"The NHS will last as long as there are folk left with the faith to fight for it"
Aneurin Bevan

Tuesday, 5 March 2013

Section 75 suggested amendments

What's the Problem?

Tucked away in the Health and Social Care Act 2012 is Section 75. It says this:
75 Requirements as to procurement, patient choice and competition
(1) Regulations may impose requirements on the National Health Service Commissioning Board and clinical commissioning groups for the purpose of securing that, in commissioning health care services for the purposes of the NHS, they—
(a) adhere to good practice in relation to procurement;
(b) protect and promote the right of patients to make choices with respect to treatment or other health care services provided for the purposes of the NHS;
(c) do not engage in anti-competitive behaviour which is against the interests of people who use such services.
(2) Requirements imposed by regulations under this section apply to an arrangement for the provision of goods and services only if the value of the consideration attributable to the services is greater than that attributable to the goods.
(3) Regulations under this section may, in particular, impose requirements relating to—
(a) competitive tendering for the provision of services;
(b) the management of conflicts between the interests involved in commissioning services and the interests involved in providing them.
(4) The regulations may provide for the requirements imposed, or such of them as are prescribed, not to apply in relation to arrangements of a prescribed description.
Starting with subsection (2) the important point here is that the section is only about services, not goods so if there is a contract that involves both goods and services, the regulations only apply if the value of the services in the contract is larger than the value of the goods. Subsection (1) gives the usual waffle about patient choice, but significantly, subsection (1c) says that services must not be procured in an anti-competitive way. The section does not define anti-competitive nor does it define the phrase against the interests of people who use such services.

The Explanatory Notes say:
15 Chapter 2 establishes concurrent powers for Monitor, alongside the Office of Fair Trading (OFT), under specific sections of the Competition Act 1998 and Enterprise Act 2002, as they will apply in the health care sector in England. It also provides delegated powers for the Secretary of State to make regulations imposing requirements on commissioners of NHS services, regarding good practice in procurement, protecting patients’ rights to patient choice, imposing prohibitions on anti-competitive conduct and managing potential conflicts of interest, which Monitor will enforce. It is intended that these regulations will enshrine a full range of options for commissioners, including the ability to secure services without competition, where this would be in patients’ interests.
Again, this uses the phrases anti-competitive behaviour and patients' interests but does not define them. The note does say that the regulations should enshrine a full range of options for commissioners and include the cases where services can be procured without competition in patients' interests.

There are two opposing themes here. On the one side the law says that services must be procured in a way that is not anti-competitive and in the patients' interests, and on the other hand there should be full options for services to be procured without competition but also in the patients' interests. To be able to describe both things, you have to define what is competitive and what is anti-competitive, and above all, what in the patients' interests means.

The recently withdrawn SI 257 regulations defines neither. The main sections are 5 and 10. Starting with the latter:
(1) When commissioning health care services for the purposes of the NHS, a relevant body must not engage in anti-competitive behaviour which is against the interests of people who use health care services for the purposes of the NHS.
(2) An arrangement for the provision of health care services for the purposes of the NHS must not include any restrictions on competition that are not necessary for the attainment of intended outcomes which are beneficial for people who use such services.
Again, these mention competitive and anti-competitive behaviour and the interests of people (or the intended outcomes). The regulations do not define these, other than perhaps, that anti-competitive is the opposite of competitive. Reading this through, however, you get the impression that it is people using the services (ie patients) who are being hurt, and so would have a complaint. Therefore, you would assume that it would be patients who make the complaints. However,
(1) Monitor may investigate a complaint received by it that a relevant body has failed to comply with a requirement imposed by regulations 2 to 12, or by regulations 39, 42 or 43 of the 2012 Regulations (choice of health service provider).
(2) Monitor may on its own initiative investigate whether a relevant body has failed to comply with a requirement imposed by regulation 10.
(3) Monitor may not investigate a matter which is raised by a complaint under paragraph (1) where the person making the complaint has brought an action under the Public Contracts Regulations 2006 in relation to that matter.
The two significant things here are that subsection (3) says that the complainant must not have already complained under the Public Contracts Regulations 2006  this instinctively says that the complainant is not a patient, but a potential contractor. Further, subsection (1) says that an investigation does not even need a complainant, Monitor can roam willy-nilly around commissioning land poking its nose into commissioning to see if it is anti-competitive.

Again, these regulations do not define what the patients' interests are, but if the complainant is not a patient it is hard to see how they could successfully bring a complaint when the complaint is not about an action against their interests. It is also important to note that the regulations do not give any time limit, so a contract could be signed, and a provider could be delivering a service, and then another provider can complain. In such a case, Monitor has wide powers to re-tender or alter a the contract which is potentially disruptive and could easily be against the interests of the patients using the service!

