The following correspondence between myself and the Head of Procurement at Wandsworth Clinical Commissioning Group in South West London maybe of interest to SHA members, and the idea contained in the exchange could be a way of thwarting CCGs from putting out to tender services previously provided by the NHS.

I  put the question below to the Wandsworth Clinical Commissioning Group(SW London) at their meeting on  10 July 2013,

‘The Government is committed to creating a level playing field for all qualified providers tendering for services from the NHS.

In the  ‘Statutory Instruments 2013 No 500 National Health Service, England Public Procurement, England The National Health Service (Procurement, Patient Choice and Competition)(No 2) Regulations 2013, it states that,

-the relevant body must:

treat providers equally and in a non-discriminatory way, including by not treating a  provider, or type of provider, more favourably than any other provider, in particular on the basis of ownership

There must be no discrimination against a qualified provider based on the type of ownership.

Given that in any contract between Wandsworth Clinical Commissioning Group and an NHS provider such as a hospital, any surplus forthcoming from that contract would be returned to the NHS, the same commitment should be given by any private contractor wishing to provide services to the Wandsworth CCG. That is, any surplus made from such a contract should come back to the NHS. This guarantee should be written into all future contracts between Wandsworth CCG and any qualified provider.

This would mean a level playing field for all would be providers. In addition, it would ensure that the CCG complies with its statutory function to demonstrate best value. It will save taxpayers money be ensuring that any surplus made from contracts with ‘any qualified provider’ will be reinvested in the NHS.’

I received the following reply from the  Head of Procurement  at  Wandsworth CCG

‘The Statutory Instruments 2013 No 500 National Health Service, England Public Procurement, England The National Health Service (Procurement, Patient Choice and Competition)(No 2) Regulations 2013 have multiple requirements in them; along with those cited in the question, delivering value for money, enabling providers to compete to provide the services and allowing patients a choice of provider could all be added.

In relation to Any Qualified Provider (AQP) specifically DH guidance confirms that competition must be on quality not price, and that any provider must demonstrate the same or an improved quality of service for the national tariff (or locally agreed tariff where a national tariff does not exist).  It would not be possible for the CCG to follow DH guidance, demonstrate value for money,  enable providers to compete to provide services, nor offer a choice of provider to patients, if there was in some way a requirement added that any qualified provider would be paid the agreed tariff price but with an expectation that any surplus achieved would be returned to the CCG as commissioner.

As suggested in the answer to a previous question submitted to the CCG Board in May 2013, Monitor has undertaken a review of a “fair playing field” and found that the market was heavily weighted in favour of NHS providers.  The requirement in the regulations state that the CCG “must: treat providers equally and in a non-discriminatory way, including by not treating a  provider, or type of provider, more favourably than any other provider, in particular on  the basis of ownership”. The CCG interprets this as requiring us to offer the same standard NHS contract terms to any qualified provider. Wandsworth CCG has no plans at this point in time to place any perceived penalty or benefit on the basis of ownership on any provider in any procurement.

This was my reply,

‘I am not clear why Wandsworth CCG would not be complying with Dept of Health guidance by inserting into every contract with a potential qualified provider that any surplus from such a contract be returned to the NHS.

You state that,
It would not be possible for the CCG to follow DH guidance, demonstrate value for money,  enable providers to compete to provide services, nor offer a choice of provider to patients, if there was in some way a requirement added that any qualified provider would be paid the agreed tariff price but with an expectation that any surplus achieved would be returned to the CCG as commissioner.

That is exactly what a contract along the lines I have suggested would do.

It would put all potential providers on a level playing field. At the moment an NHS provider returns any surplus made from a contract with the CCG back into the NHS. All other potential providers would have to give the same commitment.  They would all be bidding on a level playing field. No potential bidder would make a surplus from any CCG contract. This would represent good value. In keeping with the CCG’s undertaking to use public finance wisely.

I am not sure what you mean by the statement , ‘offer a choice of provider to patients’

Contracts given to any qualified provider by the CCG often offer no choice to patients .The GP Out of Hours Service, for example, operated by Harmoni, now Care UK, does not give patients a choice. This is despite repeated requests to the CCG that such a choice be made possible.

I absolutely agree with your statement,

The requirement in the regulations state that the CCG “must: treat providers equally and in a non-discriminatory way, including by not treating a  provider, or type of provider, more favourably than any other provider, in particular on  the basis of ownership”. 

