5 Practical Implications of the Neighbourhood Contract Consultation for Practices

NHS England has published a consultation on the proposed Single Neighbourhood Provider (SNP) and Multi Neighbourhood Provider (MNP) contracts.  But what do the proposals actually mean for practices?

I think there are at least 5 practical implications of the consultation for practices, particularly in terms of what it is telling us about how the future is likely to develop.

  1. Practices working together is to become more not less important in future

One of the key questions around neighbourhoods has been whether they mean the end of PCNs.  What is clear from the consultation is that these contracts are going to evolve out of and from the PCN DES.  So regardless of whether PCNs end up being called PCNs in future, practices working together in the PCN (or neighbourhood) area is going to be a key feature of the future landscape.

  1. The PCN DES is going to shift from national to local, and be combined with enhanced services

The consultation presents a number of options as to how the future might develop.  Essentially, the PCN DES could continue, or the PCN DES could be merged locally with some local enhanced services to create a local version of the PCN DES, or the PCN DES could be replaced locally by a new SNP contract that uses the PCN DES as a minimum funding requirement.

We have started to see a few areas across the country, such as Kent, already adopt the option of adding local enhanced services to the PCN DES which is then commissioned locally.  Looking ahead to next year it seems likely that more areas will follow this model, with the introduction of a full-blown SNP contract unlikely to arrive until 2028.

  1. More funding is going to come to practices via PCNs/Neighbourhoods

So while at present enhanced service funding comes direct to practices, in this new model at least some of it will come via the PCN/neighbourhood.  Whether this ends up being just another hoop practices have to jump through to secure practice finances, or whether it also adds more risk to that funding remains to be seen.

  1. Increasing amounts of practice funding are likely to be dependent on collective PCN/neighbourhood performance

The reason the risk to enhanced service funding may go up is that the trend is for some of the contract payments to be linked to collective PCN/neighbourhood performance.  So while in an enhanced service paid directly to practices the ability to secure all of the available funding lies directly within each individual practice’s control, in the future this will not be the case.  Instead it will rely on all of the practices collectively achieving the relevant targets.

  1. Internal governance within PCNs/neighbourhoods will be more important as a result

Many PCNs have internal governance agreements that have not been changed since the PCNs were first formed in 2019.  At that time PCNs were new, and most adopted the model neighbourhood agreement (or a modified version of it).  But as more resources become dependent on the way the PCN/neighbourhood functions, it becomes more important than ever that the internal governance arrangements are effective and fit for purpose, so that roles, responsibilities and rules for funding allocations are clearly delineated.

Why PCNs and GP Federations are Suddenly More Important

Digesting NHS England’s consultation on the proposed Multi-Neighbourhood Provider (MNP) and Single Neighbourhood Provider (SNP) contracting models is not that easy.  But the upshot for PCNs and GP Federations is that they are likely to become more important than ever.

Essentially the consultation is proposing a move in how funding flows through the system to practices.  In the current model, somewhere in the region of 30% of a typical practice income will come to the practice via the PCN DES and local enhanced services.  While some of this goes to the PCN, much still flows direct to the practice – in particular local enhanced service funding.

The proposed model in the consultation is that all of this income, the PCN DES and local enhanced service funding, is combined into the new Single Neighbourhood Provider (SNP) contract.  This funding will be locally not nationally determined, although there are certain safeguards proposed to protect the existing PCN funding levels.

This funding will not come direct to practices, but come via the PCN.  PCNs will have to develop as entities as they take on these contracts.  The document states that “the holder of the SNP Contract must be a legal entity, although, for example, it could be held by a lead practice on behalf of a consortium of practices”.  The requirements for infrastructure to deliver against these contracts will only increase from what PCNs currently have in place.

So in future the percentage of practice funding coming through the PCN is going to go up, and represent something in the region of a third of total practice income.  It is not hard to imagine a scenario developing in future where this percentage goes up further still – the direction of travel appears pretty clear.

Practice to PCN relationships have been important, if sometimes strained, over the last seven years.  The proposed changes mean this is likely to be even more the case going forward.

The consultation suggests ICBs may hold these SNP contracts directly with PCNs.  But it also suggests that they could be held either by the local foundation trust if/when it becomes an IHO, or by a new MNP.

MNPs are to operate over a place-based area, with 250,000 given as the guideline population.  While it seems highly unlikely individual PCNs will be able to take on MNP contracts, PCNs working together as a group, or GP federations operating in the area, seem ideally placed.  The need for strong relationships between MNPs and SNP contract holders seems to put them into pole position.

