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Will CCGs be forced to introduce competition?

How much of a free hand will CCGs have under the health reforms? Alisdair Stirling and Sue McNulty report.

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Much of the furore surrounding the coalition Government's health reforms has centred on the issue of competition. Small wonder. The original bill talked of Monitor ‘promoting' competition in the NHS with providers competing on price under maximum tariffs.

In February last year, NHS chief executive Sir David Nicholson published a letter saying there was ‘no question' of introducing competition on price into the NHS. Out went maximum tariffs and in came ‘competition on quality, not price'. Monitor's proposed role was duly watered down and became that of ensuring competition is fair and operates in the interests of patients.

A proportion of the bill's critics were assuaged. But then, out of the blue, last summer PCT clusters were instructed to select three community and mental health services to open under any qualified provider (AQP) by September 2012. This was not the way commissioners had been led to believe AQP would operate. It was to have been another commissioning tool at their disposal – not a centrally imposed, nationwide ‘diktat', as a leading commissioner branded it.

Amid the ensuing outrage, and after behind-the-scenes negotiations, the Government announced last October that it would review the policy. And in what appears to be another U-turn, health secretary Andrew Lansley told CCGs in February that commissioners would not be forced to subject services to competition, with the final choice always resting with commissioners – a point repeated by Mr Lansley at a meeting of CCG leaders last month.

‘Competition and co-operation are tools,' he said. ‘The legislation doesn't change the rules on competition in the NHS at all. It just means Monitor administers them – that's it.'

Back in February, Dr Mike Dixon, chair of the NHS Alliance, identified the volte-face as ‘highly significant' and said it should soothe public fears about competition being stimulated artificially within the NHS: ‘What we have agreed is that CCGs should be sovereign and not wrong-footed by the NHS Commissioning Board and Monitor into taking on commissioning methods they don't want to use. It should go a long way towards reassuring people.'

The status quo?

But while the uproar around AQP has died down, pre-existing competition law will still leave CCG decisions open to challenges from providers. CCGs inherit the same legislative and regulatory framework as their PCT predecessors. They will have to abide by public contracts law – both UK and EU – as well as two sets of Department of Health guidance: the principles and rules for co-operation and competition, and the procurement guide for commissioning.

According to Jamie Foster, a partner at law firm Hempsons: ‘The net effect is not to require PCTs to go out to tender in every situation. PCTs must comply with procurement law and guidance and consider each case on its merits. I expect that to continue for CCGs and they will be bound by procurement law in the same way that PCTs are.'

Post-bill regulations

Sources close to Andrew Lansley have told Practical Commissioning that there will be no secondary legislation on competition. However, lawyers are expecting a wave of post-bill regulations that will have the role of statutory instruments. They are likely to enshrine the principles and rules of co-operation and competition in law and could conceivably change the competition landscape in the NHS again, Jamie Foster believes.

He says: ‘The bill envisages regulations will be issued that will require the NHS Commissioning Board and CCGs to ensure that in commissioning healthcare services for the NHS they adhere to good practice in relation to procurement, protect and promote the right of patients to make choices with respect to treatment or other healthcare services provided under the NHS, and do not engage in anti-competitive behaviour that is against the interest of patients.

‘These regulations are likely to impose requirements in relation to competitive tendering for services and the management of conflicts of interest between commissioners and providers.'

Mr Foster added: ‘Monitor will have the power to investigate failures by the board or CCGs to comply with the regulations. Monitor can direct the board or CCGs to require the remedy of failures. In some circumstances, Monitor will also be able to declare that where the board or CCGs have failed to comply with the regulations, and the failure is sufficiently serious, then the arrangements in question are ineffective.'

Time will tell whether this will mean CCGs face a potentially tougher job in proving their decisions are watertight and whether the number of legal challenges from providers both inside and outside the NHS increases.

‘The effect of the regulations will not be known until they are published in draft form, but they could – for example – require CCGs to competitively tender certain services in certain situations,'

Mr Foster says. ‘There is also a consultation happening about changing EU procurement law, which may impact on future CCG procurement.'

That is the fear some CCGs have about taking over procurement from PCTs. GP Dr Kambiz Boomla, a prominent critic of the reforms whose Tower Hamlets CCG recently wrote to Andrew Lansley in a last-ditch attempt to have the health bill scrapped, is taking the health secretary's reassurance about AQP with a pinch of salt.

‘If a private company went to Monitor and accused a CCG of uncompetitive behaviour, would Monitor simply reply that Andrew Lansley says the decision is the CCG's?' Dr Boomla asks.‘Whether or not the legislation actually supports Lansley's claim remains to be seen. It could be that it's all fine but in six months to a year, there could be more pressure from companies and the regulations could be amended.'

Dr Shane Gordon – a GP, chief executive of North East Essex CCG and clinical commissioning co-lead for the NHS Alliance – is not sure CCGs will have much to worry about in practice: ‘It would create long-term difficulties with the local commissioners. It would have to be convinced it had given you all the information and that you'd discarded it despite it being an equivalent or more efficient offer, and then have to go through due diligence with Monitor to prove its point.'

Janet Roberts – director of Tendering for Care, which works with both providers and commissioners – warns there has been a ‘dramatic increase' from providers seeking advice about challenging tenders this year: ‘There is a general reluctance to challenge because of reputational risk, but it is now true that organisations with a turnover as small as £1.5m up to those with £150m are currently pursuing cases through the courts.'

The unknowns

David Bennet, chair of Monitor, admits his organisation is still having to work through how its new responsibilities will be applied. At last month's CCG leaders' event, he said: ‘Although we now have an Act and in that sense it is fixed, we still have a large amount of work to do to interpret that Act.'

The interpretation and implementation of the Act will prove critically important for CCGs, as will subsequent test cases of providers challenging CCG decisions.

Alisdair Stirling is a freelance journalist

Sue McNulty is editor of Practical Commissioning

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