United in mismanagement

Plans to restrict private enterprise and charities from future bids for NHS services has left confusion in both sectors

By Nigel Hawkes

It takes a fair degree of mismanagement to unite charities and private enterprise in opposition to government policy. But that is just what Andy Burnham, the Health Secretary, achieved in a speech last September.
After extensive lobbying by trade unions fearful that the recession would hit NHS jobs, Mr Burnham moved to reassure them in a speech at the King’s Fund. In future, he said, the policy of opening up NHS services to “any willing provider” would be replaced by one in which the health service itself was the “preferred provider”.
In doing so, he overturned a decade of Blairite encouragement to the private sector and to charities to bid for contracts to deliver NHS services. There seemed no pressing need for the change, so we must assume that Mr Burnham believed in what he was saying. It was welcomed by Unison, the British Medical Association, and the Royal College of Nursing, but condemned as “completely irresponsible” by the NHS Partners Network, which represents private providers of NHS care.
This was no throwaway remark by the Health Secretary. The following month David Nicholson, the chief executive of the NHS, spelt out what it meant in a letter to Brendan Barber, general secretary of the TUC. Underperforming NHS organisations must be given “at least two” opportunities to improve before an alternative provider is considered; and the underperformance, if it continues, must be deemed “significant” before any change is made.
Where there is a need to change services, existing staff from the NHS must be given “at least two” chances to come up with a plan. But when a contract with the private sector or a voluntary organisation comes to an end, that service should automatically go out to tender even if the provider has produced an excellent service, and NHS organisations allowed to bid.
The policy change has opened up old divisions in the Labour party. Alan Milburn, the ultra-Blairite former Health Secretary responsible for introducing competition and choice into healthcare, called it retrograde. “If you are going to drive productivity and quality on the scale required, the last thing you do is renew a monopoly and say your existing provider is your preferred one,” he said. Professor Paul Corrigan, a former adviser to Mr Blair, said the overriding duty of NHS commissioners was to provide the best patient care; if that involved awarding a contract outside the NHS, that duty should outweigh the Health Secretary’s views.
While Mr Burnham argued that his new policy would enable the NHS “to move beyond the polarising debates of the last decade over private or public sector provision”, what it did was reignite those debates. There has always been a strong opposition to any private involvement in the NHS. Among the doughtiest opponents is the BMA, many of whose GP members are, in fact, private contractors themselves. GPs who run practices are not in public employment, but are doctors contracted to provide a service. Their incomes are the “profit” resulting from the difference between what they are paid and what it costs to deliver the service. Despite this, they saw no irony in recently launching a campaign calling for the NHS to be “publicly funded, publicly provided”.
Nobody feels quite so strongly about charities. Voluntary and charitable organisations already deliver £4.7 billion worth of NHS services a year. More than 90 per cent of the income of charities such as Mencap or Leonard Cheshire comes from the Government, and this is not untypical. Among bigger charities with an income of more than £10 million a year, two thirds get 80 per cent or more of their income from delivering public services. The voluntary sector has doubled in size since Labour came to power.
Mr Burnham’s decision “confused and angered” the sector, according to the Association of Chief Executives of Voluntary Organisations (ACEVO). Peter Kyle, its deputy chief executive, said that the Health Secretary had broken a pledge in the 2005 Labour manifesto that the voluntary sector’s potential for service delivery should be considered on equal terms with other providers. “If Andy Burnham sees this through, he will be the first Health Secretary to oversee a shrinkage in the voluntary sector,” Mr Kyle told Health Service Journal.
ACEVO and the NHS Partners Network have made common cause in opposing the policy. Their opportunity arose when a primary care trust (PCT) in Norfolk, NHS Great Yarmouth and Waveney, after announcing it intended to seek tenders from any willing provider to run its community services (district nurses, health visitors, physiotherapists, chiropodists and social care), then changed tack after Burnham’s speech and said it would only accept bids from NHS organisations. It made this change after discussions with the Department of Health.
The voluntary and private sectors appealed against the decision to the NHS Cooperation and Competition Panel (CCP), the body that is supposed to resolve such disputes. The CCP has launched an inquiry, and by March 2 will determine whether the complaint should be dismissed or subject to further investigation. If the latter, the second phase of the inquiry will be completed by June 28.
The complainants say that Great Yarmouth and Waveney has breached the competition code, which says: “commissioners should commission services from the providers who are best placed to deliver the needs of their patients and populations”, and that choice for patients must not be restricted “via collusive behaviour or any other action”. The defendants say that the code must be interpreted in the light of the new Department of Health policy, and deny any collusion. In the submissions so far received by the panel, nobody has even tried to argue that restricting the pool of potential bidders has any benefit for patients or taxpayers.
The dispute could hardly have come at a worse time. PCTs are under notice to outsource their community services and to have plans to do so in place by March 10. Until now, they have both commissioned care – in hospitals and GP surgeries – and delivered it, through their community services. They have been both purchasers and providers, a contradiction the department is anxious to eradicate as soon as it can, because it is a distortion of the market. PCTs will have to rid themselves of community services by April 11 next year.
So who’s going to take them on? Voluntary and private organisations saw this as a great opportunity, now denied them by Mr Burnham’s intervention. If the panel rules the complaint invalid, then the chance is gone. The most likely winners, odd as it may sound, could be hospital trusts – although they know nothing about community services. But they are part of the NHS family, so would be favoured by the Burnham doctrine.
If the panel rules that a full investigation is needed, things will be little better as it will take so long that decisions may already have been made. By then Mr Burnham may have formally changed the rules that the panel no longer has the right to adjudicate in the case. The publication of new rules is said to be imminent. Whether they will resolve the confusion remains to be seen.

20 February 2010

Nigel Hawkes. Director of Straight Statistics and former Health Editor of The Times,