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Minimum Practice Income Guarantee

– in Westminster Hall at 11:00 am on 26th March 2014.

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Photo of Tim Farron Tim Farron Party Chair, Liberal Democrats 11:00 am, 26th March 2014

It is a huge pleasure to serve under your chairmanship, Sir Roger. I am extremely grateful for the opportunity to raise the problems caused by the removal of the minimum practice income guarantee. The removal of the minimum practice income guarantee is not the sole cause of the crisis facing some of England’s rural surgeries, but it has unveiled the failure over several decades to provide a sustainable basis for funding GP surgeries in rural communities. The coming crisis, which could have the unintended consequence of closing dozens of rural surgeries, will be immensely costly to our communities and to the taxpayer. Taking intelligent, targeted and swift action to prevent those closures will be extraordinarily cheap by comparison.

Over the past few months, I have been working with our communities in and around Hawkshead and Coniston in my constituency, whose surgeries are undoubtedly at risk. Last August, 500 local people filled the school hall at John Ruskin school in Coniston at a public meeting. Five hundred people is an impressive turnout in any community, but when we realise that the total number of patients listed at Coniston is just 900, we see how important the issue is. Those 500 people turned up because they know that it would be impossible for them reasonably to access another surgery, given how remote and isolated they are. My job today is to convince the Minister—I hope it will not take much doing—that my constituents are right and he should take action to help them. Let us be clear: unless a specific decision is taken to provide new and additional support for small rural surgeries, there will be a series of surgery closures that will be hugely damaging to our communities, harmful to patient safety, costly to the taxpayer and utterly embarrassing for Government.

In my constituency, two practices stand out as being in need of immediate aid from NHS England and the Department of Health: Coniston and Hawkshead, two communities in the central Lake district, which are about as remote as one can get in England. Both communities have a GP surgery, and both surgeries are at risk because of unsustainable funding. If you would care to have a look at your Ordnance Survey map of the Lake district, Sir Roger, you will see that if either of those surgeries were to close, the next nearest surgery would be on the other side of at least one lake, not to mention a couple of mountain ranges.

Across the country, there will, of course, be some small practices that should amalgamate with others, predominantly in urban areas where access and sparsity are not such an issue. The number of small rural GP surgeries, such as Coniston and Hawkshead, which are facing up to falling off the funding cliff is relatively small. At the last count, there were 36 in the whole country. Therefore, although intervention is vital, it is manageable and affordable. It is not a big problem to solve if we do it now, but it will become an enormous problem if it is not tackled. The evidence is clear that for that to happen, there will need to be strong and unmistakeable political leadership. In other words, Ministers must state unequivocally that they want NHS England to protect small, strategically vital GP surgeries, and that they expect a formal fund to be set up to make that happen—a small strategic surgeries fund—just as our Government have successfully done to protect small, strategically important schools in rural areas. It will cost little, but it will save a lot.

A couple of weeks ago, controversially, our Government fought to permit the Secretary of State to have the right to intervene in local trust matters when there is a patient safety issue. They were right to do so, because elected Governments should involve themselves to ensure that strategic priorities are met. Here is one such example. It is strategically vital that people in rural areas across the country, including Coniston and Hawkshead, have the same rights to access health care as anyone else.

Photo of Sarah Wollaston Sarah Wollaston Conservative, Totnes

As somebody who has worked in a small rural community, where there are high levels of deprivation in an area of relative affluence, the difficulty is that many people cannot access transport to get to services in other locations. I agree with my hon. Friend that we must prioritise access in small rural communities and recognise the problems of rural poverty.

Photo of Tim Farron Tim Farron Party Chair, Liberal Democrats

I am grateful to my hon. Friend for making that strong and good point. What counts as poverty in rural areas is often very different from what counts as poverty in urban areas. It is poverty in terms not only of income but of access to services. The average age of my constituents is 10 years higher than the average age of the UK population, so isolation and lack of access to private transport, never mind public transport, make it physically impossible to access another service. That is why we need to intervene.

