COSTS OF COMPETITION/TENDERING

Trust warns of ‘significant’ quality and safety risks if private provider keeps contract (HSJ: 7 March 2016)

The loss of a £126m contract to another provider could cause multiple staffing and patient care issues, a trust has said.

An impact assessment prepared by Kent Community Health Foundation Trust said if it lost the work in north Kent there would be a “significant risk in terms of either financial, reputational, safety or quality of patient care”.

The document was released to HSJ under the Freedom of Information Act and drawn up by the trust in November.  

The trust lost the contract in January to a bid from Virgin Care and last month lodged a challenge against the procurement process with the High Court.

The seven year contract was awarded to Virgin by Dartford, Gravesham and Swanley Clinical Commissioning Group and Swale CCG...read more

 

Loser of £126m tender challenges commissioners (HSJ: 4 February 2016)

One of the losers in a £126m community services tender has written to commissioners to query their methodology. Kent Community Health Foundation Trust submitted a bid for the services last year but was beaten by Virgin Care.

The seven year contract was tendered by Swale and Dartford, Gravesham and Swanley clinical commissioning groups last year and announced last month.

[...]

Kent Community Health’s acting chief executive, Lesley Strong, told HSJ her organisation was “asking for clarification on a number of issues including how they evaluated Virgin’s mobilisation plan, which is a critical element of the tender scoring”.

Both the community trust and the commissioners said no formal objection or legal challenge had been mounted against the process.

A report to the trust’s board of governors from finance director Gordon Flack said it had scored higher than Virgin in the quality assessment. It added that the CCG assessment “took no account” of the loss of economies of scale, redundancy costs of staff that do not transfer to Virgin and the cost of retraining staff in new IT systems...read more

 

Landmark £800m outcomes based contract collapses after eight months (HSJ: 3 December 2015)

One of the biggest contracts ever put out to tender by the NHS has collapsed just eight months after going live, after commissioners and the provider consortium agreed it was not “financially sustainable”.

It has been announced today that UnitingCare Partnership has handed an £800m, five-year contract to provide older people’s care for Cambridgeshire and Peterborough back to Cambridgeshire and Peterborough Clinical Commissioning Group.

UnitingCare began running the services at the beginning of April this year.

The company is a limited liability partnership established by Cambridgeshire and Peterborough Foundation Trust, and Cambridge University Hospitals FT.

The deal is one of the largest ever tendered by NHS commissioners, and has also attracted attention for being an early, highly ambitious example of “outcome based contracting”, in which an element of payment depends on achieving agreed clinical outcomes.

A joint statement issued by Cambridgeshire and Peterborough CCG and UnitingCare today said: “Patients and frontline staff will see services remain despite a contractual arrangement between Cambridgeshire and Peterborough Clinical Commissioning Group and UnitingCare Partnership LLP ending.

“Unfortunately both parties have concluded that the current arrangement is no longer financially sustainable.

“We are clear that the innovative model of care for older people and people with long term conditions brings benefits for patients and the whole health and care system and we are all agreed that we wish to keep this model of integrated service delivery.

“The CCG will be working with providers of services in the coming days to ensure that there is a smooth transition for all concerned.”

HSJ revealed last year that the contract cost Cambridgeshire and Peterborough CCG over £1m to set up.

During the design and tender process the CCG had been advised by the NHS Strategic Projects Team – the unit which oversaw private provider Circle being brought in to run Hinchingbrooke Health Care Trust, as well as the abandoned procurements for George Eliot Hospital and Weston Area Health Trust.

The Strategic Projects Team is currently advising commissioners in South Warwickshire on a tender for community services.

The CCG was also supported by the COBIC consultancy, which has advised other CCGs seeking to bring in outcomes based contracts, including in Oxfordshire, Bedfordshire and Croydon.

A number of private providers, including Capita and Circle, initially expressed an interest in the Cambridgeshire and Peterborough tender but withdrew during the process because of the steep financial efficiencies required by the contract.

