PCTs need to separate provider and commissioner services to demonstrate transparency, accountability and modernised regulation. Christian Dingwall explains how to achieve this

The Department of Health has said consistently this year that community services are critical to delivering Our Health, Our Care, Our Say, but so far they have been largely untouched by public service reform.

Since primary care trusts started to take on responsibility in 2000 for community health services, they have been hampered by poor information, lack of a common payment system and low priority. By 2006, after three decades of seemingly permanent revolution in the NHS, it seemed community health services had defied reform.

How then can PCTs reform these services and break the vicious circle of change without progress?

As to structural change, last year's reduction of PCTs from 303 to 152 was, at times, a painful exercise, but not simply a cost-saving one. In number, configuration, leverage and alignment with local authorities, they may be better structured to deliver an agenda for public service reform.

Is the same true of their functions? The 2005 imperative for PCTs to divest themselves of providing community services was withdrawn. Instead PCTs are required to undertake regular reviews of services that they provide and to continue the drive for a greater plurality of providers to extend patient choice, increase quality and foster innovation.

Separating services

It is clear that guidance is needed on a wide range of governance issues, including the future position of service delivery within or outside the PCT. While divestment (external separation) of provider services is not required, internal separation (eg establishing an autonomous provider organisation) is likely to be key to demonstrating transparency, accountability and modernised regulation.

Hempsons and NHS North West have drafted guidance on seven distinct steps to successful separation of PCT commissioner and provider services. They cover:

  • purpose and vision – developing the brand of the PCT and its autonomous provider organisation;

  • form of relationship between the PCT commissioner and autonomous provider organisation;

  • membership of an autonomous provider organisation;

  • governance of an autonomous provider organisation;

  • delegation and retention of functions;

  • agreed accountabilities and responsibilities;

  • service resources and operational development.

PCTs have already started to operate in a new policy and legal environment. As commissioner and provider services are increasingly undertaken at arm's length from PCTs by practice based commissioners, autonomous provider organisations and other new market entrants, the functions of PCTs may increasingly be comparable to local authorities that operate in the best-value framework.

The importance of effective market management should not be underestimated. The policy objectives of plurality, diversity and contestability require strong regulatory oversight and enforcement. At the same time, EU procurement and competition laws are becoming embedded as key mechanisms in public service reform. Understanding this new policy and legal framework will be critical to PCTs achieving public service reform and world-class community services.

The issues around separation are complex. But for PCTs that get them right, they have a real opportunity to deliver on a modern and dependable health service.

Seven Steps to Separation is available at www.hempsons.co.uk.