By giving practices indicative - as opposed to actual - budgets and price information, the policy seeks to make them more innovative in their referral decisions. In theory, this leads to more convenient and cost-effective community-based services for many outpatient procedures and supports choice of secondary providers.
It is open to all practices, whether on the general medical services contract or the personal medical services contract, and was at its start voluntary.
Under PBC, practices are to use this 'indicative' commissioning budget to provide services. This involves identifying patient needs, designing effective and appropriate health service responses to these needs, and deciding how to allocate resources for competing service priorities.
The PCT retains overall accountability for what practice-based commissioners do, and acts as the practice's agent in procurement or placing contracts, helping them buy the care that will deliver the services the practice-based commissioner says they want.
PBC was presented as a policy that would improve clinical engagement, provide better services for patients and ensure better use of resources.
From a policy perspective, PBC was designed to deliver on the major objectives of the government's NHS reform programme.
It aims, for example, to shift more services out of hospitals and into the community where they are more accessible to patients and provide better value for money for taxpayers.
It also provides quicker access to diagnostic services, which GPs commission. PBC is therefore seen as contributing to achieving the 18-week referral to treatment target.
It was also pitched as a counterbalance to the payment by results policy, which encourages trusts to attract as many patients as possible to maximise their income. Under PBC, GPs have an incentive to develop and refer to lower cost, community-based services and thus prevent hospital costs from spiralling out of control.
PBC does not divest primary care trusts of all their commissioning. They are expected to provide the overall strategic framework for commissioning in their area.
They are also charged with making sure all patients have equal access to a practice or group of practices that is commissioning directly on their behalf. This seeks to address the potential for widening inequalities, with some patients having access to services developed by entrepreneurial GPs (often in well-off areas) while others are left behind.
Although the policy has the support of the main political parties as well as key NHS stakeholders, it has had a slow implementation trajectory.
Several factors have been cited for this, notably the environment into which PBC was launched. PCTs - crucial for the development of the policy and supporting practices - were in a state of financial crisis and wholesale reorganisation through 2005-06 and into 2007.
GPs were in the process of restructuring the way they worked as the new GMS contract with its emphasis on the quality and outcomes framework bedded down.
There were also pockets of reluctance, with some GPs wary of involvement, having seen previous attempts to get them to take charge of budgets come and go.
But there were also other limiting factors, including the lack of an incentive regime to reward practices for their involvement and a lack of clarity over what was expected of practice-based commissioners.
Over the years, the government has introduced several policy documents and technical guidance to increase the uptake of PBC. It has done this without prescribing a model, favouring instead an organic, bottom-up evolution.
Initially, the government said it would not attach a target to the roll-out of PBC. Participation was voluntary.
But in July 2005, Commissioning a Patient-led NHS introduced a target for PCTs: to ensure 100 per cent of GP-registered patients had access to a practice-based commissioner by the end of December 2006.
This was called universal coverage. It did not mean all practices had to take part, rather it meant PCTs had to provide support to all practices such that they could take part in PBC.
Practices were encouraged to form locality groups or consortia to improve efficiency, take advantage of economies of scale and work together in areas of service redesign.
Universal coverage was defined the in DoH's January 2006 guidance, which said PCTs have a role to support practice-based commissioners by providing:
information that allows them to understand their clinical and financial activity compared with local and national indicators;
an indicative budget covering an agreed scope of services;
support and the offer of an incentive scheme;
Meanwhile, a financial incentive, known as a directed enhanced service, was built into the revised GMS contract for 2006-07. It came into force in April 2006 and saw GPs offered 95p per patient if they agreed to be given an indicative budget and draw up an action plan on how they planned to use information from the PCT to achieve objectives agreed with their PCT.
A further 95p per patient was on offer if they could demonstrate they had delivered these objectives by the end of the financial year. This was to be funded through savings generated by service redesign.