 

NHS competition could waste millions says Labour, after Care UK complains (The Guardian: 23 August 2015)

Labour has warned that the NHS could be forced to spend millions on competition lawyers after the UK’s biggest private healthcare provider demanded an immediate investigation into a decision to award an elective care contract to a local health trust.

Care UK has been branded a bad loser after lodging a complaint with the NHS watchdog Monitor over the management of a contract by commissioners in north London.

Monitor has now begun an investigation into the decision by four GP-led clinical commissioning groups (CCGs) to award a contract to the Barking, Havering and Redbridge University Hospitals NHS Trust. The trust said it was extremely disappointed by the investigation and warned that it would delay the opening of a care centre....read more

 

Number of area teams 'to be halved' under draft plans to cut costs (Pulse: 12 September 2014)

NHS England is proposing to cut the number of area teams by merging them into ‘much bigger’ structures, prompting fears the move could cause ‘inevitable chaos’ for GP practices, Pulse can reveal.

The mergers could see a reduction in the 25 area teams - currently in charge of GP commissioning - as part of possible changes to the structure of NHS England which are currently under discussion by senior managers, Pulse understands.

GP leaders expressed concerns that the move could lead to a further loss in experience across NHS England employees, resulting in more confusion for GPs about who they should be contacting and creating bigger distances between practices and their commissioners.

Area teams have struggled to pay practices in the past because of chaos behind the scenes at NHS England, Pulse has reported, with some GPs left confused by the way payments and reimbursements were being allocated following the abolition of PCTs last year. Some GPs also raised concerns that bigger area teams may lead to bigger CCGs in future, as area teams struggled to manage many small structures.

 

Practices closures set to widen GP privatisation (Pulse: 9 September 2014)

All new GP contracts will be thrown out to private providers under APMS, in a move described as the ‘death knell’ for traditional practice, Alex Matthews-King discovers 

Pulse has learned the full implications of scores of practices facing closure could include a mass privatisation of GP services.

NHS England has admitted its policy is that any new contracts to replace closed practices will be APMS following a full procurement process. The GPC has described this as signalling the ‘death knell’ for traditional general practice, and is seeking urgent legal advice about the move.

Other leaders have warned it will lead to GP surgeries being replaced by ‘short-term, profit-making ventures’ but managers insist competition rules mean they have no choice but to use APMS contracts, even when reprocuring GMS or PMS contracts.

APMS contracts have a chequered history. They were introduced in 2004 to open up primary care to ‘new providers’ and were famously used to procure the Labour government’s ill-fated ‘Darzi’ centres across the country.

In October last year, Pulse revealed that NHS England’s London area team was planning to procure a ‘significant’ number of APMS contracts this year. NHS managers now say this policy has been adopted nationally...read more

 

Doctors voice concern over the future of sexual health clinics under current tendering regime (The Guardian: 28 December 2013)

Sexual health services are in danger because they are being fought over in a contractual free-for-all between the NHS and private companies, senior doctors are warning. In an unusual move, representatives of the UK's hospital doctors and sexual health specialists have written to every local council in England strongly advising them not to put services that provide contraception and diagnose sexually transmitted infections (STIs) out to competitive tender. Tendering poses several "key threats", including reduced access to clinics and treatment, a fall in the quality of patient care and the undermining of existing services, according to the British Association for Sexual Health and HIV (Bashh) and the Royal College of Physicians (RCP).

 

The misuse of competition law is undermining care and integration (The Guardian: 28 November 2013)

The government's doctrinal obsession with competition in the NHS is damaging care, holding back improvement and undermining integration. But ditching competition is not the solution. Numerous studies on the impact of competition on the quality of healthcare (John Appleby of the King's Fund has written an excellent summary) broadly demonstrate that when used appropriately it can bring benefits, but it is by no means a universal tool for improvement. Competition law is having five detrimental effects. It is railroading commissioners into tendering services, interfering with service integration, inhibiting providers from collaborating and merging, protecting services that should be shut (under the guise of preserving competition), and exposing commissioners to protracted legal disputes with both public and private sector providers.

