Private providers cry foul over NHS contracts ‘stitch up’

The Financial Times on Monday (behind the firewall unfortunately although you get a few free articles per month if you register) reported that private sector suppliers of health services are becoming angry at the lack of opportunities to bid for work.

As the purchaser and provider arms of the Primary Care Trusts (PCTs) are being separated in preparation for the move to GP Commissioning, the firms expected that they would have the opportunity to bid for services previously provided by the PCTs; for instance, community health services.

The NHS Partners Network, which represents these private providers, has complained that only 4% of the 'provider arms' are being put out to tender; 86% are being given to other NHS bodies (in some cases after competition between those public organisations) or converted into Foundation Trusts; and 10% are being handed over to staff to run as mutuals or social enterprises without any competition.

This brings together two themes that are likely in our opinion to bring the Government significant problems ahead. We've commented before on issues around GP Commissioning, and while these firms are complaining about contracts awarded by PCTs rather than GP groups, there is a link in that there is a lack of clarity around the 'rules' for awarding contracts in the health system.  When must contracts be openly competed and when can provision be restricted to 'public' bodies?  That is likely to cause more problems under GP Commissioning if it is not resolved.

Secondly, how 'mutuals' and social enterprises made up of ex-public servants are treated under EU procurement rules is a largely unexplored issue.  I’m writing a piece on this for a magazine, and the limited research done already suggested to me that some ‘mutuals’ have already been awarded contracts without competition. In my opinion this may well be on dodgy ground in terms of both EU regulations and even the basic need for the public sector to show steps have been taken to achieve best value for money.

That makes it seem surprising that the response from Department of Health to this particular complaint has been so negative.  In refusing to refer the complaint to the Co-operation and  Competition Panel, (which was set up arguably to handle exactly this sort of issue), the DH appears to be daring the suppliers to mount a full legal challenge, which seems to be the only way they can take this further.  I assume the DH officials have taken Minister's instructions on this hard-line response; so yet another 'brave decision' by Andrew Lansley!

And if I had to place my bets; it may be legitimate to award contracts to other purely public bodies, but competition between such bodies would seem to be sensible.  But giving work previously done in-house to newly created social enterprises directly without competition... I doubt whether that will stand up to challenge if the new bodies are considered to be operating in the private sector.

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