made unemployed.


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were used to suggest the seriousness of the implications for not doing so (see Box 2, 4.2.2.). With respect to local politics, participants focussed on the influence of the SHA which was considered to be highly political given its close alignment with the centre (the DH). The SHA’s role in commissioning was described as both ‘guiding’ and ‘interfering’. In terms of providing guidance, the SHA was perceived by participants as ‘holding the reins’ for commissioning in line with its remit for setting and monitoring the strategic direction for commissioning across the health authority area. However, that this often resulted in the SHA setting additional targets and performance indicators for PCTs, was regarded as interfering. Additionally some participants discussed specific instances where PCTs were ‘told’ where to allocate resources by the SHA (see Box 2, 4.2.3.). These two roles are also reflected in the interview accounts from SHA participants which depict the SHA as one of many voices in the system that is pointing out a direction for commissioning (see Box 2, 4.2.4) and, at the same time, imply that the SHA presides over the final decision to which PCTs are expected to defer (see Box 2, 4.2.5.). Backroom commissioning. Backroom commissioning is an extension of local political commissioning. However, in contrast to explicit political commissioning (which is based on fulfilling policies, guidelines, or targets with which participants were all familiar), backroom commissioning can be considered implicit because many participants were not clear how decisions were made. It was described as a closed environment where ‘big’ deals about local priorities and the allocation of ‘big chunks’ of resource were brokered among the chief executives of the most ‘important’ organisations – the PCT, the acute hospital trust, and the SHA (see Box 2, 4.3.1. and 4.3.2.). Clinical commissioning. Clinical commissioning referred to the influence of clinicians (primary and secondary) and the clinical setting. This was explained in three ways. First, clinicians were recurrently portrayed by participants as vocal in campaigning for or against service (organisational) and technological changes (see Box 2, 4.4.1.). Participants suggested that a powerful clinical consensus about the best way to manage healthcare dominated and was rarely challenged by the PCT. This view was further

evident in participants’ portrayals of the Royal Colleges, depicted as powerful lobbying bodies that could influence commissioning by contesting decisions and shaping legislation. Second, clinicians influenced commissioning through their behaviour within a clinical setting. Reference was made to GPs in particular whose referral patterns, demand management strategies, and prescribing behaviour were considered by participants to drive resource allocation decisions (see Box 2, 4.4.2.). Third, participants suggested that despite risk management strategies, unplanned events in the clinical setting impacted significantly upon commissioning decisions. These events were mainly described as administrative changes (e.g. changes in emergency admissions procedures) or legislative changes (e.g. changes in working times, or wage increases). Historical commissioning. Historical commissioning was described in the interview accounts as allocating resources in line with allocations made in previous years with slight adjustments for inflation and new service development funding. The examples used by participants portrayed historical commissioning as simply ‘recycling’ or ‘rolling over’ resources from 1 year to the next (see Box 2, 4.5.1.). This was justified by participants who indicated that the PCT did not start with a ‘clean sheet of paper’ and that patterns of service use were determined by arrangements inherited by the PCT from predecessor organisations (see Box 2, 4.5.2.). However, all participants recognised this method of commissioning was not ideal. Participants highlighted that the historical pattern of service provision was rarely questioned and was not the focus of prioritisation decisions which were ‘fixated’ on additional (often referred to as marginal) new resources (see Box 2, 4.5.3.). Participants therefore speculated that some current patterns of service use were perhaps redundant, but making changes to these current patterns was a major challenge for commissioning (see Box 2, 4.5.4.). These results illustrate the commissioning process and constitute the second stage of the schematic model in Fig. 1. This shows, from a positive perspective, the structures utilised in commissioning and the methods that drive commissioning, and the impact of structures external to the PCT on these.

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3.3. Commissioning performance – outcomes and constraints Reflecting on the commissioning process, participants focussed on what they perceived to be the weaknesses of the current system. Two themes emerged from the interview accounts that present these weaknesses as negative outcomes of the commissioning process and constraints in the commissioning process.


3.3.1. Commissioning outcomes Participants consistently referred to the commissioning process as ad-hoc, reactive, and, by implication, lacking ‘rationality’, strategy, planning and management (see Box 3, 5.1.1.–5.1.3.). Furthermore, participants emphasised the lack of transparency in the process, noting that decisions were often unclear (see Box 3, 5.2.1. and 5.2.2.). Additionally, participants discussed, with mixed views, the ‘fairness’ of the process. As with all these outcomes, there was consensus

