Ideal size of commissioning organisation – briefing note

Research evidence note prepared by Prof Kath Checkland, Policy Research Unit in Commissioning and the Health Care System, University of Manchester, Feb 2017, updated Oct 2018

Disclaimer: this note is a brief summary of relevant evidence, prepared in response to a request for a rapid summary from DHSC colleagues. It is not a comprehensive summary of all available evidence. 

Introduction

This is an issue which has been considered many times over the past decades. When first created in 2003, Primary Care Trusts covered populations of approximately 100,000 – this increased to 300,000 due to mergers in 2005. When CCGs were created in 2013, no specific ‘ideal’ size was stipulated. CCGs vary greatly in size, covering populations from approximately 800,000 to less than 100,000. 212 CCGs went ‘live’ in 2013 – that number has not materially changed since then.

The issues which are usually considered when thinking about size of commissioning organisation are:

  • Large enough to pool the risk associated with rare or expensive treatments
  • Large enough to have ‘clout’ to influence provider behaviour
  • Small enough to understand the needs of the local population and local provider landscape
  • The best size to minimise running costs

Size and performance

The evidence is clear that there is no obvious association between size and measures of performance.

I am aware of two main studies of this topic:

1. Wilkin, D., Bjoke, C., Coleman, A. & Gravelle, H. (2004), The relationship between size and performance of primary care organisations in England. Journal of Health Services Research and Policy, 8, pp. 11-18.

Abstract

Objectives: To examine the relationship between the size and performance of primary care organisations, the effect of and the reasons for mergers.

Methods: Data on size, proxy measures of performance and merger intentions for 71 organisations were extracted from telephone and mail surveys of primary care groups and trusts (PCG/Ts).

Results: Of the 22 performance measures examined, only two were significantly associated with size, and over half were not associated with any of the potential explanatory variables. Most organisations (70%) were planning mergers. If all planned mergers take place, the mean size of primary care organisations will double to nearly 200 000. The main reasons for mergers were to make better use of resources and for PCGs to become PCTs.

Conclusions: There is little evidence that the performance or efficiency of a primary care organisation is associated with its size. Optimal size may differ for different functions. Mergers are seen as a way of increasing management capacity and may reflect the desire of managers to manage large organisations. There is a risk that larger primary care organisations will recreate hierarchies and lose local ownership and participation.

2. Greaves, F., Millett, C., Pape,U., Soljak, M. and Majeed, (2012) Association between primary care organisation population size and quality of commissioning in England:an observational study. British Journal of General Practice DOI: 10.3399/bjgp12X616364

Abstract

Background: The ideal population size of healthcare commissioning organisations is not known.

Aim: To investigate whether there is a relationship between the size of commissioning organisations and how well they perform on a range of performance measures.

Design and setting: Cross-sectional, observational study of performance in all 152 primary care trusts (PCTs) in England.

Method: Comparison of PCT size against 36 indicators of commissioning performance, including measures of clinical and preventative effectiveness, patient centredness, access, cost, financial ability, and engagement.

Results: Fourteen of the 36 indicators have an unadjusted relationship (P<0.05) with size of the PCT. With 10 indicators, there was increasing quality with larger size. However, when population factors including deprivation, ethnicity, rurality, and age were included in the analysis, there was no relationship between size and performance for any measure.

Conclusion: There is no evidence to suggest that there is an optimum size for PCT performance. Observed variations in PCT performance with size were explained by the characteristics of the populations they served. These findings suggest that configuration of clinical commissioning groups should be geared towards producing organisations that can function effectively across their key responsibilities, rather than being based on the size of their population alone.

Size and purpose

Those who have studied commissioning qualitatively (including our own work and that of Smith, Mays et al (2013) and the Nuffield Trust (Curry, Goodwin et al. 2008)) tend to conclude that the different population sizes are required for different purposes. Thus, for example, considering the configuration of services for rare or expensive diseases requires a population size large enough to absorb the risk of small numbers of patients costing a great deal. However, whilst commissioners sometimes argue that larger organisations are required to counter the power of large providers, this is not associated with any demonstrable change in outcomes. Many of the things that commissioners are able to influence in a significant way require fine-grained local knowledge (Coleman, Checkland et al. 2009, McDermott, Checkland et al. 2016), which requires smaller organisations with real legitimacy amongst their colleagues. Thus, for example, supporting GPs to manage demand, reducing prescribing costs, managing access etc requires commissioning organisations with clear local roots. Our study of the early stages of primary care co-commissioning (http://blogs.lshtm.ac.uk/prucomm/files/2016/04/CCG3-interim-report-v8.2.pdf)  showed that the attempt by NHS England to commission primary care at national level resulted in a transactional form of commissioning, unable to respond to the nuances of local conditions and problems.

Size and costs

Primary Care Trusts (PCTs) had the freedom to allocate resources to running costs as they saw fit, and these costs varied. These costs seem to have been in the region of approximately £25-£35/head of population, although I do not have exact figures for this. When CCGs were created in 2012, running costs were fixed at £25/head, and this has subsequently been reduced to £22/head. CCGs are encouraged to contract out managerial functions to very large Commissioning Support Units. The extent to which they do this varies (Petsoulas, Allen et al. 2014), but the functions contracted out tend to be those most amenable to economies of scale, such as back office functions, data management and analysis etc. Increasing the size of CCGs would therefore yield minimal additional savings in managerial costs.

Conclusion

The evidence suggests that there is no obvious ideal size of commissioning organisation. Commentators have suggested that what is required are flexible arrangements and regulations that allow organisations to work together across different scales depending upon the type of service involved and the degree of financial risk. Studies of service reconfiguration suggest that local context is very important (Turner, Allen et al. 2011), and it is therefore vital that organisations responsible for significant service changes are local enough to both have legitimacy and to understand the context. There is little scope under current regulations for further economies of scale with regards to managerial or administrative costs.

References

Coleman, A., K. Checkland, S. Harrison and G. Dowswell (2009). Practice-based Commissioning: Theory, implementation and outcome. Final report. University of Manchester, National Primary Care Research and Development Centre.

Curry, N., N. Goodwin, C. Naylor and R. Robertson (2008). “Practice-based Commissioning: reinvigorate, replace or abandon?” The Kings Fund.

McDermott, I., K. Checkland, A. Coleman, D. Osipovič, C. Petsoulas and N. Perkins (2016). “Engaging GPs in commissioning: realist evaluation of the early experiences of Clinical Commissioning Groups in the English NHS.” Journal of Health Services Research & Policy 22(1): 4-11.

Petsoulas, C., P. Allen, K. Checkland, A. Coleman, J. Segar, S. Peckham and I. McDermott (2014). “Views of NHS commissioners on commissioning support provision. Evidence from a qualitative study examining the early development of clinical commissioning groups in England.” BMJ Open 4(e005970).

Smith, J., S. E. Shaw, R. Rosen, A. M. D. Porter, I. Blunt, A. A. Davies, E. Eastmure and N. Mays (2013). Commissioning high quality care for people with long-term conditions, NIHR Service Delivery and Organisation Research Programme.

Turner, S., P. Allen, W. Bartlett and V. Pérotin (2011). “Innovation and the English National Health Service: A qualitative study of the independent sector treatment centre programme.” Social Science & Medicine 73(4): 522-529.

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