Exclusive: fixed costs leave CCGs just £9 per head for commissioning

*updated 8 September 14:00

A leading GP commissioner has warned this could make management of flagship policies such as allowing patients to choose from any qualified provider impossible for all but the largest CCGs.

A “ready reckoner” tool distributed to future commissioners by the Department of Health, and seen by HSJ, allows emerging CCGs to estimate their fixed costs. It suggests the average group could be left with less than half its “running cost” allocation to spend on the administrative costs of commissioning.

The tool makes the assumption that CCGs will get £20 per person for whom they commission, lower than figures previously used by the DH in public. The operating framework mooted a figure of £25-£35 per head.

A DH spokesman said the figures were “illustrative” and that the department is “still working with the assumptions set out in this year’s operating framework”.

He said: “Emerging commissioning groups will need to enter their own information to reflect their own local arrangements and assumptions.”

£9.12:

The amount a “typical” CCG would have to spend per person on the commissioning processes

A typical CCG – based on HSJ’s analysis of the current CCG landscape – covering 175,000 people and 24 practices, would get a total running cost allowance of £3.5m, according to the document.

Using the ready reckoner, HSJ calculates nearly £1.5m of this would be taken up by “corporate base costs” – including pay costs for an accountable officer, GP board members, chief operating officer, director of finance, chair and non-executives.

Also included is an estimated cost of £111,000 to fund a nurse and secondary care specialist member of the board, which was made mandatory after pressure from professional bodies.

• View the data: HSJ visualisation of CCGs by size and by estimated allocation

A further £446,000 is estimated for “clinical leadership and practice engagement”, which includes monitoring of practice performance, service redesign within the CCG and governance issues.

This would leave just £1.6m – £9 per head – to spend on the commissioning process, although CCGs covering larger populations would have a larger allowance which would offset fixed costs.

The running costs of primary care trusts, before clustering, are estimated at around £70 per head by the DH. However, this figure takes into account commissioning public health, primary care and specialised services which will not be the responsibility of CCGs.

NHS Alliance member and North East Essex CCG chief executive Shane Gordon said an allocation of £20 would make “good management of services” difficult, unless there were “much larger CCGs than we previously talked about”.

He also said a low running cost allowance would make the policy to allow patients to choose from any qualified provider “extremely difficult”.

He said: “Transaction costs and overheads are multiplied by how many providers you’ve got. You have to administrate any qualified provider somehow. Will we have the capacity?”

But National Association of Primary Care executive member Charles Alessi said: “The whole business of clinical commissioning is that it is different [from PCT commissioning] and the support you will need is going to be different.”

The DH spokesman said: “The base costs for commissioning groups are likely to vary and depend on a range of factors, including the extent to which a CCG aims to share particular functions with other local groups. As such, the tool allows CCGs to change these values of these fields and enter their own figures.

“Overall, the tool will help CCGs to think about how they best deliver their functions and the way in which they structure their support to improve quality and secure the best value from public funds.”