I have had many conversations with NHS England, our local area teams and the clinical commissioning group. In the nicest possible way, there is a sense that they are all seeking a lead from the top. They are all good people, but they seek direction from the top. To be fair, NHS England has identified some 90 GP surgeries as outliers—practices that will lose more than £3 a patient—and a further 200 or so that will lose more than £2 a patient. However, that process of identifying outliers does not tell us which practices will be sustainable and which will not. Crucially, although outliers have been identified, no resource has been identified to help to protect them. That is why the Government must take a lead and make it clear that surgeries such as Hawkshead and Coniston must be protected, and that funding must be set aside to ensure that they not only survive but thrive. I am concerned that many of the discussions and the media attention have focused around the minimum practice income guarantee when we should focus more directly on funding sustainable general practice in remote rural areas.

In south Lakeland there are vast differences in minimum practice income guarantee payments per patient. Coniston gets approximately £25 a patient, Hawkshead gets less than £1 a patient and Ambleside gets around £15 a patient. By comparison, Slaidburn in Lancashire receives £110 a patient, even though the Slaidburn practice is the same size as the one in Hawkshead. The proposed changes from April will begin to remove those differences. Arguably it is correct to do so, but it is not correct simply to leave it at that.

The process of removing the minimum practice income guarantee and redistributing the funds per capita is a staggeringly blunt instrument. It is the ultimate one-size-fits-all policy, which treats small rural practices the same as large urban ones. It is on a par with making the casual assumption that the local village shop will have the same business model as Tesco. Smaller practices do not have the economies of scale that larger practices do; for example, the core practice management costs are the same whether the practice has 1,000 patients or 5,000.

NHS England’s argument is that, because smaller surgeries are inefficient, they should merge with neighbouring practices to increase efficiency. That works in urban areas, where there are often multiple GP practices operating close together. In that case, it is safe and sensible to consider sharing resources more efficiently. In remote rural areas, however, it is not possible to achieve those savings without sacrificing patient safety. It is not possible physically to merge with a neighbouring practice if it is on the other side of a lake. Merging, say, Coniston and Hawkshead with a larger, more distant surgery in Ambleside or Ulverston will not change the fact that health care still needs to be provided in the heart of those communities.

The only way to get savings is by closing a surgery or downgrading the service significantly in one or more of the villages and asking the patients to travel to another one for their main GP service. That would, in fact, result in no savings at all. Consider the increased cost to the ambulance service, to the A and E units nearby—not that they are particularly nearby, by the way—and to social care that would be triggered by the removal of GP services from the heart of our community. The human costs of closure are immeasurable, but the financial costs are measurable. It would be extreme foolishness to let our surgeries close by accident.

NHS England suggests that the policy does not impact on large numbers of rural practices, and that a greater number of urban practices will lose out. It is correct: there are not a large number of rural surgeries at risk. However, the analysis ignores the fact that, for the rural surgeries, an alternative to the current service provision is simply not available. Patients cannot simply move to the neighbouring practice down the road, because there is no “down the road”.

The changes come on the back of an already diminishing level of income in general practice for small rural surgeries. Hawkshead’s 2013-14 income from the GP contract is down 5% on 2012-13, and that has absolutely nothing to do with the removal of the minimum practice income guarantee. We should therefore be careful not to allow the removal of the minimum practice income guarantee to mask the much wider problem of a lack of sustainable funding streams for a relatively small and very manageable number of rural surgeries.

NHS England states that the removal of the minimum practice income guarantee will be phased gradually over seven years, but only so much can be squeezed out of an ever-reducing funding stream. The core running costs of the premises cannot be cut, so all that is left to cut is staff. If the staff consists of barely a handful of committed professionals, all that is left to do is close.

Hawkshead is already at 50% of the national staffing average, which reflects its historical low level minimum practice income guarantee funding compared to similar practices. At the same time, the surgery has the highest patient satisfaction levels in the country. It is officially the best surgery in England, but, as things stand, its only options are to reduce service provision to a level that would never be tolerated in an urban area, or to close. I am sure that the Minister will agree that such unacceptable choices mean that we must intervene.

Unlike Coniston practice, Hawkshead will gain by a small amount through the proposed changes. However, it will be by only about £1,000 a year, when the historical funding shortfall is about £35,000 to £40,000. Coniston’s income will decline significantly—by around £25,000 to £30,000 a year—and, to put it mildly, both surgeries will be at severe risk.

