The NHS Commissioning Revolution – And Why It Might Fail (Part 3)

In part 1 and part 2 we looked at the way the NHS is trying to move from a commissioning model for service provision to a “planned economy” approach with a per head fee going to regional ACOs (accountable care organisations) who then decide how to spend that through a range of other health organisations.

We also explained why the first major procurement to appoint an ACO in Manchester goes against public procurement good practice in many ways. Given our concern about that, we asked an FOI (freedom of information) question to NHS England. Here is our question in summary:

“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.

This process seems to display many facets that are directly in contradiction to “best practice” procurement and commissioning thinking as previously defined by Cabinet Office, National Audit Office and the Department of Health itself. Indeed, Dr Albert Sanchez-Graells, a notable procurement lawyer and academic, has suggested the procurement may even be “illegal”.

The specification for this procurement has clearly been developed to make it impossible for all but a very small number of organisations to bid; there was limited “early market engagement”; the requirements were aggregated rather than dis-aggregated to make it impossible for SMEs to bid,  and so on. The end result not surprisingly is that only one bid has been received, which in most public procurement exercises would be seen as an abject failure. So please can you tell me:

  1. What support you have provided to the commissioners – is anyone from NHSE involved with or working on this programme?
  2. What procurement or legal advice NHSE has provided to the commissioners about the strategy they are pursuing? (Please provide a copy of any relevant documentation).
  3. Whether you are satisfied with this procurement to date and feel that it is in line with your own good practice thinking and advice?”

And here is a summary of the response – I have included most of it as I know some readers will be interested! In summary, the centre (eg. NHSE) carries out some assurance, but does not comment on whether the local body is breaking the law (which seems extraordinary), leaves decision making to the local bodies) and does not look for instance at the detail of legal procurement guidance that has been provided – it will only ask “did you get guidance”? So this is very much passing the buck back to the Manchester commissioners, if you want to be a little cynical.  But we should thank NHSE anyway for a prompt and helpful response to our questions – here it is.

“In regard to Question 1: The Greater Manchester Health & Social Care Partnership (GMHSCP), NHS England and NHS Improvement are supporting commissioners and providers to develop new models of care and to identify, understand and manage the risks in developing such contracts  for  local care organisations (LCO’s). The Integrated Support and Assurance Process (ISAP) provides a co-ordinated approach to reviewing the procurement and transactions related to complex contracts.

The ISAP has two purposes: to support the work of local commissioners and providers in creating successful and safe schemes, and to provide a means of assurance that this has happened …

The ISAP has a series of 3 checkpoints, which GMHSCP, NHS England and NHS Improvement use to support the commissioner and provider(s) to identify, understand and mitigate as far as possible the risks of a complex contract. ISAP’s objectives are to:

  • Ensure the proposals represent a good solution in the interests of patients and the public;
  • Take a system view of the potential consequences of the contract award;
  • Enable the risks of the complex contract to be identified, understood and mitigated as far as possible; and
  • Improve efficiency and reduce duplication in the work of NHS England and NHS Improvement, increasing the speed of the national assurance for complex contracts.

Early Engagement (EE) begins while a commissioner is developing a strategy that involves commissioning a complex contract and typically before a formal market engagement exercise. The aim of EE is:

  • To determine if the ISAP applies;
  • For NHS England and NHS Improvement to understand from the commissioner what the proposed new contractual arrangements are and what the new service model will broadly look like;
  • To understand the commissioner’s procurement timetable;
  • To agree a draft timetable for the ISAP checkpoints; and
  • To confirm what sources of evidence and supporting documentation will be required from the commissioner

Checkpoint 1 (CP1) takes place just before formal competitive procurement or other selection process begins. The key considerations for Checkpoint 1 are:

  • To establish whether the proposal represents a good strategic solution for the local economy; and
  • To determine if the necessary preparatory work has been completed for the proposed procurement.

To navigate through the checkpoint stages the ISAP will consider 7 Key Lines of Enquiry (KLOEs) … KLOEs are structured as questions that will establish the risk profile and other parameters of the complex contract at each checkpoint.

In regard to Question 2: The KLOEs at each checkpoint will assess the commissioner’s and (where relevant) the provider’s identification, understanding and mitigation, as far as possible, of the risks during each phase of the procurement lifecycle. They are designed mainly to provide a self-assurance checklist. Each checkpoint is therefore focused on working with commissioners to ensure they have completed their self-assurance to a satisfactory standard and not overlooked critical issues. For example, the ISAP panel will ask whether commissioners sought legal advice on specific topics and adjusted their approach accordingly. The ISAP panel will not review or quality-assure the legal advice, but will seek assurance it has been followed.

A green rating (outcome from the checkpoint) should not be taken as confirmation from the GMHSCP, NHS England or NHS Improvement that the commissioner(s) and provider(s) have complied with all their relevant legal obligations, or that there are no risks, legal or otherwise, associated with the procurement, contract award or service delivery. Commissioners and providers are responsible for ensuring their actions are lawful and that they have satisfied their statutory and other legal obligations.

