The Pharmaceutical Journal
Vol 268 No 7203 p878-880
22 June 2002

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medM conference

Designing successful LPS pilots

Angela Alexander is chairman of the College of Pharmacy Practice and a freelance pharmaceutical consultant

Introducing the conference, Dr Darrin Baines, director of medM Ltd, said local pharmaceutical services (LPS) was such a new concept that people were not sure whether to run towards it or run away from it. He thought that LPS was a means to link pharmaceutical services into primary care, and embodied the logic of the changing National Health Service rather than the logic of pharmacy.

It could be two years before it became clear what LPS is really about. In the first two waves we could see 50 to 100 pilots which would be experimental. Among those there may be three or four that will set the agenda, that will say what LPS is all about.

Pharmacy had to come in line with the rest of the NHS. This was a message that people were consistently missing within LPS. It was not purely about innovation in service provision, but more about mixing old and new services within a cash-limited envelope. The extra services may be quite tame, the difference will be that data are collected and a plan set out of what is to be done.

Dr Baines thought that within LPS, 80 per cent would be traditional services and 20 per cent innovative services. The Department of Health was looking for innovation in the way people were paid. LPS was innovation for remuneration in addition to innovation for service provision.

LPS was not just a fad; the legislation being introduced was an alternative legal framework for providing pharmacy services. There was a common misapprehension that LPS would only last for three years, but unless the law was changed again it would be a permanent feature.

Dr Baines believed that we should not dismiss LPS. It was about giving PCTs access to the global sum. It was about testing how the existing funding could be distributed locally. LPS was about the ethos of primary care trusts and would put the same constraints on pharmacy as were evidenced in the rest of the NHS.

Lessons from PMS

Roland Petchey, director of the health management group, City University, presented some lessons for LPS from personal medical services (PMS). This was from his perspective as a lead for one of a PMS evaluation team. He thought we should not look for apparently easy lessons, because there were subtle differences between the two schemes. The key thing was to look for transferable learning.

Tensions were evident within PMS between central policy and local policy. These could be handled by three methods: balancing, buffering and harnessing. Balancing required the PMS to retain the ability to respond to local needs as well as meeting central requirements. Buffering was necessary if a central policy requirement created a difficulty; you had the choice to just do enough to comply with it or to ignore it. Harnessing central policy could be an asset if it helped to push you further along the local policy requirement.

The PMS pilots that survived and thrived were tied into multiple other policy developments such as the health improvement programmes (HImPs) and the national service frameworks (NSFs). These provided quality and coherence of local policy, together with a vision and actionable steps. Mr Petchey suggested that this might be the same for LPS.

At a local level, he said we would have to be prepared for contract design and production to take longer than expected. It needed shared understanding and education. We would need to educate the people we are working with and we also needed to learn about them. Setting a contract value could be problematic. What is a reasonable price for a reasonable service? Contract negotiation had to be flexible because we may find we need to re-evaluate throughout the pilot.

Organisational change and development within PMS pilots was complex and time-consuming. Most PMS pilots had found they needed ongoing support but only one had budgeted for it. Good management within and around the pilot was also needed; you could then afford to be more ambitious. For LPS, Mr Petchey suggested that we tie in the ambitions of the pilot to the capacity of the organisations around us.

Within an LPS pilot, good teamwork would be essential and would depend on some professionals being prepared to make sacrifices. Support for staff development would be required. They will be working in ways different from those they were accustomed to. This needed skills, expertise and confidence to expand into the new roles created for them within LPS.

The final lesson from PMS was the need for a "product champion". LPS would need a true believer on the ground who had the political and management skills to take people along the LPS journey.

Lessons from PDS

Similar lessons came from the evaluation of personal dental services (PDS). John Morris, consultant in dental public health for South Staffordshire PCTs, had been involved in a PDS pilot and in the national evaluation. There were similarities between dentistry and pharmacy: both had independent contractors and both had a growing corporate involvement in the provision of services. The key objectives for PDS and LPS also had some similarities in that they were testing revised mechanisms for remuneration, though for PDS this was for existing services, whereas for LPS this was for revised services (see Panel 1).

