News / News Analysis: Competitive tension

If the NHS in England could choose a motto for the next five years it would be efficiency, quality and choice. These themes are
traditionally delivered through co-operation between health service bodies. But competition between NHS providers and between the NHS and the independent sector will also have a part to play in the future. Health service providers are becoming restless at the thought of a further challenge to their financial positions, with commissioners able to move services at only a few months notice.

It is unlikely that state-funded healthcare will become a fully-fledged bazaar, but it is taking on more market characteristics, with primary care trusts being encouraged to create local markets under world class commissioning. It even has its first regulator – the Co-operation and Competition Panel (CCP) for NHS-funded services.

The CCP is essentially an Office of Fair Trading for the NHS and NHS-funded services, overseeing the principles and rules on co-operation and competition in the operating framework. Its job is to adjudicate in four areas – on the competition implications of mergers, conduct (such as whether financial interventions are fair), complaints on advertising and procurement disputes appeals. Its conclusions are not binding and will be given in the form of advice to the relevant authority (health secretary, Monitor or strategic health authority).

Unsurprisingly, given that it is an idea borrowed from the commercial sector, there is unease in the NHS about the role of the CCP and its recent consultation on how it will operate in these four areas did little to allay these fears. Trusts were concerned these operating guidelines put too much emphasis on competition at the expense of the other aspect of its remit – co-operation. 

Even health secretary Alan Johnson, whose department had set up the CCP, was concerned. In a letter to the panel, he said the guidelines would benefit from a greater emphasis on co-operation, and he worried that the panel would slow the progress of proposed mergers. Mr Johnson was said to be considering a fundamental review of the CCP – barely four months after it was established.

The NHS Confederation’s foundation trust network (FTN) was concerned the panel would take an unbalanced view, promoting competition and market creation over what was best for patients and taxpayers. For example, FTs were concerned that commissioners – keen to meet the market creation requirements of WCC – would receive the panel’s support in salami slicing services, awarding contracts to a range of providers, leaving the incumbent provider with an unsustainable rump service. The FTN also noted it would be concerned if the panel believed the benefits of competition were based on driving down prices rather than improving quality.

Market referee

CCP chief executive Andrew Taylor sought to calm the service’s fears. He told Healthcare Finance the panel has been set up as a referee in the market, not as an advocate of greater competition.  ‘How much competition there should be and where it should happen is very much a question for the Department of Health and ministers. We are here to oversee a set of rules. I don’t see us as having a role putting more competition into the system and, anyway, our role is about co-operation as well as competition. Co-operation and competition are equally important but we will not be out there instigating investigations – they must be brought to us. There is no philosophy that we will be trying to impose on the system.’

He said it was inevitable there would be more competition to provide NHS-funded services, but only as a result of government policy – such as plurality of provision and patient choice – not because of the panel’s intervention.

And he was relaxed about the health secretary’s response to the CCP’s guidelines. ‘It is great to have clarity about what the Department wants us to be doing and he made some very important points about the need to be proportionate and to make sure the emphasis is on co-operation as well as competition,’ he said.

In the area of conduct, the CCP could respond to a complaint about financial intervention in NHS trusts. Mr Taylor accepted this may apply to a local health economy coming to the aid of a financially-challenged trust (as has been the case recently), but he insisted the panel would approach such a situation fairly. There would be no problem if organisations co-operated to benefit the patient and taxpayer – but the panel would take issue if it benefited the provider at patients’ expense. Equally it would not necessarily be concerned by the award of a contract away from the current provider. ‘Moving services elsewhere is not in itself a problem but it would be if the process has not been conducted fairly,’ he said.

David Worksett, director of the NHS Confederation’s NHS Partners Network, which represents independent sector providers, said his members strongly supported the panel. The independent sector had been subject to competition regulations for some time, and while he understood that the mainstream NHS was unused to such a regime, he saw no reason why it should not follow the same principles as other sectors.

‘We understand there are cases in healthcare where co-operation is very important, for example to produce seamless patient pathways or make full use of expensive and valuable skills. The NHS is 90% to 95% about co-operation; there is still precious little competition and it is thoroughly beneficial. I think people are missing the point if they are worrying about there being not enough co-operation.’

He suggested the value of competition would be accepted as NHS funding is restricted. ‘The NHS is facing one of the tightest financial squeezes it has ever had to face after 2011. This will require a drive for greater efficiency and real innovation in the way services are delivered.’

Clear methodology

Mr Taylor said the CCP’s methodology would become clear over time. ‘Our overriding approach will be to weigh up the costs and the benefits and we wish to be transparent and fair. The guidelines are a first step and we are all on a learning curve. But we will be transparent so the NHS will be able to see how we make decisions and the analysis we used.’

Informal, confidential advice will be a major element of the panel’s work, he added. ‘We are aware it’s a new system with a lot of new concepts for the NHS, and people are nervous about it. But it’s better to stop a problem before it happens.’

The CCP insists it is nothing more than an impartial referee that will ensure the NHS market operates in patients’ and taxpayers’ interests. Nevertheless, NHS providers will remain worried that it could add to the potential for financial instability.