In the swing of it

Published: 08/09/2005, Volume II5, No. 5972 Page 20 21

As a driving force behind the ongoing reform of primary care, Mike Farrar knows a thing or two about organisational change. Andy Cowper talks to a serial moderniser

Mike Farrar's recent career has been closely tied to the developing future of primary care. As the Department of Health's head of primary care, he was instrumental in establishing primary care groups, primary care trusts and personal medical services.

Later, he led the NHS Confederation team negotiating the GP contract.

Today he is working with DoH director of choice and access Margaret Edwards on the future of PCT-run provider services.

Combine this with the widespread rumour that he was one of two men tipped to take over at the top of the NHS if chief executive Sir Nigel Crisp had been successful in his bid to become cabinet secretary, and it is clear that Mr Farrar is a man of influence.

Recently he has been rewarded for stewarding one of the NHS's most successful regions as chief executive of South Yorkshire strategic health authority by being given the considerably more taxing brief at West Yorkshire SHA too.

Mr Farrar responds to HSJ's inquiries about his view on the future of primary care by casting his mind back to his time at the DoH and another re-organisation.

'PCGs were meant to have a 10-year transition to PCTs, but that was overtaken by the NHS plan. I see a Newton's pendulum: lots of functions have bounced backwards and forwards. In some ways, PCGs were the best structure for clinical involvement.

Practice-based commissioning may help get that back. However, PCTs have done great work in community development - more than health authorities did, ' he says.

'We are moving to an organisational level further away from individual practices - but We have yet to see what will come in locally to keep relationships within primary care healthy. I hope we can take some learning from the total purchasing pilots.'

What will happen to 'new localism' as PCTs merge? 'Merged PCT boundaries will likely be co-terminous with local authority boundaries, ' answers Mr Farrar. 'In theory, this should enable better partnershipworking. The question is, what replaces PCTs at sub-local authority level?' Does this train of thought suggest the need for sub-PCT level structure to ensure clinical and local engagement?

'You need some form of grouping to relate to neighbourhoods or communities: more local than at counties or unitary authorities, ' explains Mr Farrar. 'I think it would be groups of practices, as opposed to new formal bodies. If we get that right, you'd have strong clinical input. It wouldn't have accountable officers and boards, because that would be replicating what We have got at present: not a structural solution, but an informal one to work into and with neighbourhoods.

'The PCT fitness for purpose review is not necessarily about boundaries, but about PCTs' underpinning structures, values and relationships. The chance to work more closely with local authorities is incredibly important, but we can't lose community input in moving to bigger administrative structures: we have to try to secure both.

He continues: 'With PCTs, we took a step backwards [on clinical engagement], and professional executive committees as an entity never quite felt to me like what the rhetoric - possibly mine - envisaged.

This is an opportunity to look again at clinical involvement, and I guess people may try to rediscover what worked better under PCGs.' The DoH is adamant that it has no set number in mind for the number of PCTs after reconfiguration, but the view that whatever happens we will end up with around 150 appears hard to shift.

'There is only so many ways to carve boundaries, ' says Mr Farrar.

'We shouldn't have different boundaries for the same function. If health improvement is 50 per cent of PCTs' function, then co-terminous boundaries with local authorities make sense.

Mr Farrar says a drive for 'better, stronger commissioning' and 'how we deliver people working together', are behind the reforms.

'In 1999 it pointed to smaller organisations working with smaller groups of practices. So if we now move to larger organisations, we need structural capture of the local.

Form should follow function, and we are doing this intelligently, teasing out what we need to do to achieve these functions, ' he states.

What about research evidence which suggests that mergers are divisive, distracting and destabilise organisations for at least 18 months?

'Evidence shows that we need to identify the timescale to deliver new organisations as soon as possible:

protracted is bad, ' he responds. 'It is also essential to identify the new leaders, so people know where authority will lie; and we need transparent human resources processes that give people a fair chance at the new jobs. People do respond to that chance.' How will merged PCTs affect the aim set out in Shifting The Balance Of Power to invert the setting of 80 per cent of targets nationally and 20 per cent locally by 2008?