In setting up LPS pilots, Mr Morris believed we were working to a short timescale. Looking back to the setting up of PDS, he said they only felt real after they got approval. It was important for LPS to try to feel real every step of the way. The successful PDS pilots were based around ideas that had been thought about for years. Some pilots attempted to be too ambitious, promising everything in order to secure PDS.

The importance of a "product champion" also became significant during the later stages of the PDS. After about a year the process risked becoming boring and a champion was needed to solve problems and move things along.

There was benefit in having a clear contract and clear management, outlining who does what and when, when review is due, what is expected of the provider, and what would happen if the provider does more or less than is expected.

PDS had presented huge information technology (IT) challenges. Funding had been provided for IT, but there were additional demands on staff training, and interpreting and validating the information. All were time hungry. Many dentists did not trust the data and kept additional paper records. Some of the most successful PDS were also the simplest and used only paper-based systems.

Overall progress with PDS was good. Most were achieving their objectives and PCTs were generally supportive and wanted then to continue. Because fewer complaints were being received regarding access to dental services they were seen as a job well done to meet the local agenda.

Looking at the lessons for LPS, we had to keep asking "why?" to quantify the problem to be solved. We had to seek consensus between the potential providers and the PCTs. Stakeholder views were important, identifying who might attempt an ambush at a later date. It was important to avoid a "cure in search of a disease".

For data collection, process measures of activity data to show we were doing the work would be necessary. Outcome measures, such as information from other services, and user views would contribute to showing how the new service improves health. Incentives for data collection may be needed.

Advice for PCTs

PCTs, which were well represented at the conference, were given advice on how to respond to LPS by Brian Miller, senior pharmacy adviser, South Essex. He stressed the words in the LPS guidance that the "prime purpose of LPS is to provide an alternative ways of contracting for pharmaceutical services". It was not necessarily about broadening services.

PCTs could exercise choice over which LPS proposal to take forward, but as soon as an element of choice occurs it also meant that decisions were open to challenge. This was not the case with PMS. PCTs needed to have a robust system with proper defences in place. There was also no new money for LPS apart from a small amount for development.

Another major difference was the potential influence of the large companies on pharmacy services. This was a big unknown. There seemed to be an idea at the moment that the multiples were major players intent on world domination. It had been suggested, for example, that a pharmaceutical company could do all the dispensing for 20 per cent less that the current contact. PCTs had to start to think about what might come their way.

PCT boards had various policy choices to make in elements of LPS. The guidance allowed them to say that they did not want any external submissions either on the grounds of lack of capacity to consider them and/or that no needs assessment had yet been undertaken. This latter aspect seemed to be the reason being picked up by many PCTs. If that was the option chosen, it was important for the PCT board to set a process and date for review of the decision.

It was also possible for PCTs to state that any future proposals would be refused if they endangered the provision of comprehensive local community pharmacy services. This would need to take account of not just NHS dispensing services but also OTC sales.

The guidance said that it was important for PCTs to have in place a robust process by which they make decisions and that those decisions were clearly reasonable. The DoH was concerned that if outside bids were rejected the PCT could be taken to court. Judicial review involved weeks and weeks of work.

The DoH may require evidence of the process and suggested that PCTs should record details of each outline proposal received and document its progress thought the selection process. Consultation would be extremely important.

Mr Miller was aware that some PCTs were trying to side-step LPS; one had sought legal advice to find a way of avoiding LPS and another had decided at board level not to have any LPS that put them at financial risk. This he felt was untenable; the key was in managing and controlling that risk.

As for when to use LPS, the guidance said that proposals for LPS were for situations that could not be achieved by add-ons to the Part II arrangements. Verbal advice from the DoH had suggested that LPS be used when the national contract gets in the way around control of entry issues. Mr Miller believed that the examples of LPS given in the guidance did not seem to seem to fit with these criteria. He thought it more likely that LPS schemes would be around dispensing for addicts, out-of-hours centres, one-stop centres and supporting essential pharmacies, in both rural and urban areas, at risk of closure.

A thorough needs assessment had to be conducted before LPS and participants at the conference were directed to that listed under "National seminars" on the North West region medicines management team website (www.lpspilots.co.uk).

The responsibility for clinical governance of LPS lay with both the PCT and the Royal Pharmaceutical Society. PCTs had a responsibility for monitoring of the service as experienced by the patient and the Society had a role for monitoring and enforcement of professional competence and adherence to the law. Mr Miller believed that the PCTs may have to do some things that the Society ought to do but does not do particularly well, one of these being monitoring the quality of premises.

