PROCUREMENT
ARRIVES IN THE NHS (20 years after the rest of the Public Sector) Stephen Pearson, Partner – Freeth Cartwright
PROCUREMENT LAW I
have never, in the last 15 years acting on Public Contracting matters seen such a kerfuffle as that accompanying the mildly named NHS (Procurement, Patient Choice and Competition) Regulations 2013. Given that the UK has been subject to the European Public Procurement Regime since the mid 1990s, why all the fuss?
Well....its politics. Search “NHS Commissioning” and the first entry on Google adds the word “crisis”. Organisations such as the media and the BMA seem happy to pour petrol on what is without doubt a tricky issue for the NHS reeling from a post Mid-Staffs duffing up. A key issue is that health and social services have been what are called “Part B” services which means that they have not been subject under EU procurement law to most of the requirements for competitive adverts, contract notices and “lowest price” procedures which other parts of the Public Sector has been subject to when letting contracts for Refuse Lorries, Leisure Services and the like. However, proponents of these processes say that they produce improved value for money and a range of services to benefit the public. So what is the issue with the NHS? Well, GPs are technically private contractors operating through partnerships (just like lawyers), who have, it has been said, been able to exploit their bargaining potential to maximise income and reduce elements of their workload (eg out of hours services) enhancing their position in some of the best paid professional groups. They are hardly likely to be happy to welcome competitive tenders with open arms.
They would, in their defence, claim to uphold the interests of patients, are part of the NHS “family” and seek to put patients before profit as the gatekeeper to more invasive services.
The other group of service Providers
are NHS Trusts. They have spent the last few years gearing up their capacity to reduce waiting lists from 18 months to 18 weeks (a great achievement by any token), in many cases by committing to PFI-funded projects which have produced some magnificent facilities with index- linked unitary charges with a duration of, typically, 25 – 30 years. They also
have a high fixed cost including many thousands of employees and are subject to a number of complex regulatory regimes. Accordingly, even a minor drop in workload could severely affect their finances.
What do the regulations provide? The legislation seeks to promote competition (good) whilst preventing the “race to the bottom” that has been (allegedly) the result of some competitive processes.
In many ways, the regulations represent “procurement lite” in that they repeat the principles of procurement best practice and European law but create a statutory duty to secure “the needs of the people who use the Services” (reg 2(a)), to consider “the services being provided in an integrated way”(reg 3.4) and to allow “patients a choice of Provider”. There is also a duty on the awarding body, eg the Clinical Commissioning Group to record how the contract provides services which are “effective”, “efficient” and “improve the quality of services”. Under regulation 5, a contract can still be awarded without competition if, for reasons such as technical ones the contract is only capable of going to one provider-say a provider is the only GP in town? However-there is a general expectation under Section 75 of the Health & Social Care Act 2012 that services are put out to competition and that commissioners procure services in a “non-Discriminatory way, including by not treating a provider... more favourably than any other provider in particular on the basis of ownership”. In other words, an NHS Trust cannot be preferred because it is a public body. This is really a restatement of general rules of procurement but seems shocking in the NHS where, in reality the private sector is typically not favoured in being granted contracts and may be regarded as somewhat suspect. This is possibly unfair, as some major providers have a good track record in providing care and treatment, particularly in other parts of the world and may have extremely high standards.
Regulation 7 means that a relevant PUBLIC SECTOR SUSTAINABILITY • VOLUME 3 ISSUE 5 33
body must establish, and apply criteria which are transparent, proportionate and non-discriminatory. This is no more than a statement of the “level playing field” rules that have underlined procurement law across Europe within a directive going back to 1993.
What will the results be? If CCG’s embrace procurement / commissioning properly, they have a real opportunity to enhance both quality and value for money in patient care. The challenge will be whether the entrenched institutional habits of the NHS will get in the way.
Under the 2012 Act Monitor (who have, certainly on economic and financial matters been an effective regulator of Foundation Trusts) have the power to investigate allegations that the NHS or any CCG have failed to follow the requirements for a competitive process. This would seem to come from a lack of confidence that, left to their own devices, CCG would do nothing more than award contracts to the local GP and District General Hospital.
The Department of Health say that the changes will open up provision to “a wider range of health care providers, including independent and charitable organisations” meaning that there will be more choice for patients and a greater range of services. It is difficult to say. The pressures to achieve savings and the increased use of joint commissioning with Local Authorities may have as much affect as the regulations on producing a wide range of providers. In many areas, the only provider equipped to provide the service will be the local NHS provider, and the rise of the private sector medical provider has, over many years been marginal with some nibbling away in specialised areas such as screening and overflow work only. My view is that progress will continue to be slow and a properly diverse health economy may still be some way off, but the NHS and Clinical Commissioning Groups in particular had better get used to complying with procurement legislation!
www.freethcartwright.co.uk
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