Party Conference Procurement Edition – part 2: Health

In part 2 of our review of the major UK Government policy issues and the procurement implications, we'll take a quick skate through Health.

The health sector reforms proposed by the Coalition are far reaching in all sorts of ways, and throw up many interesting commercial and procurement issues.   And I'll start with a contentious prediction; a health  "procurement strategy" issue will play a major role in determining the result of the next election....

GP Commissioning, which is at heart a procurement issue, is perhaps the most dramatic of the new policies announced to date. And so far it is not clear how it will work in terms of some pretty fundamental issues.  How many commissioning units (buying points in effect) will there be?  What procurement routes will they need to take - where will full market competition be required?  How do EU rules apply to their activities?  How will conflicts of interest be avoided where GPs wish to deliver services but are also the purchaser?  How will GPs manage providers, manage demand, and manage limited budgets?

GP Commissioning and the move for all hospitals to become Foundation Trusts will also impact on that secondary care sector.    What happens if GPs decide to remove business from the local hospital and it becomes uneconomic? Will a landscape of Foundation Trust hospitals acting independently lead to better services or unfettered competition?  Will some of the positive procurement collaboration between hospitals fade if they are forced to act more competitively?

The role of the private sector seems very unclear as well.  The idea that patients can choose 'any willing provider' who meets quality standards is fine in theory, but that means presumably no contractual certainty for those providers -  surely firms aren't going to build or equip a major treatment centre 'on spec' in the hope they can attract patients?  And how do GPs commission anyway if they have no idea on volume for many suppliers?

Capability is a further concern.  GPs don't have the full range of skills, so will commissioners from PCTs end up in the new GP groups?  Or will it be boom time for consultants or health insurers?  Procurement staff in PCTs face considerable uncertainty; those in hospitals probably have a clearer future as focus on better procurement and value is only likely to increase.  What will happen to the collaborative bodies is less certain but those that work effectively should survive.

On the supply side, I suspect the private health providers are in 'wait and see' mode in terms of how much real scope there will be for them in the new landscape.  At the moment, there is no evident 'market shaping' work going on at Department of Health level, although I suspect (and ope) that someone is considering these issues.

Consulting firms and health insurers are looking at GP Commissioning as a huge potential area for business.  Equally, I would suggest providers of sourcing, contract management and related software should be thinking about how they can best support GP groups .  But so far the additional money available to GPs to carry out all the new activities looks limited, so there will be constraints on what they can afford.

So, all in all, a very foggy outlook for procurement in the sector.  Commercial issues will be critical, with GP Commissioning and the role of private providers central to the emerging Health system.  But the proposed changes were not laid out in party manifestos or even in the first coalition document post election, and the uncertainty on many issues seems to reflect the apparent haste in which these plans were announced.  The lack of clarity on many of the fundamental commercial issues follows.

Hence, in the immortal words of Johnny Nash, there are more questions than answers.  My purely personal view is that if these changes are introduced hastily, there is a high probability of major problems, or even scandals, in areas such as GP Commissioning (hence my initial 'contentious' remark).  By 2015, the success or otherwise of the commercial market re-structuring, and the state of the NHS, will be back at the top of the (next) election agenda.

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