The pros and cons of competition in the NHS, and the question of whether competition law applies to the NHS, were hotly debated as the Health and Social Care Act passed through Parliament.
The purpose of this article is not to debate whether or not competition is good or bad for the NHS; plenty of academic studies have considered that question. Instead, the aim is to clarify how competition law and policy will apply to the NHS in practice.
Competition law has different aspects including procurement, mergers and acquisitions and abuse of a dominant market position. Much competition law already applies to NHS bodies and other providers of NHS-funded services, and this law is currently supplemented by a range of Department of Health policies.
Where competition law does not already apply, the act does not extend its reach in the NHS.
Instead, the act will enable development of the current competitive market by transforming the current policy-based framework into a statutory framework to regulate the market and to confer specific NHS regulatory functions on Monitor. Monitor will become a regulator for the healthcare sector, in much the same way as the regulators of utilities.
Monitor will be able to influence the role of competition in the NHS through:
• the imposition of licence conditions for all providers of NHS services that require compliance with conditions based on the existing Principles and Rules for Co-operation and Competition
• its new concurrent powers with the Office of Fair Trading (which itself is soon to be merged with the Competition Commission into a new Competition and Markets Authority) to take action against anti-competitive behaviour.
How will it affect GPs as commissioners?
CCGs will need to comply with procurement law and guidance when commissioning services. The aim of this will be to require CCGs to act transparently and non-discriminatorily and to prohibit agreements or other actions that restrict competition. This means CCGs will need to consider, among other things, whether or not to put services out to tender.
The act says that regulations will be issued to impose specific requirements on CCGs to:
• adhere to good procurement practice
• protect and promote the right of patients to make choices with respect to NHS services (this reinforces the general duty on CCGs to act with a view to enabling patients to make choices)
• not engage in anti-competitive behaviour that is against the interests of patients.
These regulations are likely to supplement and/or replace existing guidance for commissioners of NHS services. A key question will be whether the regulations go further in promoting competition than this existing guidance.
The answer will not be known until draft regulations are published.
The act goes on to say that Monitor will have wide-ranging powers to enforce compliance of the regulations, including the power to investigate failures, require remedies, require CCGs to vary or withdraw tenders and to declare arrangements ineffective.
The effect of the act will therefore be to require CCGs to ensure they understand and comply with their obligations to promote good procurement practice and not act anti-competitively when commissioning services.
How will it affect GPs as providers?
Competition law already applies to providers of NHS-funded services, depending on the activities they are carrying out. The act will not change this.
Competition law applies to entities that
are deemed to be ‘undertakings' carrying
out economic activities. Whether a provider of primary care services is an ‘undertaking' for the purpose of competition law will depend on the activities it undertakes in a particular case.
So primary care providers may be subject to competition law if they are carrying out economic activities. This will remain the case when the act comes into force.
Where competition law does apply, it operates to prohibit:
• anti-competitive agreements, including, for example, agreements that directly or indirectly fix prices or otherwise seek to restrict competition
• abuse of a dominant position by an undertaking that has a significant share of a particular market – including, for example, arrangements that restrict supplies of goods or services to other providers.
Monitor will have significant new powers to enforce these competition rules. It will be able to investigate anti-competitive practices, direct organisations to take action to remedy infringements and impose financial penalties. A key issue will be how Monitor decides to exercise these powers.
GPs, in their capacity as providers of services, will need to ensure that arrangements they enter into with other organisations to conduct their activities do not fall foul of the competition rules.
In addition, they should be aware that mergers between practices could also require regulatory approval in certain cases.
Jamie Foster is a partner at Hempsons Solicitors