The accusations by Spire Healthcare Limited against Blackpool, Fylde and Wyre clinical commissioning groups are a particularly unedifying example of how competition law is being used to undermine the freedom of commissioners to do what they think is best for patients. Spire has complained to competition regulator Monitor that the CCGs are directing patients away from its hospital, a claim the commissioners refute. The GPs are now caught up in an investigation, leaving them even less time to focus on the things that matter. But there is no consensus for change. This month NHS England chief executive Sir David Nicholson told the health select committee the service was "bogged down in a morass of competition law". But in an interview with the HSJ this week, Clive Maxwell, chief executive of the Office of Fair Trading, dismissed the idea of reforming his organisation's oversight of trust mergers.

 

NHS competition holds up creation of specialist cancer treatment centres (The Guardian: 16 November 2013)

The government's drive to introduce more competition into the NHS is having the perverse effect of holding up the creation of world-class cancer treatment centres, the Observer can reveal. Investigations show that individual hospitals whose roles would be downgraded under reorganisations are blocking moves to concentrate cancer services into fewer top-performing specialist centres, by claiming such mergers would be anti-competitive and would reduce patient choice. NHS leaders, who are deeply concerned about the effect that legal disputes are having on progress, have admitted some cancer units are being allowed to carry on operating even though they do not meet the latest official guidelines on how services should best be organised. The health regulator Monitor is now involved in a detailed investigation into whether the changes contravene government regulations introduced in April this year, supposedly to widen competition and choice.

 

Competition rules over merger has cost NHS £1.8m, BMJ probe shows (BMJ: 21 October 2013)

The lengthy battle over the proposed merger of two hospital foundation trusts in England has cost the NHS almost £2m (€2.4m; $3.2m) in legal and consultancy fees, a BMJ investigation has shown. Plans to merge the Royal Bournemouth and Christchurch Hospitals NHS Foundation Trust and Poole Hospital NHS Foundation Trust, first proposed in 2011, were provisionally blocked by the Competition Commission in July, with a final ruling due by 21 October. The trusts said that the plans were essential to ensure the sustainability of services in the area, but the commission provisionally ruled that the move would reduce patients’ choice. The plan has been opposed by BMI Healthcare, which runs a private hospital in Poole. In response to a request from the BMJ made under freedom of information legislation, the two NHS trusts disclosed that they had spent a combined sum of £1.8m on legal and consultancy fees related to the merger, as at August 2013. The finding came after Stephen Thornton, deputy chairman of the health sector regulator Monitor, recently warned that the government’s new competition arrangements for the NHS in England were a “bonanza for lawyers and consultants” and could lead to scandals if money was being diverted from the care of patients.

 

Government procurement strategy is blocking NHS value for money (The Guardian: 4 September 2013)          

If we pooled all of the expertise within the NHS, we would have one of the best-equipped and most capable procurement teams in the world. It would hold all the cards to find cost savings while improving services for patients. The problem is that we don't pool expertise.

The government's NHS procurement strategy is dividing rather than uniting us. Bringing competition into the healthcare market is considered vital to ensure services are delivered a high standard. But, in many situations, this is contrary to procurement best practice, where pooling resources, knowledge and buying power delivers real savings.

NHS procurement needs more than a makeover. It requires fundamental changes in attitude to cope with the conflicting priorities of competition and collaboration.

 

Lords rubberstamps controversial competition regulations (Pulse: 24 April 2013) 

Peers voted against a motion to ‘kill’ the Section 75 regulations, which state that CCGs must put all services out to tender unless they can prove it could only be provided by one particular provider, by 254 to 146. The regulations have been criticised by the BMA, NHS Clinical Commissioners and CCG leaders, who fear they will hamper CCGs’ freedoms, while the NHS Confederation warned ahead of the vote that it could create ‘a barrage of bureaucratic procedures’ for CCGs.

NHS Confederation chief executive Mike Farrar said: ‘Where competition is the most effective route to improving care, CCGs need to be able to use it at their own local discretion, rather than have it forced upon them for all services. ‘Using competition in such an arbitrary fashion would potentially create a barrage of bureaucratic tendering and procurement procedures, which would inevitably be paid for at the taxpayers’ expense. This is not in the interest of commissioners or any aspirant new providers.’

