Health Services “Competition” in Manchester – Dr Sanchez-Graells Comments

Dr Albert Sanchez-Graells is a procurement lawyer and academic at Bristol University (and has just been promoted to Reader – well deserved and congratulations to him).

With his friend Pedro Telles he will be known to regular readers for his commentary on public procurement legislation, and recently he has been writing about the situation in the NHS in terms of the clinical commissioning environment including Brexit issues. So his focus has not been procurement within hospitals, but how clinical commissioning groups buy medical services from hospitals.

In a recent article, he summed up very well some concerns around an issue that has been troubling us for a while too. The rules for competition between health providers were largely defined in the Health and Social Care Act of 2012, the “Lansley reforms” as we might call them, named after the then health minister. They defined the purchase and provider split, with CCGs the buyers of care and hospitals or other public health bodies as well as private providers competing to win that work.

The general consensus now is that these changes have proved pretty disastrous. They make long term planning of health provision difficult, and some hospitals have lost profitable work but are left with the activities that no-one else wants to do. We have also seen some high profile contract failures – from both private providers (Circle at Hinchingbrooke) and public providers (the UnitingCare contract in Cambridge).

Anyway, the introduction of STPs (sustainability and transformation partnerships) between the NHS and local councils in 44 areas is a move back towards more of a “planned economy” for healthcare, designed (in theory at least) around the needs of the local population. Sounds great – but there are some issues with this, as we will see. One potential problem is that the legislation around the “NHS internal market” and competition are still in place, yet that does not stack up well with the STP’s aim to plan provision rather than using the market to determine suppliers and supply options.

So back to Sanchez-Graells, who in this article, looks at recent events in Manchester.  As part of the implementation of a sustainability and transformation plan (STP), Manchester authorities responsible for health and social care (including three CCGs, and the City Council) tendered a contract for the creation of a ‘Local Care Organisation’ (LCO) for a range of out of hospital health and care services for Manchester.

Basically, his view is that this tender was and is a “stitch-up” (our words not his), designed to adhere to the regulations whilst providing the result that was clearly desired by the commissioners.

For a start, it is huge in its scope. As Sanchez-Graells describes it is, “a contract for the provision of virtually all health and social care services with the exception of in-hospital services. The tendered contract was for a duration of 10 years and an estimated value of £5.9 billion, and was designed as a single block, thus excluding the possibility of awarding it by lots. This was the biggest ever NHS tender at the time of being launched, but other similar contracts are already being sought by local NHS commissioners”.

Clearly, the number of respondents who could credibly bid for this is very limited. The contract was advertised on March 14th, with expressions of interest required by April 28th.  There was no attempt at market making – indeed, the tender notice also explicitly indicated that the "contract will be awarded without further advertisement of this opportunity and there will be no further opportunity to express interest".  So that time pressure and lack of openness was designed it would seem to discourage bidders.

Except for the one bidder who did reply of course! That bid has been submitted by "the Manchester Provider Board, which is a consortium made up of Manchester City Council, local GP federations, the city's three acute trusts [ie hospitals], community service providers and the Greater Manchester Mental Health Trust".

Sanchez-Graells suggests two reasons why this less than competitive outcome was achieved. Firstly, the requirement was so broad that it needs pretty much every public health organisation to collaborate to deliver it. And secondly, he speculates that the “entities participating in the design of the Manchester STP had, at least, a clear time advantage to prepare their tender (if not also information not available to other potentially interested tenderers)”.

Yes, it is a stitch up, a pre-arranged result to the “tender” which was “never intended to create real competition, and is simply a formal step aimed at creating an appearance of legality of this strategy aimed at side-stepping the (NHS) market” as Sanchez-Graells describes it.

But does this matter? In part 2 we will look at why Sanchez-Graells thinks it does, and add some of our own thoughts about what is going on here and the potential risks. And do read his article here in the meantime.

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