5 March 2013

Letter to Earl Howe Regarding Section 75

RCGP Chair Dr Clare Gerada has sent a letter to Earl Howe regarding section 75 of the Health and Social Care Act procurement regulations currently before Parliament.

The letter sets out the RCGP's serious concerns that, in contradiction to assurances given by Ministers during the Act's passage through Parliament, the regulations will severely restrict CCGs' freedom to decide not to expose services to competition.

The letter and accompanying case studies are below.

Professor Clare Gerada MBE MOM FRCP FRCPsych FRCGP
Chair of Council

Rt Hon the Earl Howe
Department of Health
Richmond House
79 Whitehall
London
SW1A 2NS

Thursday 28th February 2013

Dear Earl Howe,

I wish to express the Royal College of General Practitioners’ concerns regarding the National Health Service (Procurement, Patient Choice and Competition) Regulations 2013, laid in Parliament last week.

These revolve in particular around regulation 5, which would seem to severely restrict the circumstances in which Clinical Commissioning Groups (CCGs) may decide not to expose services to competition, through either competitive tendering or the application of compulsory competition through use of any qualified provider (AQP) requirements.

On 27 January last year, you wrote to me:

“The Government’s stated intention is that regulations under Clause 73 [now Clause 75] would give commissioners a full spectrum of options in the procurement of clinical services. It would be for commissioners to decide how to use these tools… These regulations would not set a presumption, either way, that services should be open to competition, or not open to competition. This approach would give commissioners flexibility in determining how best to discharge their duties, working within a framework of rules to ensure transparency and value for money. The onus would be on commissioners to act transparently and to be able to be able to demonstrate the rationale for their decisions in terms of patient benefits. To emphasise, therefore, commissioners would decide if, when and how to use competition, as a means to an end, in improving services.”

These principles were reflected in the Government’s consultation Securing Best Value for patients published last August. According to this (in paragraph 1.9): “It will also be for commissioners to decide how best to secure and improve… services. Commissioners can use a range of tools, including managing providers’ performance, extending and varying contracts, widening choice of qualified provider, and tendering.” Similarly, in paragraph 2.22, it states: “We have made it clear that commissioners have the flexibility to decide whether, where and how to extend choice or use competition as a means of improving NHS services.” It was these, and other similar statements, which formed the context for the RCGP’s broad support for the approach set out in the consultation document to the detailed design issues concerning the new commissioning framework for CCGs.

We were therefore concerned to discover that, rather than upholding the above, the content of the regulations themselves appears to constrain the ability of CCGs not to utilise competition only in a specified set of circumstances. These are in cases of extreme urgency, and where technical reasons or reasons connected with the protection of exclusive rights, the contract may be awarded only to one provider. In our view, this effectively amounts to a presumption in favour of the application of competition.

The problem is compounded by the very narrow nature of the exclusions in the definition of a “new contract”, which could have the effect of rapidly requiring large swathes of the NHS to be exposed to competition. In order to attempt to gain clarification on this point, we last week sent a list of case study examples to your officials for their comments on how the regulations would apply. Please find these attached again for your information.

It is clear to us that, as they currently stand, the regulations will be interpreted by CCGs as requiring services to be put out to competition. This will have significant implications for local determination, stability of services and transaction costs (given that tendering is a very expensive undertaking).

As such, significant changes are required to the face of the regulations. I would accordingly urge you to withdraw the regulations in order to allow this to happen. I would also welcome the opportunity to meet with you to explore the concerns articulated in this letter and to discuss the Government’s intended response.

Yours sincerely,

Professor Clare Gerada MBE FRCP FRCGP FRCPsych
Chair of Council

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Case Studies – How will the proposed Health and Social Care Act regulations affect CCG autonomy?

Below are six hypothetical scenarios in which Clinical Commissioning Groups (CCGs) may find themselves in future. RCGP is concerned that under the National Health Service (Procurement, Patient Choice and Competition) Regulations 2013 currently laid in Parliament, the commissioners in these scenarios may find their freedom to decide not to expose services to competition is restricted.

All these examples are based on the premise that the　CCG has a well worked out market strategy and intervention time line agreed in open session by the　CCG Governing Body and the local Health and Wellbeing Board aligned to the Joint Strategic Needs Assessment (JSNA). Within the market strategy and five year financial model a　CCG has set aside a budget to support procurement but this has to come out of the CCG’s £25/head management costs.

These hypothetical scenarios are designed to test how much control the local　CCG with support from the Health and Wellbeing Board actually has to develop a locally integrated system or whether the regulations　inadvertently mean they find themselves forced to go to the market.

  • Case 1: The responsibility for commissioning community sexual health services moves to a Local Authority who decide to enter into a joint commissioning arrangement with the CCG. The five year contract has come to an end but the CCG and Local Authority feel happy with the current service with high patient satisfaction, good integration with other services, outcome targets for reducing sexual transmitted infections met, improving reductions in teenage pregnancy and improved Chlamydia screening within a reduced budget. Both the CCG and Local Authority feel that AQP is not appropriate and the risk of fragmentation and expense of a full retender is greater than continuation with the existing provider. They decide to extend the contract. This view is supported by the local Health Watch. Would they, despite the circumstances, be forced by the regulations to go to market or could they proceed as planned?
  • Case 2: The CCG agrees a very new specification with improved access times and educational feedback for diagnostic (radiology) services within their acute trust. This is within the Payment by Results tariff with agreement to unbundle tariffs and will be managed as a separate sub contract with the provider trust but still within the main "shell" contract for governance purposes. Diagnostics is not on the time line for an intervention decision for another five years. The CCG has analysed the wider diagnostic market but feels the local agreement already give significant added value. Would the CCG be forced by the regulations to go to AQP or tender in the open market?
  • Case 3: The CCG is commissioning community nursing within a block contract. This service has changed out of all recognition with the development of risk stratification and personalisation. Community nursing is well integrated with the practices, social services and other specialist community services. The CCG and Local Authority, practices and local acute providers feel the system risk of a new provider is too great and decide to continue with the current contract without going to market at this stage. Would this be challenged within the regulations?
  • Case 4: A CCG is commissioning an INR (anti-coagulation) locally enhanced service from its local practices. The CCG's view is the lower cost and direct link to dosage and clinical responsibility means the GP practices continue to be the provider of choice by virtue of the registered list. This view has been tested independently to avoid Conflict of Interest and subsequently agreed by the Health and Wellbeing Board. The CCG plans therefore not to put this out to market but continue with current arrangement of contracting with the local practices. Would this be challenged under the regulations?
  • Case 5: A PCT went out to market three years ago for a community dermatology service. The procurement costs were high but in the end a new provider was chosen and is now well integrated with local practices leading to lower costs, educational sessions with primary care and good effective links with third sector organisations. The contract is due to come to an end but the CCG feels that as the service is working well, the cost of completely new tender would be high and have decided after analysing the market, they would prefer to stay with the current provider. This view is supported by the Health and Wellbeing board. Would the regulations force the CCG to go out to market?
  • Case 6: A large practice working on the boundary of a CCG decides to move from one CCG to another by mutual agreement when it is found that the majority of its patients have shifted over time. This means activity numbers and revenue in the schedules need to change by virtue of a change in CCG population size by 5%. Would this have any impact on the need to go to market?

Further Information

RCGP Press office - 020 3188 7574/7575/7576
Out of hours: 0203 188 7659
press@rcgp.org.uk

Notes

The Royal College of General Practitioners is a network of more than 46,000 family doctors working to improve care for patients. We work to encourage and maintain the highest standards of general medical practice and act as the voice of GPs on education, training, research and clinical standards.