Some of the service issues around LPS, which the PCT might require, could be to do with owings, hours of opening, participation in out-of-hours services and the use of parallel imports. Owings were of concern to the PCT and the patient. Perhaps LPS could impose a requirement for 100 per cent of formulary items to be in stock all the time. Hours of opening could perhaps be varied to allow staff in an LPS pilot to join in with other health care staff on protected learning time initiatives. Perhaps a compulsory out-of-hours service would be part of an LPS scheme. Parallel imports were not popular with patients. Could an LPS scheme require pharmacists not to use PIs?

One of the first tasks that PCTs had to put in place was the appointment of lead person to take forward the work on LPS, although, as Mr Miller pointed out, this person was never mentioned again in the guidance. The lead person need not be a pharmacist and in some areas a lead was being appointed to cover more than one PCT.

In conclusion, Mr Miller thought that the LPS guidance was PCT friendly, but nevertheless LPS was for the brave who would also have to be careful. Consideration needed to be given to what it was about dispensing and services provided for a group of patients which made it LPS. In the long term all pharmaceutical services would be LPS.

A Department of Health view

An overview of the Department of Health policy on LPS was presented by Kevin Guinness, head of the DoH's pharmacy policy and prescriptions branch. He believed there was a lot wrong with the existing arrangement of having one national contract. It was not sensitive to local need, did not offer pharmacies a choice and failed to integrate dispensing with other services which pharmacies may offer. There was also a lack of anything about quality. LPS would address these matters and introduce choice for existing and potential contractors.

There were many myths developing about LPS and Mr Guinness took the opportunity to dispel these and explain the reality. LPS was not about payment for additional services; PCTs already had the opportunity to do that. LPS is principally a new way of paying for the sort of things that pharmacies already do. Section 28 of the guidance said that pilot schemes were about providing local pharmacy services but that they may include other services.

LPS was about local contracts for local needs to meet local problems through local innovation. This dispelled the myth that if we wait long enough the DoH will tell us what they really want to see in LPS schemes. There was also a myth developing about the need to "designate" an area. This was necessary if LPS involved existing pharmacies and was only a "maybe" if thinking about a new pharmacy.

Responding to the often asked question "Who's in control?", Mr Guinness said it was the wrong question. But if it had to asked, then the answer was nobody and everybody. Although the DoH had to approve schemes it was up to PCTs to initiate or support them. Nobody has to take part, although the DoH was looking for a broad measure of local support and had the right to look to see if PCTs had taken the correct decision.

The first steps for PCTs and the first steps for potential LPS providers were outlined (Panels 2 and 3). PCTs had to be prepared and had to have their reasons if there were not interested in LPS, either because they had no money or they had not done a needs assessment. The criteria for acceptance or rejection of bids also had to be clear. It was not good enough to say that an LPS bid would upset other pharmacists or that a PCT would only work with a certain contractor. It had been suggested that the lack of a mechanism for appeal might be in contravention of EU human rights, but this was not the case. What was needed was a transparent process.

Potential providers had to be prepared to work with PCTs and find out what their attitude was before putting a lot of effort into a proposal. LPS may be seen as an opportunity to expand their business by some companies who had been frustrated by the control of entry regulations. Mr Guinness said there was nothing wrong with this providing the LPS brought something that the PCTs wanted locally.

The deadlines by which a fully worked up proposal needed to be submitted to the DoH were 28 June and 1 November. The reason for the short deadlines was that the Health and Social Care Act was in place quicker than expected. It was unlikely that anyone who had not been working on a potential LPS scheme for some time would make the June deadline, and Mr Guinness suggested that they go for November, which would probably mean a 2003/04 start. There would be more waves of LPS pilots with later start dates. PCTs needed to ensure that any future funding was in the Service and Financial Framework (SAFF) for next year.

