Senior managers implementing NHS reforms believe many of the proposed clinical commissioning groups are “unsustainable” because they are too small.

A document produced by NHS Yorkshire and the Humber and seen by HSJ draws on cost analysis carried out by the Department of Health and several other strategic health authorities. The study was undertaken before the government amended the Health Bill to formalise governance arrangements at CCGs, which is likely to increase running costs.

The NHS Yorkshire document, Commissioning Support – Framework for Option Appraisal, says the region’s smallest emerging CCG could afford to employ as few as seven staff, if it spent all its running cost allowance itself. This level of staffing is viewed as inadequate to sustainably fulfil the functions of a CCG. That is based on the government’s proposed running cost limit of £25-£35 per head of population.

That smallest CCG in the analysis, which is not named, has a population of 21,000. Across England there are at least 15 emerging CCGs of the same size or smaller, according to HSJ’s own analysis. The groups have been formed over the past year as proposed commissioning consortia.

One SHA director involved in the discussions said: “There is a fundamental point about small consortia being unsustainable given these numbers. The sooner that is realised the better.”

The document says: “A population based methodology for determining commissioning resource encourages scale – resources increase linearly with scale but staffing requirements probably do not.”

The document adds to other pressures on CCGs to grow – for example to ease joint working with councils which tend to cover larger areas, and to share financial risk. It will also increase pressure for the running cost allowance to be higher.

The analysis also includes proposals about which commissioning functions will have to be carried out by CCGs’ own staff and which could be provided by outside organisations (see table, below). It indicates this could be a mixture of providers of a similar size to merged or standalone PCT clusters; and larger organisations, such as national specialist back-office providers.

NHS chief executive Sir David Nicholson told HSJ there was “no right place where you can bundle it [commissioning support] all together. It will be bundled up at different levels”.

He said a DH review into commissioning support had already concluded that: “Lots of the IT stuff could be done two or three times nationally”, while contracting work “might congregate around natural health communities”.

Sir David said some PCT clusters were already developing commissioning support units. He added that it was “not in the long term interest of the commissioning board to manage commissioning support”, but that it would help shape the requirements and carry out tasks where no suitable provider had yet been established.

One cluster chief executive warned: “We could end up taking a lot of energy deliberately designing something which doesn’t look like what we have got now.”

However, National Association of Primary Care chair Johnny Marshall warned against PCTs assuming too many staff could remain in similar roles. He said the management cost limit could make it unaffordable.


Where could commissioning functions be provided?Function
Consortia in-house
  • Financial planning and strategy, statutory functions including employment and complaints
  • Local authority-level resource planning – e.g. joint budgets
  • Patient engagement
  • Lead service design and strategy development
PCT cluster level
  • Estates management
  • Risk pooling
  • Financial returns, costing advice and accounts
  • Population health assessment
  • Policy on high cost drugs
Greater scale
  • Legal services
  • Invoice validation
  • Social marketing and market research
  • Manage tenders, assess market, utilisation reviews
Do once nationally
  • Commissioners’ finance and accounting system
  • Risk stratification – procure set of tools
  • Evaluation of high cost drugs and interventions
  • Provider accreditation and registration

Source: SHA and DH analysis