NHS competition policy and the EU

Nearly 2 years ago, the Health Foundation commissioned a team of researchers at the University of York to investigate how and whether competition works in five European health systems – France, Portugal, the Netherlands, Norway and Germany – and to uncover what the NHS in England could learn from them. Today we are publishing the findings of their research as a Health Foundation working paper. Who knew then that the EU lens would become so topical?

The NHS in England’s relationship with competition policy – like the UK’s relationship with the EU – can be neatly described in three words: controversial, confusing and changing.

Why controversial?

Around five years ago, new legislation was passed in England which for the first time gave competitive tendering a legal footing in the NHS. Building upon the 2007 Principles and rules for cooperation and competition, the Health and Social Care Act 2012 and associated secondary legislation requires clinical commissioning groups (CCGs) to advertise and competitively tender for most contracts. Unless, that is, they can show that only one provider or group of providers is capable of delivering the contract (single tender action). However, NHS England’s procurement guidance is clear that ‘the law… is complex’ and this route ‘carries an inherent risk of challenge’. The 2012 Act also repositioned Monitor as the NHS’s economic regulator with a statutory duty to (among other things) prevent anti-competitive behaviour.

Of course this wasn’t the first use of competition (or competition-inspired policies) in the NHS. In 1991, the introduction of the purchaser–provider split established the internal NHS market. Since 2008, ‘free choice’ – an early version of the current ‘any qualified provider’ policy – has allowed patients to choose any registered NHS or independent sector provider for routine elective care. The NHS Constitution sets out this and other patient choice policies as legal rights. And all choice policies are underpinned by the national tariff (payment by results), which allows money to follow the patient.

Why confusing?

No more than two and a half years after the controversial 2012 Act was passed, a new strategy for the NHS in England was launched – the Five year forward view – which did not use the word competition once. If that wasn’t confusing enough, 18 months later Monitor merged with the NHS Trust Development Authority to form a very different kind of organisation – NHS Improvement.

For a while the word competition was only spoken in hushed tones. Perhaps people simply wished it would go away. Confusion still reigns over how the requirement to competitively tender can co-exist with the new care models. How can new and complex integrated provider partnerships be nurtured when they might have to go through a lengthy tendering process, and with no guarantee that they’d be awarded the contract?

And how strong is local oversight of competition? Can CCGs continue to maintain around 50 community care contracts each, while ensuring quality and avoiding fragmentation for patients? Hospital competition attracts much scrutiny, but a recent Health Foundation briefing highlights how little is known about the community care provider market.

Why changing?

A couple of months after Monitor merged into NHS Improvement, the UK voted to leave the EU – the home of the procurement legislation (public contracts regulations 2006 and 2015) that so heavily influenced our own NHS legislation . And, finally, it is not yet clear what the recent general election might mean for the NHS in England.  

So are we likely to see much change in relation to how competition is used in the health service? 

The Conservative Party manifesto signalled the government’s continued support for the Five year forward view and sustainability and transformation plans. If implementation is being hindered by ’the current legislative landscape’, the manifesto committed to ‘consult and make the necessary legislative changes’ including a review of the internal NHS market.

But the Queen’s Speech contained no mention of a bill or draft bill to this effect. So instead, there is a chance that something new will come out of another of the government’s manifesto commitments – to make non-legislative changes to facilitate the integration of care by April 2018 (ie more of the ‘let’s find a workaround’ approach).

One of the things that the paper by the team at York does so well is highlight the ongoing mismatch between evidence and national-level policy in the NHS. For example, while the NHS in England holds fast to maintaining and expanding patient choice policies, the paper finds that ‘proximity to the provider remains the key driver of patient choice’.

Hospital competition, facilitated in part by the ‘any willing provider’ policy, is probably also here to stay. Yet given the current financial climate, the ‘tension between stimulating quality competition and controlling expenditure’ should not be disregarded.

So while there won’t be any radical changes to NHS competition policy and legislation any time soon, the debate on what value they add should continue, especially during this era of austerity and integration. And hopefully any future changes to NHS competition policy will be based more on evidence and less on ideology than in the past.

Informing the debate with evidence is precisely what this working paper helps to do. 

Sally Al-Zaidy is a Senior Policy Fellow at the Health Foundation