In October 2004, the government published Practice-based commissioning: engaging practices in commissioning to outline the Department of Health’s latest thoughts around the role of indicative budgets at GP practice level (practice-based commissioning, or PBC).
The government hoped that through PBC a greater variety of services would be delivered (resulting in greater choice of patients); service use would become more efficient and frontline clinicians would be more involved in commissioning decisions. In spite of much effort, PBC never flourished.
PBC involved the devolution of commissioning functions from primary care trusts to frontline general practice teams. These teams held indicative budgets. However, PCTs continued to hold the actual budget and retained responsibility for managing contracts. The practice or groups of practices made the commissioning decisions and were able to retain 50% of any savings. The remainder could be charged against reasonable practice management costs with the balance going to the PCT.
As the budgets were only indicative, PCTs could meet overspends for practices. Overspends in one year could be offset by savings in another year. Practices that were unable to balance budgets over a three-year period could lose their right hold a budget following an arbitration process.