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Has the Health Bill debacle done irreparable damage to public-private relations?

At its peak, the Health Bill crisis got very, very personal. Opponents of the legislation stopped at nothing to portray private providers as heartless profit rackets, while the media set about finding dirt on companies’ financial affairs and political connections. Some of these reports were fair, others much less so, but the net effect was to cast the entire private sector as Public Enemy No. 1.

With the legislation now through parliament, and the furore at least partially dying down, the question is where does the private sector now stand in the great NHS debate? From a purely legal standpoint, it’s clear that competition was a major focus of the Bill’s 1,000-plus amendments, with various changes seemingly eroding the cause of a ‘level playing field’ in the health service. From an emotive standpoint, meanwhile, it remains to be seen what damage 14 months of vitriol and suspicion has done to the private sector’s prospects.

Take the recent example of NHS Gloucestershire, and its failed attempt to outsource community services to a social enterprise. The primary care trust (PCT) abandoned its decision to award an £80 million annual contract to Gloucestershire Care Services after a campaign to halt the ‘privatisation’ of NHS services, led by a local pensioner, reached the High Court. The legal challenge argued that other NHS bodies should have the chance to bid for the contract, and expressed concerns that services would become “more fragmented” and “less accountable” under a non-NHS provider.

The irony is, though, that the PCT will now have to put the services out to tender – potentially leading to a for-profit provider, rather than a charitable social enterprise, taking on the services. The episode actually highlights the absurdity of the current debate within the NHS, and its failure to comprehend an obvious truth: At a time of massive fiscal tightening and service redesign, alternative providers will inevitably come into the market.

Community contracts, for example, are increasingly emerging because PCTs will no longer exist from next year – hence they must transfer their service operations to new providers. Under EU procurement law, which applies to all industries, contracts of this scale must be put out to tender (as NHS Gloucestershire has discovered), meaning that any provider can bid. If a private provider is selected for the contract, that simply means they satisfy the terms of the publicly defined tender better than any other. Serco recently had such success in Suffolk, and has also been shortlisted with Virgin Care for a children’s services contract in Devon.

These examples simply show that PCTs have been impressed by the private sector’s ability to run major contracts – and they haven’t shied away from awarding them, despite the likelihood of a public backlash. Indeed for all the animosity swirling around the private sector, the NHS has become increasingly reliant on private providers as the budget squeeze has taken its toll and waiting lists have crept up. Ramsay Health Care, for example, saw NHS admissions rise by 6.4% in the second half of last year.

Of course, it’s true to say that a ‘level playing field’ remains a long way off. In the world of commissioning, for example, it has emerged that the National Commissioning Board will ‘host’ around 30 commissioning support service (CSS) groups, made up of former PCT staff, until 2016. After that point they will become ‘freestanding organisations’.

Ross Clark, partner at law firm Hempsons, argues that there’s “nothing Machiavellian” about the move and that it simply reflects government efforts to take support services out of the equation for clinical commissioning groups (CCGs) when they’ve got “so much else on their plate”. But it’s nonetheless a big blow to the private firms that are hoping to provide certain support services to CCGs. Some have argued that the CSS groups will get privileged access to NHS contracts before being privatised in four years time.

There are big questions, too, about how Monitor will apply its powers and interpret EU competition law in its new role as the NHS’s economic regulator. Here, Jocelyn Ormond, chair of the independent healthcare group at DAC Beachcroft, notes that as a consequence of the Health Bill crisis, there has been a clear shift in rhetoric. “Initially, the impact assessment for the Bill focused on a level playing field for non-NHS providers, such as improving access to the NHS pension scheme,” he says. “Since then the tone of the debate has shifted, with more attention on a level playing field for NHS providers. If you take a look at Monitor’s proposed NHS licence conditions, the emphasis is on ensuring that all providers are subject to the same financing constraints as foundation trusts, regardless of their business model.”

Clearly, the absence of a truly level playing field will continue to determine the private sector’s experience in the NHS for some time to come. But there’s also reason to think that, despite all the mudslinging and name-calling over the past year, the cause of public-private partnership in the NHS is still alive and kicking.
Indeed, as many private health companies point out, there’s has been one constant throughout the Health Bill debacle: the government’s commitment to its patient-centric slogan of ‘no decision about me, without me’. If those companies can prove to patients that they’re the quality providers of choice, any rifts with the public should heal pretty quickly.


Posted on: 11/04/2012

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