NHS “Procurement” & non-price competition – cashbacks and champagne?

Various bits of public sector news last week got lost somewhat in the avalanche of hacking stories. One of the most significant, and with a procurement angle, was the NHS announcement about introducing competition in a number of health areas.  The principle of “any willing provider”  will apply, so that any provider who passes a quality threshold will be able to offer services to the public in these particular areas.

Every health commissioner (PCTs and / or GP groups) will have to choose 3 service areas to implement by 2012.  They can choose from a list of 8; although there is a get-out clause that they could propose a different area if it meets local needs better. As the Guardian reported:

In the first wave, beginning in April, eight NHS areas – including musculoskeletal services for back pain, adult hearing services in the community, wheelchair services for children, and primary care psychological therapies for adults – will be open for "competition on quality not price".

So one assumes that there  is going to be a flurry of activity later this year, as a large number of pseudo-procurement processes kick-off.  I say “pseudo” because there is no price competition; and no firm contracts or guaranteed volumes. The competitive element will be purely on quality, and the providers will then have to market themselves to GPs and potential patients I assume.

I can fully understand the political reluctance to introduce price competition, But that decision would seem to merely introduce a different problem.

Take the example given by the Department of Health in their briefing to the Guardian.

There were also major savings that could be made, the department (of Health) said. It cited the example of chronic leg wounds, where the NHS pays out £18,000 per patient over four years, often without curing them. One not-for-profit company – Wound Healing Centre in Sussex – treats patients successfully for £720.

Great! But hang on, we’re not going to have price competition.  So presumably the standard tariff for leg wound treatment is going to be based on the NHS norm – which is presumably based on the £14,000.  So won’t the charity be making HUGE profits on every treatment they do? And is it really an equivalent treatment?

And could the Wound Healing Centre offer a “cashback” deal to patients, given the huge margin, to drive revenue?

“Choose us and we’ll give you £1,000 cheque?”  Free caviar and champagne while you’re being treated? Or – even worse – kickbacks or freebies for GPs, in return for encouraging patients in their direction? (Not suggesting for a moment that this particular organisation would do this, but you can see the dangers).

If this is indeed how the process will work, then I can’t see it taking long for the media to pick up on the “huge profits being made out of the NHS”, if the tariffs are fixed.  But this seems so obvious, I can’t help thinking we’re missing something here? Anyone from the health sector reading this, please comment if we’ve got this wrong!

But if this is how it is going to work, we can guarantee that the policy will be one of the key campaigning points at the 2015 general election – you read it here first.

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