Monitor’s fairness review five years on
In 2013, Monitor published its independent review for the Secretary of State on the NHS “playing field” (presumably consciously steering away from the word “market”), which looked at whether there were market distortions that affected public, private and charitable providers differently. Their scope was limited to considering distortions that might have a significant impact on patients, but they also went on to consider some distortions that they thought did not affect service to patients. The review broke into three main categories:
(a) Participation distortions – where some providers were directly or indirectly excluded from offering their services to NHS patients for reasons other than quality or efficiency.
(b) Cost distortions – where some providers faced additional external costs that others did not face.
(c) Flexibility – where some providers are prevented from adapting their services to the needs of patients and commissioners by external factors that do not apply to all providers equally.
We thought this would be a good time to look at some of the issues they identified and see what progress had been made in the five years since the report – a five year backward view, if you like.
The review found “widespread examples of commissioners failing to consider alternative providers where that might have been appropriate”. Since that time we have seen two sets of procurement regulations and a reminder that CCGs need to commission transparently, but the recommended commissioning support programme withered on the vine. There has also been a move to two-year contracts, and commissioners are awarding contracts for longer terms where appropriate, so those recommendations have clearly taken root. However, recent developments on (NHS-only) STPs and the direction of travel towards ACOs has caused the private sector understandable concern – although that pales into insignificance beside Labour’s stated intention to take the market out of the NHS.
Probably the most significant distortions identified by Monitor were the cost of pensions (an issue for the independent sector) and the CNST’s barriers to entry (for the independent sector) and exit (for all). The first two points have been addressed, but the cost of run-off cover means it maybe too expensive for CNST members (public sector) to leave. The other big issue for the NHS is VAT, where the contracted-out services rules give a competitive advantage to the public sector, but the generally inability to reclaim VAT works to its disadvantage. Recent attempts by Trusts to level the playing field themselves through the use of subsidiaries have been roundly criticised by politicians. So, cost is still an issue.
Concerns were expressed about the lack of autonomy of public sector providers, including the need for them to obtain government approval for capital spending. Monitor’s answer was that government should promote autonomy and move towards an all foundation trust public sector. The last (new) FT authorisation was in May 2016, and we are aware of (supposedly-autonomous) FTs being told by the Treasury that they are subject to Managing Public Money and so cannot do anything novel, contentious or repercussive without HMT approval. NHS providers have also felt unable to move away from Agenda for Change, so that is still a distorting factor. The review also cited the duty to involve/consult on service changes as being an obstacle particularly for the public sector, but in practice that duty falls just a much on the independent sector because commissioners cannot change the services they commission without complying with the duty?
Are we fair yet? No, probably not, although there has been some positive progress. It is likely to be a long journey, so ask us again in another five years.