'Moving to macro-level, bigger PCTs put more emphasis on dynamics between organisations, and less on targets. Contestability [in the provision of primary care services] introduces a virtuous driver for improvement', claims the SHA chief executive.

'Commissioner-provider dynamics will eventually make the NHS less dependent on downwards hierarchical performance management. But we can't throw that out totally, as contract and inspection measurements are retrospective. More local autonomy and local responsibility should follow in time. Equally, for the next few years PCTs may need to be supported by more proactive performance management.' Wouldn't the NHS achieve more by changing incentives than structures?

'We are always looking to do both', states Mr Farrar. 'I do not think you can separate them. It is all about fitness for purpose. The NHS is a small village with great networks - where it works well, It is incredibly powerful. We can underestimate importance of clinicians wanting to do good for patients.

'Nye Bevan's line, 'if I want to get a message to doctors, I write it on a cheque', was overly cynical, ' he adds.

So does he think the suggested 15 per cent savings in administration and management costs are there to be found? A diplomatic pause: 'With public money, we should always be as efficient as possible. But We are the second or third largest health system in the world, and compared to others relatively under-managed by administrative spend. Savings are always good, but must be re-deployed into strengthening commissioning, to drive up quality. That should be first call on any savings: we need skilled people in procurement and buying, and we haven't invested in that side of the business.' What does Mr Farrar see as the risks and benefits of moving PCTs out of provision altogether unless 'no obvious alternatives exist'?

'This is quite a tricky policy. We want to break up a state monopoly and generate quality by contestability.

The acute sector has started this successfully with foundation trusts.

'But how do we do this for community and primary sectors?

What do optimal market conditions look like?' he asks. 'There are lessons from other sectors: with the deregulation of buses, economic criteria won out over social criteria and important routes were lost. It is also true of local authorities, with the residential care sector: some went wholesale to market, but those who retained 20-25 per cent inhouse have been able to manage the market better.' Mr Farrar continues: 'We can't fail to understand what We are doing.

So 2008 is a sensible timescale [to transfer the delivery of PCT-run services]. Some services may work better with a range of small, competing providers. Others - those for people with complex care needs - will need integrated whole-service approaches across health and social care which we'll 'market test' every few years. This would help PCTs commission an integrated service with tenders, including carer support as well as ongoing health maintenance and access to acute care when needed.

'We can't jump before we know where we'll land. If we put all current providers onto service-level agreements, That is a good holding position to decide what the market is going to look like. We need strong thinking and commissioning from the new PCTs on market development and specification.' Does Mr Farrar think there is any risk of 'producer capture' in a 'vertical market' that sees foundation trusts begin to provide primary care services?

He answers carefully: 'I believe It is sensible to allow the acute sector to provide care outside hospitals with proper standards and referral guidelines.' He explains that if services are priced 'properly', incentivising acute providers to undertake 'profitable' out-of hospital care, this will 'reduce concerns about supplier-induced demand', with hospitals wishing to increase revenue faced with no alternative but to drive up the number it treats as acute patients.

He adds: 'If we do not allow this, then it might create more lateral mergers of acute care, and as volumes shrink the only alternative for foundation trusts to remain viable would be to look for bigger critical mass: lateral mergers, like Mid-Yorkshire or North Pennine would become more likely.

'We know that multi-site district general hospitals have not been easy organisations to deliver and manage.

If we do not allow acutes to come down the care pathway, some will find survival difficult.

'However, we should scrutinise quality standards and what providers are doing to deliver protocols for admission, referral, and discharge criteria which address [commissioners] concerns.' That said, Mr Farrar acknowledges there are clear limits to acute involvement in primary care: 'Acutes will not be providing list-based care. So their provision into the community will [only] be in support of existing primary care.' .