The minimum practice income guarantee should be removed or phased out. That is not challenged by those of us in rural communities. The wide disparities between surgeries with significant minimum practice income guarantee grants and those that, like Hawkshead, get pretty much nothing, makes the case for us. Nevertheless, the removal of the minimum practice income guarantee provides an opportunity to ensure that, in the wider context of a fairer and more efficient funding model, there should also be an element in the formula that does what the minimum practice income guarantee was originally intended to do, only more efficiently, more effectively and less expensively.

A small strategic surgeries fund could cover the additional cost per patient of keeping the core expenses covered. As a basic need, Coniston must keep its current funding, and Hawkshead must rise to a similar level in order to sustain service provision. NHS England will argue that it has reverted responsibility for the decision-making process to local area teams. However, there is no ring-fenced funding to deal with the problem, so local area teams are limited in what they can do. Our local area team has given its support to ongoing service provision in Hawkshead and Coniston, and I am extremely grateful for that, but so far no additional funding has been identified to support the practices.

The Minister will know that strategic small surgery funds have been established in Scotland and Wales. They are ring-fenced at the centre to ensure that no surgery that needs to remain open is closed by accident. Rural communities in England suffer from poor funding in social care, secondary care and primary care. Far too often, people in areas such as Cumbria are forced to put up with services funded at a fraction of what is required in order to provide care equivalent to that on offer in urban areas.

It is understandable that civil servants in Whitehall and officials in NHS England should come up with funding mechanisms that, in the first instance, overlook the fact that it simply costs more money to provide equivalent care to rural communities. It may even be understandable that officials might be ignorant of the desperate social needs in rural communities caused by poverty, ageing populations and isolation. However, once those problems are made clear, it is not acceptable to shrug them off. Once we have brought them to national attention, it is imperative that we see action.

In summary, I want to make five quick points. First, a small number of small, rural surgeries in England are at risk, partly as a result of the removal of the minimum practice income guarantee. Secondly, Coniston and

Hawkshead are two such surgeries, and there is no alternative to having a surgery in either of those communities that is either sensible or safe. Thirdly, rural communities have as much right to decent health care as anyone else. Fourthly, it will cost relatively little to come up with a strategic fund to protect those few dozen surgeries. Fifthly, such a fund will be created only if the Department of Health and NHS England agree that it must be, and then make it so.

My constituents deserve access to good local GP services as much as anyone in London, Birmingham or Manchester. Unless we tackle the problem I have outlined, my constituents will be put at unacceptable risk. On behalf of the people of south Lakeland, and all other rural communities, I ask for the Minister’s help in setting up a small strategic surgeries fund so that we can remove that risk.

Photo of Daniel Poulter Daniel Poulter The Parliamentary Under-Secretary of State for Health 11:14 am, 26th March 2014

It is a pleasure to serve under your chairmanship again, Sir Roger. I congratulate my hon. Friend Tim Farron on securing this debate, which is pertinent to many constituencies in England. Indeed, it is pertinent to my own constituency in Suffolk. Later in the debate, I hope to reassure him by giving good local examples from Suffolk of how the joint working he has described can be very effective. The issue is not just money, but improving the quality and availability of care for patients.

We all recognise the importance of local GP practices, particularly in rural communities such as those in my hon. Friend’s constituency. I would like to reassure him that the Government believe that high-quality local services can be maintained. I will not rehearse all the background to the 2004 GP contract negotiations, which we know changed the way that GP practices were funded, but it is worth drawing out a couple of points. Rather than receiving a series of fees and allowances, since 2004, GP practices have been paid based on a formula to take account of need and work load. Practices can also earn money by participating in the quality and outcomes framework—commonly known as QOF—or offering enhanced services.

To smooth the transition to the new system, a minimum practice income guarantee was introduced and used to top up practices’ core funding to match their basic income levels before the 2004 contract was introduced. We must also remember that many GP practices are of course small businesses in their own right. They value and enjoy the flexibility that the GP contract implicitly recognises, and that can bring great benefits to patients. In a moment I will talk a little more about the minimum practice income guarantee and the changes under the recent GP contracts, which from now on will be negotiated by NHS England, as my hon. Friend outlined.

It is worth talking a little about rural practices and highlighting some of the measures in place to support them—it is important to get that on the record. We recognise the fact that rural practices, in areas such as Hawkshead and Coniston in my hon. Friend’s constituency, play a vital role for their local communities. We also recognise the rurality and the often sparsely scattered populations that such GP practices look after. Both the Government and NHS England intend high-quality local services to be supported and maintained.