 

Royal college of GPs - competition rules (Section 75) - higher costs? (RCOG: 12 April 2013)

The Royal College of Obstetricians and Gynaecologists [has] concerns around how competition will work in the new NHS.  The regulations for procurement and competition set out the boundaries for Clinical Commissioning Groups (CCGs) but there is still uncertainty over the obligation on CCGs to put all future contracts out to tender. Unnecessary tendering, particularly when done through legal requirement with no benefit to the patient will create more bureaucracy and increase the financial burden on the taxpayer.  Similarly, there is the significant potential for conflicts of interest as the system allows some CCGs to award contracts to themselves.

 

GPs will be hit by legislation requiring CCGs to use competition, warns GPC (Pulse: 26 February 2013)

GPs will be forced to waste time and money defending their practice resources from competition under proposed legislation for the NHS that will require CCGs to put all services out to tender ‘as a default’, warns the GPC. The claims come after the Government published its draft regulations for CCG procurement, giving Monitor new wide-ranging powers to reprimand CCGs that have not ‘considered the full range of options’ before commissioning services.

 

David Locke QC analyses the impact of the competition rules (Blog post: March 2013)

Procurement processes are hugely expensive and they delay contracts for extended periods.  Conservative MPs ought to have learned that from the West Coast Rail tendering debacle which left the Department of Transport with a bill of £50M when just one tender exercise went wrong.   These Regulations will impose countless procurement competitions on the NHS, and caused vast resources to move from patient care into administration.

Have the costs been recognised? The Impact Assessment for these Regulations signed off by Earl Howe says “There are negligible direct costs to patients, commissioners or providers”.  That statement would be laughable if this were not so serious.  Another part of government, the Cabinet Office, has recognised the huge costs of procurement exercises and is complaining that too much cost is imposed by these exercises.   This appears to be another case of a total absence of joined up government

 

How NHS reforms are increasing bureaucracy (GPOnline: 5 August 2011)

Health secretary Andrew Lansley's NHS reforms have dramatically increased bureaucracy in the health service, according to organograms produced by the Labour party.


See also:

Competition and costs: evidence from competitive tendering in the Scottish NHS

Experts speak: why section 75 NHS privatisation regulations are such a threat - Caroline Malloy

Royal College of Nursing report (21 April 2013)

The NHS must be exempted from the US/EU Free Trade Agreement - (Alex Ashman 26 March 2013)

 

 
 

More on costs/bureaucracy:

INCREASED BUREAUCRACY?

COSTS OF REFORMS

Key Facts:

Lords vote leaves controversial competition in place

81% of nurses said that paperwork prevented them from providing direct patient care

PAC say "efficiency savings" resulting in cuts and rationing

Nearly £3bn returned to the treasury by the department of health over the last 2 years

NHS competition could cost millions says Labour

Key Trends:

Cost of restructuring rising

Costs of competition emerging, GPs worried

Staff experiencing rising paperwork

 

More layers of bureaucracy?

Insert Alt 

True or false? 

“We are abolishing needless bureaucracy, and our plans will save one third of all administration costs during this Parliament” – Channel 4 fact check on the NHS reforms

  

Related issue: NHS efficiency savings:

NHS Progress in Making £20bn Efficiency Savings - A report by the National Audit Office in December 2012
 
Savings achieved through staffing  "staffing cuts and rationing" - Public Accounts committee report  -13 March 2013
 
 
Views:

costs of the reforms:

"On the basis of the National Audit Office’s survey data, I estimate that the proposed NHS reorganisation will cost between £2bn and £3bn to implement, at a time of unprecedented financial austerity." - Prof Kieran Walshe, Jul;y 2010

cost of competition: 

"Using competition in such an arbitrary fashion would potentially create a barrage of bureaucratic tendering and procurement procedures, which would inevitably be paid for at the taxpayers’ expense." NHS Confederation chief executive, Mike Farrar

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