This does not mean taking this opportunity will be easy.  PCN to PCN relationships are pretty fractious in many places, and GP federations don’t exist everywhere and themselves often have challenges with PCN to federation relationships.  Local areas will need to work this out quickly, because the absence of any effective at-scale general practice will create a vacuum that community trusts and others will be keen to jump into.

The upshot of all of this is that PCNs, GP federations and at-scale general practice are suddenly more important than ever, because these new contracts mean that they are going to be key to general practice retaining its independence, shaping how neighbourhood health develops and enabling the service to thrive into the future.

How the CQC is Changing its approach to General Practice

There have been some quite significant changes introduced by the CQC in recent months.  It can be hard to keep up with all them, so here is a quick summary of exactly what those changes are.

The background to the changes is an independent review of the CQC in 2024, which led to the then Health Secretary Wes Streeting declaring it as “not fit for purpose”.   The report highlighted a raft of failings including inspectors lacking the necessary experience, an inconsistency across visits and a huge backlog of assessments.

As a result, the CQC committed (amongst other things) to more sector-focussed regulation, more inspections and faster inspection outcomes.  The current raft of changes are these plans being put into action.

Disappointingly, the CQC has not introduced a general practice (or even primary care) specific focus.  Instead, the focus is on primary care and community services combined.  Professor Bola Owolabi has recently been appointed as Chief Inspector of Primary Care and Community Services.

In terms of practical changes the CQC is currently trying to do two things at the same time (which is leading to some of the confusion).  It is trying to increase the number of reviews it carries out, and it is also changing the assessment framework that it uses.  It is doing these two things in two different ways.

To increase the number of reviews it carries out it has introduced what it terms a “Return to Good and Outstanding” project.  This is a programme of visits that started in March and is specifically targeted at practices that hold a current rating of good or outstanding, had their last inspection report published between 2017 and 2022, are considered lower risk and have no ongoing regulatory activity.

These are slimmed down versions of a full visit.  They focus on the non-clinical aspects of care (there is no GP specialist advisor as part of the assessment team), and the primary person required for the visit is the practice manager.  On the latest podcast Ed Kennedy shares his experience as practice manager on the end of one of these visits.  The practice only receives 5 days notice of the visit, and the rating of the practice cannot be changed as a result – it can only trigger a full inspection.

At the same time the CQC is targeting practices for a full visit that that have been identified as high risk and not assessed, practices with previous enforcement action assessed for follow up, and practices with ratings older than 7 years.

These are the current inspections that are taking place.  At the same time, the CQC is changing its assessment framework.  It ran a consultation on the proposed new framework which ended on the 12th June.

This framework is long, and it tries to encompass practices, primary care organisations and community service providers which inevitably makes it unwieldy.  The focus on access, continuity, and partnership working across the system potentially opens the door for a wider range of assessments for practices in future than we have had in the past (nearly 90% of practices are currently rated as “good”), but we will have to wait and see how this plays out.

The CQC has stated that there will be a programme of pilots and testing of the new assessment system between June and October, with a final evaluation in November 2026. Pilot assessments will run alongside existing inspections. Participation in a pilot is voluntary, and the CQC has said if a practice chooses not to take part, there will be no regulatory consequence.

Whether all these changes will improve the effectiveness of the CQC remains to be seen.  At present the challenge is simply keeping up with all the changes the CQC is making at once!

List Cleansing: An Abuse of the Population-Based Funding Model

NHS England is undertaking what the BMA describes as an “aggressive” patient list cleansing exercise across the country.  According to some reports this has resulted in the removal of 450,000 patients from practice lists since November last year.

This list cleansing is clearly part of an NHS England cost saving plan.  It is no secret that the NHS is struggling to balance its books, and despite calls for any money generated by this exercise to be reinvested in general practice it is no surprise that these have fallen on deaf ears.

Most NHS cost saving or cost recovery plans try and find ways of reducing expenditure without making changes to how things work.  Rather than innovate to reduce costs, the NHS will more commonly try and find ways of reducing what it spends without changing anything.

A good example is how it has used capital funding to resolve revenue gaps.  It feels like a clever accounting trick that enables them to balance the books, but what it has actually resulted in is a crumbling and aging estate that is no longer fit for purpose.

Another example is high-cost care packages for patients.  Here the aim of the exercise is to reduce the amount the NHS pays for these packages.  The main outcome of this is that others, mainly social care but sometimes individual families, are left instead with the financial burden.

List cleansing is the same.  There is no change in the service provided, but the NHS ends up paying less for it.

