1. What are the Section 75 regulations?
Section 75 regulations cover procurement, patient choice and competition as part of the Health and Social Care Act reforms, and set the legal framework for NHS competition.
The government redrafted the regulations following extensive criticism that they would expose all NHS services to private sector competition. The revisions to Section 75 contained an opt-out clause for CCGs if using competition would be harmful to integration of services, but retained the controversial clause that CCGs have to prove that only a single provider can run a service or they must put out to tender. However, NHS England's guidance to commissioners, issued in May 2013, did not contain the promised government opt-out clause to preserve the integration of services.
2. Guidance issued regarding Section 75
In May 2013, the regulatory body Monitor issued draft guidance suggesting that CCGs would not be forced to put services out to tender, even when there is more than one potential provider. Summarised in a Pulse Today article, the guidance suggested that CCGs can carry out a review of provision of a particular service and identify the most capable providers as part of that review, negating the need to put the services out to tender. CCGs are also expected to weigh up competition and patient choice with service integration when procuring services.
The guidance presents three exemptions to competitive tendering: where there is only one provider capable of providing the service; where a detailed review of the service provision in the region identifies the most capable provider or providers of those services; and where the benefits of competitive tendering would be outweighed by the costs of publishing a contract notice and/or running a competitive tender process.
However, Monitor's guidance contradicted guidelines issued by NHS England, also in May 2013, which made no mention of opt-outs of tendering for the purposes of promoting integration. The NHS England guidance states that to award contracts without a competitive process, CCGs must be satisfied there is only one provider that is capable of providing the services. Cited in a Pulse Today article, the guidance says that: 'These procurement requirements do not mean that CCGs must always follow a competitive procurement process when awarding commissioning contracts. ‘CCGs can award contracts without a competitive process if they are satisfied that there is only one provider capable of providing those services. CCGs must consider each commissioning decision on the facts and justify/record their decisions accordingly.’
3. Investigations into Section 75 Regulations
a. June 2013: Monitor investigation into potential breaches of conduct and procurement practices
In June 2013, Monitor launched its first investigation into the competition rules following a complaint by BMI Healthcare about purchasing decisions taken by NHS England in relation to one of its clinics in Sheffield providing specialised Gamma Knife radiosurgery services. This is the first test of the Section 75 regulations and is looking into potential breaches of conduct and procurement practices both before and after 1 April 2013, when the procurement and competition regulations were amended.
An Independent article explains that Thornbury Radiosurgery Centre in Sheffield, owned by BMI Healthcare jointly with Medical Equipment Solutions, alleged that it had been discriminated against by NHS England and by its predecessor body, the North of England Specialised Commissioning Group in Yorkshire and Humber. In a statement to Supply Management, BMI Healthcare explained the complaint was lodged over concerns that the procurement process had placed patient care in jeopardy. A spokesman for the company said: “Thornbury Radiosurgery Centre made the complaint because we believe that patient care and choice has been compromised by purchasing decision taken by NHS England and its predecessor body North of England Specialised Commissioning Group in Yorkshire and Humber."
An article in October 2013 on Health Commissioning Portal provides an update into the investigation, including Monitor's statement of issues. Monitor stated that it will focus on whether NHS England complied with the Regulations, rather than looking at the actions of the North of England Specialised Commissioning Group under the previous Principles and Rules for Co-operation and Competition. NHS England took over responsibility for commissioning these services from 1 April 2013.
The statement of issues explains that Thornbury Radiosurgery Centre has been a designated treatment centre since 2011, but NHS England declined to enter into an NHS Standard contract with Thornbury for Gamma Knife radiosurgery services. It also asked Thornbury to stop accepting direct referrals on the basis that Thornbury does not comply with its requirements relating to multi-disciplinary teams. Monitor is reported to consider that the case raises a number of potential issues around the compliance by NHS England but stresses no conclusions have been reached.
In response, NHS England raised issues regarding the application of the Regulations to commissioning specialised services, pointing out that whilst specialised services are different from routine, non-specialised services procured from general acute providers, the Regulations do not make a distinction
b. October 2013: First CCGs under investigation for breach of competition regulations
According to an article in Pulse Today, two CCGs are faced with a Monitor investigation over breaches of competition rules after being accused of directing patients away from the local private hospital. Monitor is investigating whether patients were disadvantaged by the way non-emergency hospital services were purchased by Blackpool CCG and Fylde and Wyre CCG in Lancashire. The investigation follows allegations made by Spire Healthcare Limited that the CCGs had asked GPs to direct patients away from SpireFyldeCoastHospital and towards BlackpoolVictoriaHospital. GP commissioners at the CCGs have strongly refuted the allegations. Monitor confirmed to Pulse that this was the first time a CCG was under investigation for potential breach of competition regulations since the Health and Social Care Act was implemented on 1 April. The regulator said: ‘Monitor will examine arrangements made by these two CCGs to purchase planned care and to offer patients choice. Monitor will consider whether these arrangements were consistent with the NHS competition rules which came into force in April 2013.’
4. Impact of Section 75 Regulations on tendering
According to a Pulse Today article, CCGs have placed three quarters of all new contracts out to competition since taking over in April, potentially opening up huge swathes of the health service to take-over by the private sector. Figures obtained by Pulse under the Freedom of Information Act, revealed that of 65 contracts offered by 63 CCGs since April, 41 (63%) were put to full competitive tender, 6 ( 9%) out to Any Qualified Provider, and 18 (28%) were offered to service providers without being put out to competition. However, few of these were directly healthcare related, and included contracts such as archiving and records management, training projects and estates management.
In the article, Dr Richard Vautrey, deputy chair of the GPC, said that GP commissioners were worried about not falling foul of competition law and being challenged by large corporations over their decisions. He said: ‘I think CCGs are worried about competition law and are very anxious not to fall foul of that, which may well be driving that particular pattern of behavior. It would be helpful to know how much the tendering process is actually costing and whether CCGs are getting value for money, and whether they end up with a fragmented service rather than the joined-up service and integrated model, which is what the Government favours.’