This was a once-only offer and in March 2007 it was replaced with locally agreed incentive schemes. PCTs were encouraged to focus these on activities that supported delivery of the 18-week target and the 10 high-impact changes identified by the NHS Modernisation Agency.
The DoH also boosted its central support, funding the Improvement Foundation to support practices and PCTs rolling out PBC.
The extent to which practices engaged in PBC could keep any savings they generated was another bone of contention. In February 2005, the DoH had issued guidance that appeared to indicate that PCTs could claw back savings through a topslice of practice budgets to create a contingency fund.
But in January 2006, the new operating framework set out that practices could hold on to 70 per cent of savings they made through redesigning services.
In mid-2007, the DoH commissioned Ipsos/Mori to survey GP practices' experiences of PBC. The results showed widespread support for the policy but slow progress on implementing it. It also revealed weaknesses in the practical support offered by PCTs to their practices.
Out of 1,198 practices responding to the survey:
over half (57 per cent) supported PBC, 22 per cent were neutral and 8 per cent strongly opposed the policy;
one-third (37 per cent) said it was too early to tell whether PBC had improved patient care. However, 31 per cent said PBC had not improved care and 13 per cent said that it had improved patient care;
one-third of practices had commissioned one or more new services through PBC;
over half (56 per cent) had received an indicative budget for 2007-08 from their PCT. But most of these believed it had yet to make a difference to the way the GP practice operated;
fewer than half of practices had agreed a commissioning plan with their PCT;
over half of practices rate the quality of managerial support provided by their PCT as poor, with 26 per cent assessing it as being very poor;
around one-third of practices rate the quality, format and frequency of information provided by their PCT as being good;
72 per cent of practices say they have a good relationship with their PCT.
These findings broadly echoed a smaller straw poll of 257 members of the NHS Alliance PBC network, published by the King's Fund in May 2007. Like the Ipsos/Mori survey, it showed gaps in the PCT response to PBC.
Particular issues were poor data quality, poor responsiveness by PCTs and failure to set indicative budgets.
Lack of support
The report said: 'Our "straw poll" underlines the challenge that lies ahead for the NHS. PCTs have not had sufficient time to develop their capacity to support PBC. GPs and practice managers have reported that there are serious issues with data quality and the time lag involved in receiving data. Many GPs and practice managers perceive PCTs as unsupportive and lacking in strategic direction. In many cases, the lack of an enabling environment is a reflection of organisational turmoil within some PCTs, rather than a lack of commitment among managers. New senior teams are only just in place in many PCTs and they need some space and time to steady their ships and ready their crews.'
Early wins were essential if GPs were to be won over, it said, and PCTs needed to learn to let go and hand over to GP practices.
In September 2007, the NHS Alliance issued another report underlining not the problems and lack of progress but some of these early wins and early lessons.
Among these were a GP consortium that had set up an urgent care centre, saving almost£400,000; a community-based palliative care service that had saved nearly£1m; redesigned pathway and specification for Doppler ultrasound that saved£300,000; and an intermediate care service for chronically ill patients that had cut unscheduled admissions by 15 per cent and saved£450,000.
Setting the Alliance fully behind the policy, chair Michael Dixon, himself a GP, wrote: 'One way or another, practice-based commissioning is going to transform the NHS. If it succeeds - and we are confident it will - then we shall at least have achieved a primary care-led NHS.'
In November 2007, the Audit Commission was repeating the same message: PBC had been good in parts but needed more robust support from PCTs to really get off the ground.
Its report, Putting Commissioning into Practice, found that the main ingredients of success were:
- the provision of robust budgets that were well understood and accepted by practices;
- regular, accurate and easily understood information from PCTs;
- freedom for practices to use savings for the benefit of their patients;
- sound governance arrangements for approving business plans;
- greater shared ownership between PCTs and practices on how resources should be used.
In late 2007, PBC still had political and stakeholder support. But with an election due in the next two years, there was a growing sense of urgency among its supporters that it needed more early wins like those identified by the NHS Alliance, a sharper response from PCTs and maturing of relationships between all parties.