Follow up on health procurement news including HPC legal fight

After our two recent posts around the NHS SBS acquisition of the NWCCA (see here and here if you want translation of the acronyms...) we had some very interesting comments. And one directed us to last week's legal judgement on the issues around the Healthcare Purchasing Consortium (HPC) teaming up with HCA International (a US healthcare buying specialist).

HPC started life as the West Midlands health procurement 'hub' just as the NWCCA was the North West equivalent. The health Trusts (in Coventry and Warwickshire) that 'own' HPC are trying to get a private sector firm to take over responsibility for HPC. But they have run into legal problems, with Exel Europe (part of DHL) challenging the procurement process that led to HCA winning the tender - claiming that the winning bidder was given preferential treatment in the competitive process.  DHL wanted no contract award to be made until the full case was heard but last week the judge decided that the Trusts could press on with the contract with HCA and did not have to wait.

This was presented in some quarters as a victory for the Trusts (as Supply Management put it – “Judge rules in favour of health trust in contract dispute”).  But looking at his statement in detail we would question that interpretation. A pyrrhic victory, we feel.

Sure, he lifted the block on the deal progressing; the transfer of HPC to HCA can go ahead, but he has left the Trusts with a dilemma. He dismissed several of Exel’s complaints, but said that there was “a serious issue to be tried” in relation to complaints about the Trusts’ discussions with HCA early in the process prior to formal tender, and whether such discussion were unfair on other bidders.  But the judge felt that damages would be a suitable compensation for Exel if they won the full case (rather than halting the contract award to HCA) – and such damages could be quite substantial. So we suspect there are some serious discussions going on in the Trusts around what to do next.

We'll look at the EU legal implications of the judge's comments in a separate post as they are of interest well beyond healthcare. In terms of wider health sector procurement, and assuming some eventual move of HPC into a more private sector 'home', it does point to further consolidation in the procurement services space following the SBS / NWCCA developments. Rob also pointed out in his comments on the previous post that SBS are constrained by EU rules in terms of how easily customers can sign up to them, so HCA could be one of a number of competitors if clients have to go to market for such services.

But we would be very surprised if there was room for more than a handful of serious players in this market, so other health 'hubs' must be looking hard at their strategies.  And the HPC development throws more focus on how DHL might respond (other than with legal action), and what role if any Buying Solutions may wish to play in the health procurement sector.

Interesting times!

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