Box 3: Commissioning outcomes and constraints 5.0. Outcomes: 5.1. Processes is not systematic 5.1.1. “our problem is that we haven’t got a systematic approach and we haven’t got the information and all the other things that we would need in order to do that” (ID31, Female, PCT Director) 5.1.2. “I don’t think we are always . . .taking decisions based on evidence, objective information that we examine in depth. I don’t think we look at best value in terms of the use of resources. And I don’t think we look at any concept of health gain in terms of the decisions that we take.” (ID1, Female, PCT Exec) 5.1.3. “the idea that we have a rational planning process is a bit like, you know, we’re going to build a bridge so we will get some resources, we will choose a design that’s affordable, we’ll do some project management to build it, and it’s nonsense. It’s more like they look out there and think, ‘oh they’re building a bridge over there, better get out there and work out how we’re going to afford it’. And actually nobody in this age does the planning permission bit or the setting up the feasibility, nobody ever does that.” (ID29, Male, SHA Director) 5.2. Process not transparent 5.2.1. “I mean we aim to be a transparent organisation [. . .] I think we strive for transparency but I don’t think we achieve 100% transparency at the moment.” (ID12, Male, PCT Non-Exec) 5.2.2. “If you ask members of the public, most NHS staff, a lot of GPs, they wouldn’t know what the decision-making process is. So it’s definitely not transparent. In theory it is of course, you know it comes up through, goes through the Board, the Board makes the decision. But when it actually comes to making the decisions, where the decisions are made, that’s not transparent. Nor are the criteria on which those decisions are based.” (ID10, Male, PCT Director) 5.2.3. “. . . we do aim to be fair, but it’s not always that easy given that some things are historically weighted one way or another. It’s quite hard to move from a historical perspective to a current perspective.” (ID8, Female, PCT Non-Exec) 6.0. Constraints: 6.1. Lack of capacity 6.1.1. “Capacity is the biggest constraint . . . there’s loads of data around but what we don’t have is the capacity, be that human beings or be it information systems to analyse that and turn it into usable information”. (ID20, Female, PCT Director) 6.1.2. “in some instances it’s quite surprising I think that, you know, the lack of data you might imagine is just routine even down to, you know, ‘how many people is a certain service treating?’ You know, sometimes that basic information is not there.” (ID7, Male, PCT Director) 6.1.3. “. . .there’s not enough people with information handling and analytical skills within the NHS. I think they are in short supply and we need to find ways of accessing that sort of expertise.” (ID17, Male, PCT Exec) 6.2. Lack of support 6.2.1. “I think we should be able to plot the systems and money, so we should have the systems to be able to plot and track the money” (ID19, Male, PCT Director) 6.2.2. “Other SHAs in other parts of the country take a different view and are extremely supportive of primary care organisations developing their own roles and things of that sort. We’ve got no such support . . . they would probably dispute this, but from my perspective we’ve got not such support from this SHA at all.” (ID12, Male, PCT Non-Exec)


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that an unfair process would be an accidental (rather than deliberate) consequence, but that it was hard to judge whether fairness was achieved (see Box 3, 5.2.3.). 3.3.2. Commissioning constraints Constraints on PCTs in the commissioning process were used to explain or justify the commissioning outcomes. In the interview accounts constraints in capacity and support were portrayed as having affected the PCTs ability to undertake and implement commissioning decisions. A lack of capacity was described by participants both in terms of the amount of information and the numbers of people with information-handling skills (see Box 3, 6.1.1.). Participants commonly reported that they either did not have enough information and that the information available was questionable in terms of quality and its relevance for commissioning (see Box 3, 6.1.2.). This was compounded by the perception that the number of individuals possessing analytical and critical appraisal skills as well as the time that those people could spend on commissioning, was limited (see Box 3, 6.1.3.). Support for commissioning was presented as material and emotional. In terms of the material, participants commonly referred to a lack of support tools or methods that they perceived necessary for aiding commissioning (see Box 3, 6.2.1.). As for emotional support, participants expressed that they lacked support, such as encouragement and reassurance in making commissioning decisions within the line management structure (i.e. from the Department of Health or the SHAs) (see Box 3, 6.2.2.). Finally, these results illustrate commissioning performance as it relates to the commissioning strategy and constitute the third stage of the schematic model in Fig. 1. This shows weaknesses in commissioning in terms of the outcomes of the process and constraints in the process.

4. Discussion It is encouraging (not least to health economists!) to observe that there seems to be a level of common understanding and acknowledgement amongst decision-makers that resources are scarce, claims on resources are competing, and that choices and tradeoffs have to be made. In this study, decision-makers have even gone on to identify a common set of com-

