From family doctor to referral gatekeeper: the future of GP practice

From family doctor to referral gatekeeper: the future of GP practice
Clare Gerada, Lucy Reynolds, Martin McKee
What do the reforms involve?

The English NHS is moving into uncharted waters. Its reforms, described by the NHS Chief Executive as “so large you can see them from space” will have profound implications for how health care is delivered.

The Secretary of State will no longer be responsible to parliament for the provision of a comprehensive health service, and money will no longer be provided direct to secondary and tertiary services. Money for health care will be given to an appointed body, the National Commissioning Board, that will allocate it in turn to Clinical Commissioning Groups (CCGs). Originally seen as statutory bodies led by general practitioners, newly released guidance makes clear that most of their work will be undertaken by private corporations who will facilitate their transition to “freestanding enterprises”. The extent to which CCGs will be able to refuse enrolment by general practices and individual patients is still unclear but evidence from shadow CCGs suggests that there will be considerable pressure to do so, especially where practices (and their patients) use higher than average amounts of secondary care. Health care will be provided by a combination of NHS and, increasingly, private sector operators who will compete for the available funds. The CCGs will have to manage their budgets carefully to avoid running out of money, but will be allowed to retain any surpluses. But what will this mean in practice?

In this paper we draw on the experience of health maintenance organisations (HMOs) in the USA, which closely resemble CCGs in having the responsibility to purchase services for their members and which use a “managed care” or “integrated care” approach to contain costs. Indeed, in 1988’s “The Health of Nations” and its sister works on NHS privatisation, the Adam Smith Institute suggest a form of “state HMO” apparently now being implemented as the CCGs prescribed by the 2012 Health and Social Care Act 2012.

For several decades Department of health staff and their advisors have been visiting American HMOs and advocating the application of their working methods here: this is what the government and the Department of Health mean when they speak in favour of “integrated care”, this being an HMO cost-containment model using tied providers .
Financing of commissioning

It appears that two new budgets will be associated with commissioning, one to cover financial and legal administration costs, and the other paid per patient each year to fund referrals. Patients can select any provider that has registered with the Care Quality Commission (CQC) and been “accredited” under the Any Qualified Provider system. CCGs are required to be neutral in respect of the ownership of providers and could be subjected to legal action for “anti-competitive behaviour” by any provider or potential provider which suspects that GPs have favoured a competitor.

Because all hospitals must henceforth generate their income from sales of medical services either to the NHS or to private patients, and new providers are entering the market, some hospitals will not be able to attract enough patients to cover their costs. Those hospitals with large debts as a consequence of Private Finance Initiative deals are especially vulnerable as they have no obvious means of reducing their repayments. If this situation persists many will soon become “bankrupt”, creating pressure to recommend extra fee-generating services (e.g. tests, imaging, inpatient procedures, and consultant appointments). Few patients are equipped to identify decisions made in the interest of the hospital rather than themselves, so would generally accept them. The American experience has shown that hospitals not infrequently profiteer from this activity. CCGs must pay the bills submitted by providers, or query them and negotiate reductions.

Referral budgets may not cover all of the referral care needed or generated by their patients.

Random fluctuations in the number of patients needing particularly expensive treatment can also cause money t o run seriously short, especially in smaller CCGs (because of their limited risk pool).
Balancing the budget

Where the primary care level does have budgetary control is in the choice over whether to refer at all. CCGs will thus perform a rationing function4. Because the new Act removes Parliament’s duty to provide a comprehensive health service, CGCs will also be able to determine what services they provide as standard (that is free-at the point of use), with others left to the private sector.

Rationing is currently based on the Croydon list , , which excludes some treatments of dubious merit but also some therapies of proven effectiveness. These include hip replacements and cataract surgery , straightforward elective procedures which are prime targets for private hospitals. In some of the “shadow” consortia and in existing PCTs, this rationing is being carried out by referral management systems, with health professionals (often not themselves doctors), employed to decide from referral letters whether referrals recommended by GPs can be funded by the CCG .
How will this new rationing function affect the GP role?

For over two decades GPs have been encouraged to engage in the financial as well as the clinical responsibilities of primary health care. While it is appropriate for GPs to be involved in health planning, it makes no sense for them to spend their time negotiating and administering contracts for referrals, and still less for them to bear financial risk for their expensively ill patients .

Considerable workload is involved in setting limits on which patients can be referred; implementing referral management “gate-keeping” systems; performance management and utilization review; and compliance with all the relevant regulations and laws.

CCGs will need new administrative systems to handle individualised billing. In practice, most CCGs will have to outsource commissioning support functions to manage such a complex array of tasks safely. Foreign health insurance companies and management consultancy firms have been lining up for these outsourcing opportunities since 2007 , .

As well as creating pressures for GPs to deny needed care, the new system creates barriers to joint working between primary and secondary care practitioners. The incentives embedded in the new system pit GPs against hospitals and other secondary care providers, with the latter trying to increase charges to cover their overheads and make profits, and the former trying to stop them.

The Netherlands moved five years ago to a competition-based arrangement, and primary care doctors now find that their attempts to coordinate patient care result in sanctions from the Dutch Competition Authority, including a £64 million fine for asking newly qualified doctors to take up vacant rural posts, this being an interference with the market prohibited by competition law. Clause 1 of the Health and Social Care Act that came into force on 1 April 2013 means that our government too is now legally prohibited from interfering in the healthcare market.

In theory European Union competition law is invoked to defend patients’ interests, but in practice it is used against existing providers by companies wanting to enter the healthcare market12.