NHS Improvement will not reach a view about a commissioner’s compliance with the Procurement, Patient Choice and Competition Regulations 10 or the Public Contracts Regulations 11 as part of the ISAP. Therefore, a green rating should not be taken as NHS Improvement certifying that the procurement complies with those regulations or that the process will not be the subject of a referral to NHS Improvement under those regulations. The parties will, at all stages, need to take their own legal advice as regards compliance with the Procurement, Patient Choice and Competition Regulations and the Public Contracts Regulations 2015.

The decision about whether to procure and award a contract, and then to allow service delivery to begin, must be one for local commissioners, and the ISAP will not transfer this decision to the national bodies. However, the view of the national bodies should be a key consideration for local commissioners. NHS England will expect commissioners to carry out any extra activities indicated in the checkpoint outcome before they move onto the next stage.

In regard to Question 3: During the course of the procurement Manchester City CCG has developed an approach to contracting the LCO in line with the relevant law (PCR 2015 and the NHS Regulations 2013).

Professional procurement and legal advisors have been engaged by local commissioners to ensure the process was legally compliant and also effective in awarding a contract for the LCO to the most capable bidder.

In addition, as described above, local commissioners have followed the national ISAP guidance and engaged in the joint assurance process to mitigate the risks associated with such complex procurements.

To date the City of Manchester CCG’s procurement has progressed through Early Engagement stage and Checkpoint 1. As such it is still ‘live’ in the procurement and ISAP process and therefore will continue to engage with local and national partners until a definitive outcome is known”.

So, to any of our expert NHS readers, what do you make of that?

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Voices (6)

  1. Mark Lainchbury:

    Must read NHS parody from the excellent Julian Patterson

  2. Mark Lainchbury:

    I may have missed something, but isn’t an ACO just the wallet holder & once in place, be expected to start contracting (out) the area’s various health services ?

    1. Peter Smith:

      but then the ACO is just the “commissioner”, the CCG with another name! I think the idea is that the ACO determines priorities, allocates money and gets organizations to work in a more collaborative manner – but like you I am unsure how they do this – if they have to run competitive processes for all the work then we’re back where we started.

  3. Trevor Black:

    They could save a few million and save face by going back to the drawing board! But we all know they won’t.

  4. Charlie Middleton:

    A fascinating story and an(other) indication of how useless the public sector is in applying decent procurement principles, and how they are mainly just interested in getting a tick in the box on procurement regulations.

    I am not an expert in NHS Procurement but have studied the response from NHS England to your FOI request. Their core message is that whilst they (and GMHSCP and NHSI) have some involvement, they are washing their hands of this if it all turns out to be illegal, and passing the buck 100% to the “commissioners”.

    They operate the ISAP (which appears to exist mainly to give the impression that there is a proper process here) which gives some degree of review of what is happening, but avoiding responsibility. To pass CP1 they supposedly have reached the conclusion that the proposed approach is a good strategic solution and that the necessary prep work has been completed for the procurement. It is difficult to see how they could have reached this conclusion with zero market engagement and zero consideration on whether a single £6bn 10 year contract is the best approach. Clearly the necessary prep work had not been done as they have decided (after issuing the PIN) that the contract is going to be held by an acute trust which was not named as any of the contracting authorities on the PIN (which may well render the PIN or the plan for the acute trust to award the contract invalid). As this appears to be done purely to facilitate some VAT “arrangement”, I wonder whether HMRC will look into it?

    However, NHSE don’t have to worry because even if they give a green light at CP1 in the ISAP, answer 2 says that means nothing in practice – it does not mean they endorse the approach, say it is in compliance with the regulations or best practice, it just says that someone has put a tick in the ISAP box.

    I don’t know whether the approach being adopted in Manchester is a good idea or not, but that is not up to me to decide. It should, however, be up to NHSE to take more responsibility to make sure that the right approach is adopted to deliver service excellence and value for money for that area. It seems, sadly, that they are prepared just to let the “commissioners” get on with it and wash their hands of all culpability if (or when) it all goes pear shaped.

  5. Mr Grumpy:

    Crikey! I amazed that even got procured with all those checkpoints. I’d be interested to know what the 7 KLOE’s were. I am even more amazed it was challenged from the PPCCR’s 2013 which offers more ammunition to existing and would be providers.

    In response to the second question you received they more or less covered themselves accountability with the immortal line: “A green rating (outcome from the checkpoint) should not be taken as confirmation from the GMHSCP, NHS England or NHS Improvement that the commissioner(s) and provider(s) have complied with all their relevant legal obligations, or that there are no risks, legal or otherwise, associated with the procurement, contract award or service delivery. Commissioners and providers are responsible for ensuring their actions are lawful and that they have satisfied their statutory and other legal obligations.”

    Commissioners are not procurement experts and most if not all have no permanent procurement function that works closely with the Commissioners. EBI is always a critical part of any procurement exercise and in some cases is not present in these exercises. Commissioners are always pressed for tight deadlines and often can fast track decisions or scopes and can overlook some key risks or considerations to delivery of the project.

    I watch with baited breath whether this contract will see out to the end!

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