There has been a strange two-handed legal dance going on for the last year or so. Ministers, and Monitor officials and pretty much anyone in the DH or NHS England you come across says that there is nothing to fear from the Health and Social Care Act. The Act may say that competition will be a key aspect of the NHS and s75 gives it legal force – but ministers and Monitor continue to say that we are all misguided and paranoid. Just wait for Monitor’s formal guidance and you will see there is nothing to fear.

Well, Monitor’s guidance has arrived. It is fearsome and makes competition the default. And worse. We understand that Monitor refuses to publish the legal advice on which they depend.

Here are some key paragraphs with comments.

Consulting the public

Public consultation is not required for tenders to go ahead.

3.2  What is appropriate will depend on the circumstances of the case, but may include consulting publicly on proposals, engaging with local clinicians.

Going to market

Commissioners have to go out to market unless they think they know all relevant providers and can justify their omniscience.

3.3.1 all potential providers that might be interested in providing a service being procured by the commissioner have been given an adequate opportunity to express an interest in providing those services. Commissioners will need to consider what steps they need to take to identify providers that might potentially be interested in providing the services being procured. In some circumstances commissioners may be able to identify interested providers based on their knowledge of the market.

CCGs will have to go to market when contracts end.

3.3.3 For example, if a particular service (such as community dermatology services) is provided by a single provider in a local area, there is no requirement on the commissioner under the regulations to introduce patient choice……, although when the arrangement with the existing provider comes to an end, the commissioner will need to ensure that the process that it adopts to choose a provider in the future is consistent with the requirements of the Regulations.

Avoiding going to market

CCGs must demonstrate why they are not using the market.

3.3.3 However, Regulation 3(4) does require commissioners to consider whether introducing competition and choice and delivering care in a more integrated way could be used to improve quality and efficiency. Monitor will expect commissioners to be able to demonstrate that they have considered whether services might be improved through such means (including by extending patient choice to services where it is not currently available).

Even the section which outlines circumstances in which competition is NOT required makes it difficult to avoid a competitive approach. There are 3 conditions:

  • When there is only one provider
  • When the commissioner identifies the best provider through a detailed review in which all possible providers are offered the option.
  • Where the benefits of competitive tendering would be outweighed by its costs. This will need to be justified.

However, we understand that legal opinion suggests that the second and third bullet points COULD NOT be used – nothing in the legislation or regulations allows for them.

4.2 Three situations are considered in more detail below:

 Where there is only one provider that is capable of providing the services in question.

 Where a commissioner carries out a detailed review of the provision of particular services in its local area in order to understand how those services can be improved and, as part of that review, identifies the most capable provider or providers of those services.

The commissioner would also need to ensure that its engagement with each of the prospective providers is consistent with its obligation to act transparently and to treat providers equally under the Procurement, Patient Choice and Competition Regulations. In particular, the commissioner would need to ensure that potential providers have a reasonable opportunity to express their interest in providing the services in question.

 Where the benefits of competitive tendering would be outweighed by the costs of publishing a contract notice and/or running a competitive tender process.

Anti-competitive behaviour

When will behaviour be anti-competitive and not in the interests of users of health care services? Monitor will judge anti-competitive behaviour through a cost-benefit analysis, not through benefits for patients.

9.3 Where a commissioner’s conduct is in the interests of patients its behaviour will not be inconsistent with the prohibition on anti-competitive behaviour in Regulation 10. In assessing whether or not anti-competitive behaviour is in the interests of health care service users, Monitor will carry out a cost/benefit analysis. Monitor will consider whether by preventing, restricting or distorting competition behaviour gives rise to material adverse effects (costs) for health care service users.

If we find that behaviour gives rise to material costs, we will consider whether it also gives rise to benefits that could not be achieved without the restriction on competition.

Monitor will then weigh the benefits and costs against each other

Any anti-competitive behaviour must be justified by material and clinical benefits. Any restrictions on competition must be necessary to achieve the benefits.

9.3  Monitor will expect commissioners to be able to identify and describe the benefits to health care service users that arise from any anti-competitive conduct and to provide any relevant evidence in support. In deciding what value should be attributed to claimed benefits, Monitor will consider all relevant factors including, for example:

 the materiality of the benefits submitted;

 the period of time over which the benefits will be realised; and

 the robustness of the analysis and evidence that supports the claimed benefits (in considering clinical benefits, Monitor will have particular regard to supporting research and evidence regarding clinical improvements).

Any restrictions on competition must be necessary to achieve the benefits, if those benefits are to be taken into account for the purposes of establishing whether anticompetitive behaviour is in the interests of health care service users.

Contracts must not include any term or condition restricting competition that is not specifically needed to achieve the benefits. So, it may be difficult to use “continuity of care” or “knowledge of the local scene” as reasons for avoiding anti-competitive behaviour.

9.3 Regulation 10(2) clarifies that that an arrangement for the provision of NHS health care services must not include any term or condition restricting competition that is not necessary for the attainment of relevant benefits. Any term or condition restricting competition that is not necessary – for example because it goes beyond what is necessary to achieve benefits (such as a restriction that has a longer duration than is necessary or applies to a wider range of services than is necessary) – will breach Regulation 10(2).

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