missioning principles that ought to guide decisions about such choices and trade-offs. However, the process of commissioning appears to depart from these principles in practice. Although a number of structures with roles for identifying, debating and validating, and endorsing commissioning decisions were identified within the PCT, methods dominating the process and resulting decisions appeared to be driven by structures outwith the PCT through political, historical and clinical commissioning. As a result, the commissioning process was perceived to be unsystematic and lacking transparency. These outcomes imply that commissioning, as undertaken in practice, deviates from what can be surmised from the guiding principles initially outlined by decision-makers and consequently performs poorly in relation to these. Furthermore, contextual constraints on PCTs, specifically a lack of capacity and support for undertaking and implementing commissioning, were cited as contributing to poor performance. These results are summarised in the schematic diagram illustrated in Fig. 1. This presents the results in three stages from setting the commissioning strategy, executing the commissioning process, and reflecting on the performance of the commissioning process. The commissioning strategy defines a set of normative statements about what guides commissioning decisions. The commissioning process is less straightforward than simple application of the strategy would perhaps suggest and shows, from a positive perspective, the structures utilised in commissioning, the methods that drive commissioning, and the impact of structures external to the PCT on both of these. Finally, commissioning performance is defined in relation to the commissioning strategy. Poor performance is illustrated as a deviation from the strategy and is demonstrated by the commissioning outcomes which are defined as weaknesses of the process and constraints within the PCT that limit their ability to undertake commissioning in line with the strategy. Whilst the data upon which these results are based is specific to the north of England, the results should be generalisable to all contexts where prioritisation decisions have to be made within the constraints of a scarce (or fixed) amount of available resource. This paper adds to the growing body of evidence on healthcare prioritisation and decision-making. However, it is novel in its application to PCTs in England and adopts

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Fig. 1. Schematic model of PCT commissioning.

a more sophisticated analytical approach to that used in previous applications elsewhere [24]. Nevertheless these findings should not surprise some. The dominance of ‘historical’ and ‘political’ processes in decision-making has been well documented in UK healthcare organisations (though much of this refers to former organisational incarnations of PCTs) [1,3,4,10,29,30]. This is also reiterated in international research which consistently evinces prioritisation and resource allocation decisions as generally occurring on an historical basis [31–33]. Additionally, it has been repeatedly shown that the resulting process lacks transparency and systematic structure [4,34,35]. These results also reflect observations from previous research which have been put forward to explain why healthcare organisations have not been able to manage prioritisation decisions including a lack of critical capacity, capability (expertise), and time constraints [29,41,42]. Furthermore, with respect to the English NHS and in particular in light of mounting financial deficits, commentators have questioned the extent to which ‘robust’ commissioning is happening in PCTs [22,36–39]. Indeed, in a recent assessment of healthcare performance conducted by the Healthcare Commission in England (the Commission for Healthcare Audit and Inspection), 92% of PCTs scored ‘fair’ or ‘weak’ for use of resources (based on an analysis of PCT financial

management, financial standing, and value for money); no PCT achieved a score of ‘excellent’ [40]. Despite the crudeness of this type of assessment, these figures highlight that PCTs struggle to manage resources. Because the research presented in this paper occurred close in time to the Healthcare Commission’s assessments it can perhaps be seen as a qualitative complement to these assessments, providing some explanation as to why PCTs are struggling.

5. Conclusion The issues presented in this paper are beginning to be recognised by some in the English NHS who are calling for better ways to manage the delivery and organisation of healthcare services and resources, whilst explicitly accounting for the political and structural context [43–46]. The contribution of health economics in addressing these calls is critical. Even so, health economic methods still have some way to go if they are to be a viable aid to decision-making practice at the local level. Economics may provide a theoretically valid, ‘rational’, and systematic set of principles for conceptualising priority setting, but if economic methods are to have an impact in ‘real-life’ priority setting decisions, then they must also be pragmatically


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applicable. This also requires economists to consider an alternative research paradigm, such as that outlined in this paper, for investigating the use of health economic methods and the barriers and facilitators associated with their uptake. In a recent article, Maynard offers some insights to health economists wanting to make the leap in translating their research evidence into practice, concluding that: “the health economist has to be the imperialist, drawing the ignorant into enlightenment and consideration of opportunity costs and health outcome measurement” [47]. Whilst we would agree with the latter part of this statement (that opportunity costs have to be considered in practice) we would contend that the health economist should be anything but an “imperialist”. As this research has shown, decisionmakers are able to fully recognise notions that are central to health economics and their implications. In the same way that decision-makers may need to better understand how to apply health economic methods, health economists need to better understand the context in which these methods are being used. In our view, acknowledging the importance of contextual factors (e.g. organisational behaviour, decision-makers’ requirements) and the pragmatics of priority setting, allows health economists to identify barriers faced by decision-makers in adopting their methods in practice which can then be addressed in adapting them for future use. Our research suggests that the emphasis should be on integrating principles of economics into a management process rather than expecting decision-makers to apply the output of ever more seemingly ‘technically sound’ health economic methods which cannot reflect the dominating and driving complexities of the commissioning process. Having listened to the decision-makers to map out such complexities, our future aim is to accommodate these in commissioning frameworks in an attempt to narrow or even eliminate the deviation between commissioning strategy and commissioning performance portrayed in Fig. 1.

Acknowledgements The authors would like to thank all interview participants for their time and feedback. Angela Bate and this research are supported by a National Primary

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