Choice and competition

What they really mean when securing healthcare services for the NHS

Expo 2014

David Furness, Competition Policy Advisor4 March 2014

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Your story

You have slipped and hurt your knee

You can walk a bit but it hurts when you run for the bus

Scan reveals ligament damage and you need an operation

Operation will be on day 1, discharge on day 2.

Bed-ridden for a week, crutches for a month

Will require 3 follow-up appointments at 2 weeks, 4 weeks and 8 weeks.

You have a CHOICE – which hospital to attend?

4 March 2014

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Which hospital would you choose?

Hospital A Hospital B Hospital C Hospital D

Waiting time 3 weeks 1 week 12 weeks 2 weeks

Mortality rate Above average Average Below average Average

#MRSA cases None None None 1

Safety thermometer 12% 18% 1% 7%

Distance from home 12 miles 5 miles 20 miles 10 miles

Likelihood same sex ward

90% 50% 0% 70%

Car parking cost £3/hr £0.5/hr £0/hr £2/hr

Your friends’ experience

Good Haven’t been here Very good Bad experience

4 March 2014

Monitor’s role: helping commissionersto secure high quality services

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National Health Service (Procurement, Patient Choice and Competition) Regulations 2013

A framework for taking good decisions in

securing high quality services

It is for commissioners to decide how to

improve services for patients including

when and how to use integrated care, competition and

choice

To ensure competition operates fairly in the interests of patients

and prevent anti-competitive behaviour

in NHS

4 March 2014

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The rules are a framework for decision making

What services do people in your area

need?

What commissioning decisions will you need to take to secure those

services?

Are some services related to each other

and if so must they be provided from the

same location or not?

Would it be better to procure services

separately or jointly to improve services?

What contracts will you need to amend or enter

into?

4 March 2014

The rules are a framework for decision making

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How will you identify the

relevant providers?

How will you choose the best

one(s)?

What information will you need to

make your decision?

4 March 2014

Choice, competition and integration

4 March 2014 8

How do you go about improving services?

What can you do to ensure services are

provided in an integrated way?

Do or should patients have a

choice of provider

for any of these services?

Can you achieve a better

outcome by enabling

providers to compete?

Choice and competition in securing services

Health and Care Innovation Expo

4 March 2014

• Commissioners must act to secure the needs of patients, and improve quality, efficiency and the integration of services, including with social care services.

• Competition generally occurs between providers of the same or similar services. Integrated care, however, requires different services to be provided in a seamless way.

• Careful consideration therefore needs to be given to what is best for patients concerning the integration of services, choice and competition.

10 NHS England | Health and Care Innovation Expo | 4 March 2013

Choice and competition are tools that commissioners can use to meet patients’ needs & improve services

• The difficulties in the passage of the Health & Social Care Act and S75 Regulations reflect on-going concern about NHS choice and competition.

• Commissioners do not have a consistent understanding of the rules, so misunderstanding and myth have taken its place.

• Some people view the rules as obstacles in the way of improving services, prompting risk-averse commissioner behaviour.

• Concerns include: being required to put all services out to competitive tender, whether and how competition and integration fit together, competition and the sustainability of local services, competition and commissioning priorities.

• Done well, procurement can be a powerful means of stimulating innovation and enabling improvements in quality and value.

11 NHS England | Health and Care Innovation Expo | 4 March 2013

Competition in the NHS remains contentious and often misunderstood

• Complements Monitor’s substantive and enforcement guidance and builds on NHS England’s previous procurement briefings.

• Takes a system wide approach looking not just at procurement decision but also good practice in activity pre and post the procurement decision (i.e. planning and contract management) and fulfilling duties under the Social Value Act and EU procurement rules.

• Arranged in eight parts:

12 NHS England | Health and Care Innovation Expo | 4 March 2013

So beside Monitor’s guidance is our guidance for commissioners on procuring healthcare services...

Securing Services

Monitoring Services

Planning Services

BETTEROUTCOMES

Contracting and

procuring

Identifying and benchmarking

outcomes

Procurement consideration

•Consideration of provider role in contributing to broader organisational objectives (egintegration, research, population outcomes

•Consideration of financial constraints and appropriate balance of risk and reward

•Consideration of the best procurement route to secure the desired service

Procurement activities & outputs

•Competitive tenders•Framework agreements for

local patient choice•Single tender awards•Contracts and specifications•Pricing and incentives regime•Register of interest for

commissioners and providers

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…covering the process and tools to understand local population needs and securing services to meet them…

The Choice and Competition Framework

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• Competition should be employed where it serves the interests of patients, and is not an end in itself.

• Competition should not impede integrated services in the best interest of patients.

• There is no requirement for commissioners to put all contracts out to competitive tender.

• Competition is not new for the NHS.

• Commissioners need to adopt proportionate and transparent processes to support their procurement decisions.

• Commissioners need to make balanced judgments based on evidence and local circumstances.

• The evidence base is currently not comprehensive.

• There should be no hiding place for poorly performing providers.

• Resources are available to help commissioners make informed decisions.

NHS England | Health and Care Innovation Expo | 4 March 2013

Key messages

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Group exercise – procurement

A PCT went out to market three years ago for a community dermatology service. A new provider was chosen and is now well integrated with local practices leading to lower costs, educational sessions with primary care and good effective links with third sector organisations.

The contract is due to come to an end but the CCG feels that as the service is working well, the cost of a completely new tender process would be high and it has decided, after analysing the market, that it would prefer to retain the current provider. This view is supported by the health and wellbeing board.

There are a number of available dermatology providers in the area including one provider that has approached the CCG directly and has expressed an interest in providing the services.

What issues does the CCG need to think through to ensure compliance with the commissioning regulations?

4 March 2014

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Group exercise – provider conduct

Four specialist providers each provide specialist vascular services to patients in different geographic areas.

Hoping to obtain economies of scale for their specialty, they each establish an exclusive agreement with the general hospitals nearby. Under the agreement, each general hospital must send all their vascular patients needing specialist services to a specified specialist provider. If any of the general hospitals provide any specialist vascular services, they agree to stop doing so.

The providers say that by creating the clinical networks in this way they save costs due to the economies of scale. Further, by increasing volumes of patients in the specialist activity, the specialist hospital will improve its skills which will lead to better outcomes for patients.

How would you assess whether this conduct is consistent with the conditions in the provider licence?

4 March 2014

Choice and competition

What they really mean when securing healthcare services for the NHS

Thank you for your time