NHS England justifies list cleansing by saying that they are ensuring value for taxpayer money by not paying for patients that do not exist.  But in reality it is an abuse of the population-based funding model.

General practice funding is population based.  Practices receive a weighted sum for every patient on their list.  This sum is regardless of the amount of activity generated by any individual patient.  The model has worked because even though the funding per patient is insufficient to cover the costs of the relatively small percentage of patients that generate the majority of work for practices, this is offset by the funding received for the majority of patients that generate relatively little work for practices.

The problem with list cleansing is that it skews this model.  Not only does it reduce the total amount of income that practices receive, it removes it with little or no reduction in activity (because by definition it is removing patients that have not been active with the practice).  Adding insult to injury, the process itself generates additional work for practices.

If you consider this in the context of the (unfunded) additional demands placed on practices to provide same day responses to urgent requests and operate systems that do not cap online submissions, then the problem of the population-based funding model is simply exacerbated.

If general practice was operating an activity-based funding model you can guarantee NHS England would not be carrying out the list-cleansing exercise, and would have thought twice about the urgent care changes because of the price tag it would have brought with it.

If NHS England continues to abuse the population-based funding model, something will have to give, and at present that is most likely practices being unable to continue.  While the main argument against list cleansing appears to be the impact it can have on vulnerable patients groups (that I haven’t even covered here), it also presents a very real threat to the viability of the way that general practice is funded.

5 Things to Look Out for in the Review of the Carr-Hill Funding Formula

In October last year the government announced that it was reviewing the Carr-Hill funding formula for general practice, which is used to calculate the payments GP practices receive.  But what should we be looking out for once this review from the National Institute for Health and Care Research (NIHR) lands?  How will we know whether what is proposed will make the situation any better?

I had a fascinating conversation on the podcast recently with Dr Matt Jones about the Carr-Hill formula and why it does not work.  What is clear is that very few people understand the formula and the impact it has, even on their own practices.  If we don’t understand the problem, it will be very hard to work out what changes will improve things.

I took away five key issues that we need to look out for when the new recommendations finally land:

  1. Is there an up to date, meaningful marker of deprivation?

It turns out deprivation is one of the markers used within the Carr-Hill formula, termed the practice additional needs index.  However, astonishingly, this is based on survey data carried out before 2000. This has the double problem of one not being very accurate to start off with, and two being at least 26 years out of date.

The new formula will need to use a better marker for deprivation, and some mechanism for ensuring it is updated on a regular basis as the characteristics of local communities can change extremely rapidly.

  1. Are fixed costs adequately taken into account?

Dr Jones very eloquently points out on the podcast that even though practices might only be receiving 80% of the global sum as a result of the Carr-Hill formula, they are not able to pay for only 80% of their electricity bill.

Whatever the practice, wherever it is, there are some costs that are fixed, regardless of deprivation, rurality or the age and sex profile of the local population.   The current formula does not take this into account, which means the impact of the formula is amplified as practices that lose out through it have first to cover their fixed costs and are then left with an even lower proportion of funding every year to cover their variable costs.  This in turn affects their ability to provide sufficient clinical capacity, a problem that is now being exacerbated with the new access requirements.

The new formula must provide some recognition of the fixed costs facing all practices.

  1. Is there a commitment to regularly review the formula?

One of the key problems with the Carr-Hill formula is that is has not been reviewed or updated in over 20 years.  In 2004/05 the global sum was £54.72 per patient, but this year it is £130.07 per patient.  This means the impact on practices being underfunded as a result of the formula has more than doubled over the last 20 years.

It is highly unlikely that whatever new funding formula is generated will be perfect.  Many practices could tell immediately that there were problems with Carr-Hill when it first came out.  Regular checks and reviews should be put in place up front to allow issues to be addressed quickly, rather than allowing them to compound and result in the same situation we are in now.

  1. Will there be transparency over funding at an individual practice level?

The result of any funding formula will mean some practices will receive more money than others.  The situation with Carr-Hill, however, is that many practices do not understand these differences, let alone the patients.

If one equal-sized practice is receiving over a million pounds more funding than another, albeit for justifiable reasons, then there needs to be transparency with patients, practices and commissioners, so that expectations can be adjusted accordingly.

  1. Will a manageable transition plan be put in place from the existing to the new formula?

If the new formula is not accompanied by any form of cash injection then the big risk with the change is that money will simply end up being moved from some practices to others.  No practices are finding life easy at the moment, so there needs to be a realistic, thought-out plan (i.e. not an MPIG) put in place that will enable those practices requiring more funding to be able to receive it without destabilising others.

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