CCGs must buy external support services, NHS England says

It has said CCGs will have to pay for “stranded costs” if they bring support services in house.

The move has angered some groups that are understood to be seeking advice on whether NHS England has the power to compel them either to act collectively, or to go to market for services they could provide themselves.

The issue has arisen after the North West, and Yorkshire and Humber commissioning support units failed to win accreditation onto NHS England’s lead provider framework for support services. This forced the 47 CCGs that relied on them to seek new suppliers or bring services in house.

The CCGs affected are now identifying alternative arrangements. HSJ understands that in Yorkshire, some CCGs had been considering carrying out some services themselves, and not all of the 23 CCGs would procure everything jointly.

NHS England is keen to minimise “stranded costs” associated with the transition from the CSU to the new suppliers. Stranded costs could mean staff, estates commitments or other liabilities associated with the old provider that do not transfer across.  

A letter sent to all Yorkshire and Humber CCGs from NHS England director of commissioning support services strategy Bob Ricketts this week said the authority “has decided that all CCGs that currently buy their core business intelligence and GP IT from CSUs will be required to procure these via the lead provider framework, rather than in house”.

It was sent in response “growing concern” about the risks of “fragmenting key commissioning capability and capacity… poor value for money and high stranded costs” if CCGs’ in-house services which are “typically best provided at scale.”

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Mr Ricketts also said NHS England has pledged to meet some high level redundancy costs and other expenses associated with closing down the two CSUs affected. But CCGs would be liable to pay for additional stranded costs if they choose to bring services in house.

HSJ understands that groups have not yet been told what the total cost of this would be.

The letter also urged CCGs to procure jointly, rather than individually. It said: “The very clear expectation from national directors is for a single procurement process… where that makes geographical and service sense. Individual decisions and multiple providers will increase costs and potentially make service delivery coordination a real problem.”

Although there was little appetite among Yorkshire CCGs to bring business intelligence services in house, CCGs had been considering establishing their own redesign and communications functions.

One local figure said NHS England had told CCGs that if they did not comply, the issue would be “picked up in the CCG assurance process”, which they took to be “a threat”.

HSJ understands similar directions have been issued to CCGs in Greater Manchester, Cheshire and Merseyside. However, more than one North West CCG leader told HSJ that they now agreed it was best to use the lead provider framework, and that it was not worth fighting over relatively small back office contracts.

An NHS England spokesman said: “The CCG assurance process has demonstrated that financial and commissioning performance is disproportionately worse in those small number of CCGs that try and do without shared core analytics and GP IT expertise.

“Heading further down that path at a time of further administrative cost reductions carries unacceptable risks of service fragmentation, unsustainability and poor value for money, and so is being actively discouraged.”

However, NHS England produced no evidence that it had the power to force CCGs to use the lead provider framework.

A spokesperson for the Yorkshire and Humber CCGs said: “We were disappointed with the tone of the letter from Bob Ricketts, given the work the CCGs had been doing to collaborate over the past few months. 

“We are absolutely committed to redeployment of staff and reducing the cost on the NHS as a result. We welcome further discussion with NHS England on this issue.”