My hon. Friend will be aware that the funding formula for general practice already includes an allowance for rurality, and there is also provision for the costs of temporary residents. That can be a particular issue during the summer months with the arrival of tourists in the Lake district. The funding formula already includes additional support for rural areas and places with a more transient population because of tourism, or for the seasonal population fluctuations in more agricultural constituencies where there is a high reliance on temporary, summertime or seasonal labour.

Rural GPs may also be able to increase their income in other ways. For example, dispensing practices tend to be in rural areas, although not exclusively. That is potentially another way to provide additional income for a practice, as well as important support for the community, which can have closer-to-home access to prescribed medications and drugs.

I understand that NHS England is working with local GPs through the Cumbria clinical commissioning group to decide how to maintain accessible, responsive, high-quality primary medical services—my hon. Friend alluded to that in his speech. For example, NHS England can help practices to work more closely together. It is looking at doing that by sharing IT and other back-office support in order to improve care and practice efficiency. NHS England is also ensuring that, through practice patient participation groups and local healthwatch services, patients are being kept fully informed and are able to contribute to discussions.

I would like to talk briefly about the phasing out of the minimum practice income guarantee, which last year we announced would begin this April. As my hon. Friend outlined—I was pleased that he supported this—we consider that the payments are no longer equitable, because under the system, two surgeries in the same area serving similar populations could be paid different amounts per patient they serve. That is inequitable and does not make sense.

The payments of the MPIG will be phased out not simply overnight, but over seven years. The overall intention is for the funding for GP practices to be properly matched to the number of patients they serve and the health service needs of those patients.

Funding will also continue to take into account the unavoidable costs of providing services in rural areas. The issue is not one that affects only rural practices, as both rural and non-rural practices receive MPIG payments.

Photo of Sarah Wollaston Sarah Wollaston Conservative, Totnes

Regarding the point about funding following the number of patients, the Minister will be aware that there is now greater flexibility for patients to register. Relatively young, mobile patients may choose to be registered near their place of work; indeed, they should have that flexibility. However, that is an additional income drain on small and sparsely located practices. Is the Minister aware of that?

Photo of Daniel Poulter Daniel Poulter The Parliamentary Under-Secretary of State for Health

Absolutely. I alluded to that point in some of my earlier comments. We know that there is the tourist trade, which is an important part of the local economy in the constituency of my hon. Friend the Member for Westmorland and Lonsdale. Recognition of that factor is built into the funding formula for GP practices. People moving locally to work somewhere is already taken into account as part of the formula, which will benefit the funding of some of the local practices in my hon. Friend’s constituency. I hope that is a helpful clarification of the point about people moving from one location to another.

Photo of Sarah Wollaston Sarah Wollaston Conservative, Totnes

Does the Minister accept that not all sparsely populated areas will see that offset by incoming tourists? Many areas of the country will not see that offset benefit.

Photo of Daniel Poulter Daniel Poulter The Parliamentary Under-Secretary of State for Health

Absolutely. As I have outlined, other parts of the formula recognises rural areas; they are already recognised in GP funding allocation. Therefore, on both counts, additional support is available for areas such as those described by my hon. Friend the Member for Westmorland and Lonsdale in his constituency, and indeed those in Totnes and in my own constituency. Rurality is already factored into GP contracts and funding for GP practices and health care.

What will happen with the money that is recycled and released from the MPIG is an important point. The money released by phasing out the MPIG will be reinvested into the basic payments made to all general medical services practices, which are based on the number of patients and key determinants of practice work load, such as the age and health needs of patients and the unavoidable costs of rurality.

Another factor that we all recognise—I know it is a factor in Totnes and, I believe, in Westmorland and Lonsdale—is that many older people choose to live in rural areas. Older people once used to retire to seaside towns, but they are increasingly retiring to predominantly rural areas. The changes and the freeing up of cash from the MPIG will benefit all practices. In the health care funding formula—not necessarily the GP funding formula, but how clinical commissioning groups allocations are allocated—there is a strong weighting for age, which will bring broad benefit to rural areas, particularly those that have a high proportion of older people.

