Update: healthcare

Days after the coalition formed itsgovernment, a white paper was published under the heading: Equity and Excellence:Liberating the NHS. It outlines the dramatic reforms that will take place over the next three years, affecting every area of the NHS.

The reforms will also affect those who supply services to the NHS, including lawyers, as some of their NHS clients will cease to exist.

As well as law firms with specialist healthcare practices, the reforms will also affect local authority lawyers and those local solicitors that currently act for GP partnerships. GPs are dramatically affected by the reforms and those solicitors will need to consider how to manage the new requirements their clients will have.

The prescription

The changes announced in July's white paper and the consultation documents that followed were more dramatic than most had predicted. The consultations ended on 11 October and a new health bill is promised this autumn.

Before looking at some of the key changes to NHS organisations, it is worth noting the key themes.

The NHS is to be 'liberated': there will be less control from Whitehall and patients will have more information and involvement (to use a phrase from the white paper, patients should feel that there is 'no decision about me without me'). Patients will also have more choice.

There will be greater scope for providers to enter the market and NHS providers will have greater freedoms. In particular, NHS foundation trusts (FTs) will lose the 'private patient cap' that currently limits the proportion of their income that can come from privately-funded work. Financial rewards for providers will reflect outcomes, not just activity.

Local authorities will have a new role co-ordinating '“ through a 'health and wellbeing board' '“ health and social care services and health improvement in their area.

Before looking at the changes to NHS organisations, it is sensible to recap how the NHS is structured now. Currently there are five types of NHS organisation: Primary Care Trusts (PCTs), NHS trusts, Strategic Health Authorities, NHS foundation trusts and Special Health Authorities.

The proposals are to abolish Strategic Health Authorities and PCTs as well as a number of Special Health Authorities (which provide supplementary health services on a national basis). Most of the functions of these organisations will transfer to new or existing bodies. All NHS trusts must also become NHS foundation trusts. The Department of Health's role will also become more focused on public health. A white paper on public health is to be issued shortly.

Commissioning care

The main, and most publicised, changes will relate to the commissioning of NHS services. PCTs currently commission, on behalf of their locality, virtually all NHS services. The role of PCTs will be split mainly between a new National Commissioning Board (which is likely to have regional offices) and groups of consortia led by GPs. Other aspects of their role will go to local authorities.

The National Commissioning Board (NCB) will commission those services that cannot be commissioned by the GP consortia: GP,dentistry, community pharmacy, primary ophthalmic, specialised and maternity services. The majority of NHS services will be commissioned by the new GP consortia. The NCB will design the structures and contractual models for commissioners to use and will be responsible for promoting patient involvement and for making financial allocations to the new GP consortia. It will also then hold them to account for their financial management of those allocations.

Those GP consortia will be statutory bodies, but it seems there will be some flexibility regarding their structure and geographical area (providing there is full geographical coverage and they are big enough to manage financial risk). It is anticipated that there will be (on average) one or two GP consortia replacing each PCT. Every GP practice with registered patients will need to be a member of a consortium.

Each consortium will receive a management allowance to fund the costs of running the consortium. Given the need to reduce management costs by 45 per cent over the next four years, it seems unlikely that the management allowance will be generous. The consortium will, therefore, have a relatively lean staff structure. The core management team will be formed from a small group of local GPs.

It is unclear what arrangements will be put in place to transfer existing healthcare contracts to GP consortia. Similarly, it is unclear how many PCT staff will transfer to GP consortia, whether as a result of TUPE or otherwise. The rationale behind the involvement of GPs in commissioning is two-fold. First, to recognise that, as GPs are already 'gatekeepers' and decide what services their patients receive, they should also have the financial responsibility for those decisions. Second, to acknowledge that they are best-placed to design and commission services for their patients. This second aspect was something that Labour had tried to address through an initiative called practice based commissioning or PBC.

The GP consortia will be responsible for commissioning services for the patients registered with their constituent practices. They will be required to do that within their allocated budget. It seems they will also be expected to undertake some 'peer review' of their constituent practices. That may be an interesting dynamic.

A new GP contract is being negotiated to reflect the changes (it seems there will be one model contract instead of the three current contracting options). Patient boundaries (which currently set out the principal area from which GP practices should accept patients) will also disappear. The new GP consortia will become subject to public law concepts and obligations including a duty to break even and those relating to (for example): procurement, consultation and judicial review. This will either happen expressly or simply because they will be publicly funded or carrying out public functions.

It remains to be seen whether there will be sufficient appetite among GPs to make this policy work. After all, most GPs went into the profession purely to practise medicine and, while many would want to reform some of the services their patients receive, the proposals will require the GP consortia to commission most NHS services.

While only a minority of GPs will have operational/management roles within the GP consortia, if the reforms are to work it is essential that those GPs take on the roles willingly and with enthusiasm. They will also need commissioning and negotiation skills that most GPs will not have developed through their clinical work.

The private sector is likely to be keen to provide the necessary expertise, but some will perceive this as further privatisation of the NHS. The size of the management allowance will also restrict the extent to which purchasing external expertise will even be possible.

The scale of the reforms and the speed at which they are to be implemented are challenging, and that adds to the risks inherent in the proposals. There have already been some well-publicised objections to the reforms themselves and Unison is seeking a judicial review of the implementation of the reforms following, what they believe to be, insufficient consultation. It will be interesting to see whether the proposals change following consultation and as the health bill goes through parliament.

Legal bills

To some extent, the consequences depend on the sector-focus of the firm, but it seems likely that, overall, legal income from the NHS will ultimately decline, particularly for non-contentious lawyers.

Over the past few years there has been an increasing focus upon standard contracts for many services. This is sensible, and it will continue, as it means that commissioning organisations should only need advice on the service-specific aspects of those contracts (of course, it also assists in their negotiations with providers).

Those firms that already have a strong PCT client base will be ideally placed to advise GP consortia and the National Commissioning Board (as those new organisations will be subject to similar obligations as PCTs and are likely to face similar challenges). Also, in the short term, those firms are likely to have an increase in income from PCTs as they will need help understanding and implementing the reforms at a time of austerity, staff reductions and low morale. Existing NHS trust clients will also need help applying for foundation trust status (or managing their absorption into another NHS foundation trust).

As local authorities take on new responsibilities for some aspects of health care, local authority lawyers will also need to have a greater understanding of the health system than they have needed to date.

The different, but probably bigger, challenge will be for smaller (usually local) firms from whom GPs have traditionally received advice on partnership, employment and property issues. As the reforms are implemented over the coming years those GPs will need advice about what the reforms mean for them. While those firms will continue to be able to advise them on their traditional areas, their clients will now need advice on participation in local GP consortia (whether during the implementation period or afterwards) and the obligations to which they will be subject.

It will be extremely difficult for them to properly advise those clients if they have not had experience of advising statutory NHS organisations.

At a time when maintaining income levels can be challenging, especially for smaller firms that are more affected by the wider legal sector reforms, there will be an understandable reluctance to refer clients elsewhere. However, firms need to be honest about their capabilities. Smaller firms may find that, if they approach specialist healthcare firms, those specialists will be happy to play to their strengths and allow the incumbent advisers to play to theirs.

Reform is not a new concept for the NHS, and the legal profession will always adapt to meet the needs of its clients (regardless ofthe sector). Grown-up conversations between local and specialist law firms are likely to be necessary to ensure that we, as a profession, play our part in supporting development of a service that we will all rely upon at various times in our lives.