Unlike PMS there would be two types of LPS: provider-initiated (Panel 4) and PCT-initiated (Panel 5). The outline proposal for the provider initiated LPS bids had to provide enough information to convince the PCT that the idea was worth working up. Annex A of the guidelines provided a standard format to ensure that the key points are addressed. Providers had to convince the PCT on the "why?" and "why you?" — what is it about you that sets you aside from the rest? Concepts such as an LPS providing a secure income, which was less dependent on prescription volume, were unlikely to impress PCTs. Potential providers can expect a tough time in convincing PCTs, which will be cautious, partly because once proposals have been submitted PCTs are committed.

The resources necessary to develop LPS proposal would come from the DoH: initially £4,000 per scheme to work it up and then a further £8,000 over a three-month period to take the scheme from approval to implementation.

When outlining the two options for PCT-initiated schemes, the advice from the DoH was to ensure that everybody has a fair chance in option 1. PCTs needed to get all contractors to a meeting and avoid another potential provider from feeling excluded. The second option, if approved, required the PCT to look for potential providers.

Mr Guinness made no apology for the complicated funding arrangements. They were an alternative to the existing arrangements with the challenge being to make better use of the money. All aspects of the current funding needed to be brought into LPS funds; the dispensing fees, the professional allowance and ESPS. This formed the contribution from the DoH, based on the likely income to the pharmacy if services had been provided under the existing contract.

If dispensing volume was higher under LPS than expected, the PCT could ask for more money for future years and if the volume was lower, then the DoH reserved the right to reduce the amount. The amount to be taken from the global sum was a different issue. The DoH needed to bear in mind the effect that the withdrawal of funds for LPS would have on other contractors. What comes out of the global sum would be what the LPS pharmacies would have been paid based on actual activity, whereas the amount paid to the PCT would be an estimate. This mechanism would not have to last for many years but in the interim seemed, to the DoH and the Pharmaceutical Services Negotiating Committee, to be the fairest way.

A second source of funding could be added from a PCT's unified budget. In line with "Shifting the balance of power", the DoH would not be telling PCTs that they have to hold money back for LPS. PCTs get new money every year for services; none of it would be specifically earmarked for pharmacy services.

The DoH was aware of a third source of funding for LPS, that is, the profit on dispensing. Just how much was difficult to ascertain. However potential providers needed to be aware that medicines management might reduce not only the remuneration from dispensing fees but also the profit on dispensing.

Designation in relation to LPS could be the area, the premises or a description of premises. It had to have a map. It could be done when preparing proposals, while awaiting the Secretary of State's response to even after approval. Various bodies needed to be notified of the designation which had to review every six months, although it could be cancelled at any time and, indeed, must be, if it was no longer relevant. PCTs would have to consider designation if they wanted to be able to defer applications for either new contracts or minor relocations under the existing regulations.

The Department of Health was setting up regional panels of nine members, which would include patient representatives, people with performance management and financial backgrounds, a government office regulator and pharmacy representation from county or regional level. They would check the legality and probity of LPS proposals. Probity of the proposal would be important if both LPS and existing pharmacy services were to be provided from the same premises. The panel would be required to check what controls were in place to ensure that prescriptions are not switched from one service to the other.

The panels would also look at the assessment of effect on existing services and whether the outcome of a wide consultation had been taken into account. If any detriment to existing services had been identified, was it outweighed by the benefits of the LPS proposal? If there were any prejudice to the proper provision of services than the LPS proposal would be turned down.

They would also be addressing whether the LPS proposal was innovative either in the services offered or the way they are paid for, and if it addressed the PCT priorities. The panel would scrutinise and make recommendations.

The options for the panel were to approve, amend or reject the LPS proposal, although in practice they would not amend a proposal without checking first with the PCT. This was important, because the PCT had no right to pull out once a proposal was submitted.

Other duties for the panel would be to clarify if there was a right of return, following the basic principal that one return will be allowed for existing contractors and their successors, but not for new LPS contracts. Conditions such as gradualisation would also be considered if a new pharmacy were in a controlled locality. The panel will also consider proposed changes to approved schemes, both before and after they are implemented, such as any changes in premises. In due course this function may be delegated.

Mr Guinness concluded with a reminder of the website to which a section of frequently asked questions (PDF* 100K) was soon to be added.

In response to a final statement posed by Dr Baines that "LPS holds the future for community pharmacy", just over a third of the audience agreed, a further two fifths were not sure and one fifth thought not. We will have to wait to see.

  * PDF files on PJ Online require Acrobat Reader 4 or later.