NHS England has been undertaking specific analysis of the withdrawal of the MPIG. Inevitably, a small number of practices will find themselves in more difficult circumstances. NHS England has been considering the small number of significant outlier practices, as my hon. Friend the Member for Westmorland and Lonsdale mentioned, for which alternative arrangements may need to be made to ensure that appropriate services are maintained for local patients. We appreciate that that is a matter of concern for some practices, and my hon. Friend has outlined concerns in his own constituency. That is why we have decided to take seven years to implement the change to the MPIG funding. Phasing in the changes over that period will allow the minority of practices that lose funding to adjust gradually to the reduction in payments.

NHS England has been looking carefully at how its area teams can support the practices that are most affected. It has invited practices that believe they will have problems as a result of the phasing out of the MPIG to raise that concern with their area team. In a small number of cases where there are exceptional underlying factors that necessitate additional funding, NHS England has asked its area teams to agree different arrangements to ensure that appropriate services for patients continue to be available. That includes looking at how services are funded.

Importantly, NHS England has suggested that practices with small list sizes could look at collaborating with other practices, for example through federating, networking or merging with nearby practices, to provide more cost-effective and better services for patients, a point I will come to in a moment. Practices can also identify other ways they could improve cost-efficiency, such as reviewing staffing structures, and they can review commissioning or contracting options.

Photo of Tim Farron Tim Farron Party Chair, Liberal Democrats

I am grateful to the Minister for that explanation. I simply want to point out that neither Hawkshead nor Coniston, despite both being put in an unsustainable financial situation in the future, technically count as outliers. Will he guarantee that NHS England will look at the sustainability of all surgeries, not just those that have lost the most from the withdrawal of the MPIG?

Photo of Daniel Poulter Daniel Poulter The Parliamentary Under-Secretary of State for Health

The answer is in exactly the point made by my hon. Friend in his speech: it is about local area teams working effectively with practices.

Let me provide my hon. Friend with an example of how collaboration between services and GP practices can work well, from not just a financial perspective but a patient care perspective. In Debenham, Otley and Grundisburgh in my constituency, all of which have important rural communities, there is a practice that works collaboratively and a practice that serves and looks after populations across a number of sites. That works well for local populations, because they have an accessible local GP service.

That practice model has also produced considerable economies of scale. It has allowed the practices to invest in additional services for the benefit of local patients. Where there are pressures caused by an ageing population and the complex needs of older patients, that has allowed more money to be freed up to focus resources appropriately. In some cases, it has also allowed greater flexibility in the use of the infrastructure—certainly, surgery buildings —to provide greater community benefits.

The model can work, and it is important that practices, even though they are small businesses, consider that they need to collaborate and work with neighbours, where possible—not to lose their independence or identity, but to make efficiencies where they can, so that more money can be directed into front-line patient care. That is part of the answer.

Providing a sustainable solution is about practices working well with their neighbours. Sometimes it might mean rebuilding relationships that have broken down in the past. We know that, with the best will in the world, we do not always get on well with our colleagues, although we all do our best to look after patients. Sometimes it is about practices setting aside past disagreements, working collaboratively for the benefit of patients and making efficiencies where possible.

Photo of Tim Farron Tim Farron Party Chair, Liberal Democrats

Of course, many surgeries will be able to find ways of surviving and thriving through different working arrangements. There will be some, however, that are essential and strategically vital for rural communities such as mine, which will have done everything they possibly can but cannot make ends meet. Will the Minister confirm that funding will be available through NHS England to support those surgeries?

Photo of Daniel Poulter Daniel Poulter The Parliamentary Under-Secretary of State for Health

That is a matter for area teams to look at. The first approach that area teams will take is to ask, “Where can we make efficiency savings that will mean there is more money for front-line patient care, such as IT, back-office services and administration costs?” Hospital providers have been doing well in reducing administration and freeing up money for patient care. Are there economies that can be gleaned through better procurement practices and surgeries working together?

That has got to be the first thing: surgeries looking to help themselves. Later on down the line, if everything else has been exhausted, the area team will have to make a decision about whether other mechanisms are in place to provide additional support.

I am confident that, with a funding formula that recognises rurality, and a funding formula for CCGs that particularly identifies the importance of an ageing population, we have a formula that will support rural practices into the future.

Sitting suspended.