Going back to section 5 of the regulations to see the only place where the full range of options are addressed:
(1) A relevant body may award a new contract for the provision of health care services for the purposes of the NHS to a single provider without advertising an intention to seek offers from providers in relation to that contract where the relevant body is satisfied that the services to which the contract relates are capable of being provided only by that provider.
(2) The services are to be determined as capable of being provided by a single provider only when—
(a) for technical reasons, or for reasons connected with the protection of exclusive rights, the contract may be awarded only to that provider; or
(b) (only if it is strictly necessary) for reasons of extreme urgency brought about by events unforeseeable by, and not attributable to, the relevant body, it is not possible to award the contract to another provider within the time available to the relevant body for securing the provision of the services.
This says that the only cases when competitive tendering can be avoided are for technical reasons (with no definition), for the protection of exclusive rights (protecting those all important patents), or in cases of extreme urgency. This does not seem like a full range of options, indeed, it is a very narrow range and this is the reason why most people say that these regulations indicate that every NHS service must be tendered through competitive tendering.

In response to the complaints about these regulations, Lord Howe, the Minister of State, says about regulation 5:
In practice this criterion will be broad in its application. For example, this may be the case where the requirement is for provision of acute hospital services accessible on single sites; a range of integrated services to be delivered in the community; or where clinical volumes need to be maintained to protect patient safety. It is also likely to be the case for the provision of services in more rural or remote areas of the country.
Well, if Lord Howe thinks that these very broad definitions are how regulation 5 should be used, why doesn't regulation 5 say this? On competitive markets, Lord Howe says:
Furthermore, the regulations would not oblige commissioners to create the conditions for new markets to develop where they consider this unnecessary. For example, commissioners would not be obliged to fragment services to enable providers to compete or stimulate market entry where this would not be in patients' interests.
Again, he uses the term patients' interests without defining what this means. Lord Howe makes a lot of assumptions here, because it is not him that will determine if there is a case to bear on anti-competitive behaviour, or that a provider is an exception. This decision is made by Monitor. The explanatory note says that both Monitor and the NHS Commissioning Board must issue guidance about how commissioners will be compliant with the regulations and that only the former must get the Secretary of State's approval of the guidance. There is a potential for conflicting advice.

These regulations are a mess, there is not enough information to be able to interpret them and the draconian powers of Monitor has made commissioners very wary. This has led to Dr Mike Dixon (the interim president of the official sounding, but purely self appointed club, NHS Clinical Commissioners) to say that the regulations will "force commissioners through expensive procurement" processes and that commissioner "may walk".

So What Next?

The government have withdrawn the regulations because they say that the wording has been misinterpreted. Norman Lamb, Minister of State, said in the Commons:
Concerns have been raised that commissioners would have to tender all services. This is not our intention. And we will amend the regulations.
Lamb is not saying that the regulations are wrong, just that everyone else has misinterpreted them. This means that the new regulations will be more of the same, just worded differently.

So what could the government do now to keep with their idea of a plurality of providers "in patients' interests" without scaring off commissioners? Here are some suggestions:

  1. Give a time limit. Ensure that a complaint against commissioners must be within a certain amount of time of the awarding of the tender: a month?
  2. Remove the power of Monitor to act as a roving investigator. It should act only upon complains, it should not have the power to initiate the complaint, investigate and adjudicate.
  3. Define "in patients' interests". Put the definition in the regulations. For example, the regulations could say that if more than (say) 25% of patients using a service were unhappy with the lack of choice, the contract is deemed not to be in patients' interests. Such a regulation could be powerful in removing poor providers.
  4. Provide in the regulations a full range of options for commissioners. For goodness sake, commissioning is hard, don't make it harder. If Lord Howe thinks rural hospitals should be exempt then make the exception in the regulations. Provide a comprehensive list: that is what full range of options means.
  5. Only allow patients, or an independent patient advocate, to make the complaint. The advocate should not be an organisation that will tender for the service. The advocate could be a charity, a patient group, a local council, or it could be local Healthwatch. This will make sure that in patients' interests means patients not providers.
  6. The regulations should say that if a complaint fails then the complainant should be liable for all the costs of the investigation: both the costs of Monitor and the legal costs of the commissioners. This would have the double benefit of making Monitor cost-neutral (deficit reduction in action) and it would deter speculative and spurious claims.

Without such assurances commissioners will most likely put most contracts out to tender. Commissioners are responsible with public money and hence will try to avoid legal costs. No commissioner can justify spending scarce funds on legal fees rather than healthcare. This will mean that CCGs will employ Section 75 Compliance Officers to ensure that every single contract will be compliant with the regulations. Inevitably, such compliance officers will be risk averse and will competitively tender all contracts unless they are absolutely clear there is no danger of a complaint.

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