A brief history of the managed care model in its home country

The first prepaid cooperative primary care plan was set up in 1929, and this model was replicated to serve workforces and communities which were dissatisfied with existing medical insurance options. It offered advance payment for preventive care as well as acute and hospital care . Around 1970, such non-profit managed care plans were renamed “health maintenance organizations” (HMOs), and in 1973 federal subsidies to start them were arranged. By the 1990’s, for-profit HMOs had come to dominate the market , often through takeovers of non-profit competitors. Instead of just opposing provider attempts to over-treat and over-investigate, HMOs started to inflate their own profits by gaming the system. This was achieved by reducing the odds of claims being made by cherry-picking the healthiest clients and excluding high-cost subscribers (those who had become ill and started to make claims, or those known to be at high risk of disease). They also adopted the illicit practice of limiting clinically justified treatment so as to widen the profit margin between premiums received and treatment purchased .
How will the CCGs evolve in the new market-led English health industry?

The long-established American HMO market now has little potential for further growth. Several big American HMOs hope to enter the English market through offering to organise commissioning for CCGs10.

The last Secretary of State for Health expressed interest in the new concept of accountable care organisations , and now the Shadow Secretary of State, Andy Burnham, has done so as well. ACOs also originate in the USA, as a development of the HMO model. The term “accountable care organization arose in 2006, but this model is not yet fully specified .

It has been suggested that an ACO is “a small version of the NHS pre internal market”. This is very far from being the case. An ACO is a type of (usually for-profit) insurance company that applies a particular set of cost control procedures to maximise its profits by reducing the amount it pays out for patient care, whereas the NHS pre-internal market was a public service based on universal coverage and social solidarity, funded by general taxes.

This is an echo of the statement that the managed care organisation Kaiser Permanente (KP) is like the NHS. Let us unpack that assertion. KP is indeed a little more like the NHS than other types of health insurance company are like the NHS. But on the other hand, simultaneously, KP is a lot more like a normal insurance company than KP is like the NHS. If you replace “KP” in the above with “ACO”, then these assertions remain entirely true.

ACOs and all other managed care companies are very different from the NHS in some important ways:

1. The pre-2013 NHS has risk pooling across the whole population, whereas in the ACO model, individuals are exposed to their own individual risk profile, as calculated by an actuary on the basis of the medical history they declare, and their age, gender and possibly other known characteristics. This means that the cost of health care shoots up when the enrolee has been diagnosed with an illness, just at the time when ill-health hits their earnings.

Many British people seem to be under the misapprehension that health insurance covers the cost of all care needed, as the NHS does. It doesn’t, because you can only insure risks and not certainties: if the ACO knows that the enrolee has a pre-existing condition (because they have declared it) then the premium they charge for cover will rise so that the ACO will still turn a profit. If that care will certainly be needed, then the insurance premium must logically exceed what the ACO has to pay to purchase this care, so it is effectively uninsurable. If the pre-existing condition is not declared (e.g. so as to keep the premium at an affordable level), then the ACO will legally be able to deny reimbursement or payment for any medical costs related to that condition.

2. The traditional NHS covers the cost of treating all medical problems. An ACO will treat those problems for which it will be paid by the government or the patient. The ACO/CCG has no obligation to treat anyone who is not a paid-up enrolee. If it fails to treat someone who is a paid-up enrolee without a legally defensible reason (e.g. failure to declare a pre-existing condition), then the aggrieved customer may have to seek redress in the courts.

3. A model with many ACOs involves multiplication of overheads as each one needs complete administrative apparatus to operate. In addition it has lower bargaining power on purchasing than a centralised model commands. Though, of course, the NHS has completely failed to take advantage of centralised purchasing power in recent years, instead repeatedly entering into shockingly bad deals in which various companies are overpaid for the services they provide (e.g. ISTCs and PFI ). The mechanisms which have caused this persistent squandering of public money would bear detailed examination sooner rather than later.

5. Both NHS and ACOs will control the care pathway with the aim of controlling costs, resulting in some rationing of care by cost. The difference here is that mechanisms such as NICE can be used to rationalise rationing so as to make it fair, whereas there will (under Clause 4, the autonomy clause) be little or no oversight on rationing of care by ACOs – redress for perceived abuse will have to be through the courts, but since legal aid for medical matters is being withdrawn, most people may have no recourse against unfair decisions other than buying cover from a different ACO the following year.

Removal of the geographical boundaries of primary care lists will facilitate ACO targeting of fitter, healthier and younger patients throughout the country who will be unlikely to need care and thus do not regard having a local GP as a priority. A key tactic is the offer of substantial incentives only useful to those in good physical condition, such as free gym membership. For each enrolee the managed care organisation will collect a capitation fee or a personal budget. This strategy, if undertaken intensively, will destroy the financial viability of CCGs composed of conscientious GPs by leaving them with an unfair share of the most expensive and time-consuming patients. Such CCGs would be at risk of financial collapse and low-cost acquisition by a larger competitor.

Thus considerable consolidation may occur initially, at the expense mainly of CCGs formed by traditional GPs. Afterward, individual GPs forced out of practice may find that their best professional option is to accept the rationing role at a managed care organisation, where this task may be undertaken not as a necessary evil to stretch a limited budget across all patients but as a key tool to maximise profits. Job satisfaction for such doctors may be rather limited.

Many may relocate to Scotland or Wales, where the traditional NHS is to be maintained, and there are hard to fill jobs in rural and inner-city areas which may suddenly look very attractive to refugees from the McNHS.


So this is how government promises of “integrated care” should be read: as a way to shift the NHS over to an insurance basis with limited entitlement to care. It is noticeable in the Hansard accounts of the 2011-2012 debates on HASCA 2012 that there was a dual narrative in Parliament – medical Lords and lay people discussing “integration” meaning coordinated care, and government spokesmen marketing the US “integrated care” insurance model in a parallel dialogue that many others mistook for agreement with the medical perspective .

So far this ruse has worked for them: please spread the word so it fails.