Decades after it was introduced, the impact of fundholding still resonates. Many GPs hanker after the influence it brought, the way it made the big providers in the system sit up and take notice of primary care. My own experience, as a GP at the time, was one of quality improvement. Suddenly, we could directly access diagnostics that had been barred to us and get results back in days or hours rather than weeks. Communication and intelligence about what was being done to patients improved as providers needed to send us accurate information about the interventions they had performed, in order to get paid. As a practice we embraced fundholding reluctantly but began to realise the merits and opportunities it afforded us to improve care for our patients.  It also led to innovation and safer care. By the end of the decade we were managing anticoagulation locally and more safely for greater numbers of patients.

Unfortunately, despite benefits, there were unintended and unwanted consequences. There were perverse incentives and poor governance.  In the end the baby was ejected with the bathwater.
Now there is talk of hard budgets, a return to delegating decision making to primary care. In an era of austerity, when quality needs to be preserved and innovation promoted rather than stifled, creating demand side controls and incentives is needed. So what can we learn from previous experience and how should that be applied to improve the system?

I think we need to construct a set of principles that will protect the public purse from perceived and actual abuse and, just as importantly, protect professional reputation from tarnish.  We need to create trust.  The elephant in the room, between primary care and the rest of the NHS, is a lack of trust.  The financial model for general practice is based on profit.  That is not necessarily a bad thing but it creates a perception that GPs are motivated purely by money.

Would it help to build trust if practices had to publish their accounts to demonstrate how the public money invested in them is being used? People could then see that the decisions made with delegated budgets were to the benefit of the system not the profits of the partners. After all, that is the greatest criticism levelled at the private sector!

If we are to implement hard budgets then we need to apply the lessons learnt from the past and have better governance and incentives from the start, or we will simply repeat the mistakes of history.

Martin McShane qualified in 1981 from University College Hospital Medical School. He trained in surgery until 1990 then switched to general practice where he spent over a decade working in a semi-rural practice on the edge of Sheffield. In a fulfilling job, with a great lifestyle, he decided to give it all up and take on a fresh challenge. He entered NHS management, full time, in 2004 as a PCT chief executive after experience in fund holding and chairmanship of both a primary care group and subsequent professional executive committee. Since 2006 he has been director of strategic planning for NHS Lincolnshire, where there are 5,600 miles of road but less than 50 miles of dual carriageway.