That is exactly my point made earlier, NHS providers, because of their type of ownership are being discriminated against. They must give an surplus made from a contract with the CCG back to the NHS, private providers, and others, have no such obligation.

 Finally, I note that your assessment of what is possible concerning the writing of a contract is based on an ‘interpretation’ of Dept of Health guidelines.

The CCG interprets this as requiring us to offer the same standard NHS contract terms to any qualified provider. Wandsworth CCG has no plans at this point in time to place any perceived penalty or benefit on the basis of ownership on any provider in any procurement.

The advice that I have received gives a different ‘interpretation’ to that of the CCG.

To reiterate, my suggestion is that all potential providers should  be treated equally. There is no suggestion that there be a different contracts written for different providers. I have never suggested that. The contract would be awarded on the basis of best value for money, potential providers would be competing with each other. All potential providers would be offered the same contract which would include within it a  clause that any surplus made from such a contract be returned to the NHS, or the CCG. Some contracts already have written into them that  a requirement of any potential provider is to allow freedom of information requests about such a contract. The requirement to return any surplus would be a stipulation along such lines. I would strongly urge Wandsworth CCG to follow the advice on offer and draw up a contract for all potential providers that would include the commitment to return and any surplus made from such a contract to the NHS. It would represent best practice, be in accord with Dept of Health guidelines and represent best value for money.’

That is the end of the correspondence.

Is it  a policy worth pursuing ?

If anyone wants to put a question along those lines to their CCG be my guest.

SW London Keep Our NHS Public

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4 Comments

  1. Martin Rathfelder says:

    Any Qualified Provider contracts do give patients choice. AQP is a technical term for a particular contractual arrangement. The contractors are not guaranteed any work. They are just put on a list of providers of a particular service – audiology for example. They only get paid if someone picks them from off the list. All the providers are paid the same per item, and there is a mixture of NHS and other providers. These patients could be regarded as consumers, and the providers may take advantage of the situation by selling them extras – such as digital hearing aids – which are not provided by the NHS and which may not be appropriate. Out of Hours contracts are not AQP.

    The contracts which don’t offer any choice are typically community services contracts, where one provider has a monopoly. Typically they are paid a flat fee for providing, for example, district nursing, or psychology, for all the CCG’s patients regardless of how many patients they see. So patients are not consumers of these services. They are the commodity out of which profits are made.

    Mike’s idea would be much more workable with the second type of contract. With AQP providers are taking a risk that they won’t get any business so it isn’t unreasonable to have a contract with a possibility of a profit.

    It isn’t true to say “an NHS provider returns any surplus made from a contract with the CCG back into the NHS”. Foundation trusts keep their surplus, if any.

  2. Are you saying then,Martin,that patients can always choose the NHS option for their treatment,since it is now a level playing field and it’s down to patient choice[up to a point],but if the NHS has put their name down as a qualified provider in a list for a particular treatement,then it’s up to the patient if they want to use them or not?So in a way if the NHS is privatised it’s because not enough people choose the NHS as their qualified provider?

    1. Martin Rathfelder says:

      I’m not sure that you could say there is a level playing field. But for the stuff with Any Qualified Provider contracts (they run by CCG area) I’d be surprised if there were any with no NHS providers. But with community service contracts the whole population can be stuck with a private provider with no choice.

      1. If there is a list of qualified providers,excluding community service contracts,the question as to why would a private contractor be able to deliver better and quicker than an NHS provider,needs to be answered.
        Also,if a provider does not deliver according to the terms of the contract,is there a formal process for their exclusion from further contracts?Who is going to monitor the delivery of the contracted services as stipulated.
        It’ll be interesting to see how private health providers are going to manage the expectations of their ‘clients’.Are they going to be the forever the poor relation of the the’real’private clients-I’ve been in that boat,private[c/o the NHS]but definitely the poor relative?
        If they dont perform,there will be an industry of lawyers and a proliferation of court actions.I know for myself,if something goes wrong if I’m in a private health contract,there will be no mercy.I will set the money-seeking lawyers for maximum damages.I bet I’m not the only one.I would never think of this with the NHS.
        Of course,the government[s] will probably introduce a waiver for the qualified private helth[!] providers.But of course if they do that,they’ll have to do the same for the NHS providers.That’ll then shut the tory wingeing machine up.
        The only way the private sector is going to make any money here is by having a piss-poor quality assurance inspection system,to let them degrade every aspect of healthcare[unless you are rich]to then extract their profit.
        Profit before healthcare.That is their modus operandi.
        This is a very bad idea and there will be consequences.

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