PLC Public Sector reports:
This is the first of our new series of quarterly update blogs on the changes to the NHS and local government introduced by the Health and Social Care Act 2012 (HCSA 2012).
In this post, we look at the latest developments regarding NHS procurement, the transfer of public health functions, the new scrutiny regime for health services and the licensing regime to be overseen by Monitor.
What is changing?
Some of the main changes introduced by the HSCA 2012 are:
- The abolition of Primary Care Trusts (PCTs) and Strategic Health Authorities (SHAs) and the transfer of commissioning of secondary care services from PCTs to consortia of GP practices, the Clinical Commissioning Groups (CCGs).
- The transfer of public health functions from PCTs to central government and to local authorities.
- The extension of Monitor’s powers as a regulator of the health care sector.
(See Key changes under the Health and Social Care Act 2012: a quick guide.)
A key area of interest is around integration of services, which is a theme running through the reforms. Local authorities and PCTs have traditionally collaborated to deliver joined up services through the use of section 75 agreements and this will continue, though with more organisations round the table. Not only will there be more CCGs than PCTs (211 to 152) but, with many health and social care services outsourced, arrangements between CCGs and local authorities are likely to become more complex (see Practice note, Partnerships between local government and NHS bodies, and Standard document, Partnership agreement under section 75 of the National Health Service Act 2006).
Procurement of contracts for health care services
One area where CCGs will have little experience is in contracting. They will use commissioning support units emerging from the PCTs, at least initially, but they are also likely to continue to use existing section 75 agreements or enter into new such collaborations with local authorities.
On 13 February 2013, the National Health Service (Procurement, Patient Choice and Competition) Regulations 2013 (SI 2013/257) were published (see Legal update, The National Health Service (Procurement, Patient Choice and Competition) Regulations 2013 published). There was some speculation as to what these regulations might require, for example:
- Would contracts for health care services be subject to a procurement regime?
- If so, to what extent would such a regime be compatible with existing procurement legislation?
In fact, the regulations did not require contracts for health services to be advertised at all; though, oddly, they do permit a direct award without advertisement where only one provider is capable of providing the service. Instead, the duty was similar to that of best value which applies to local authorities: the NHS Commissioning Board (NHSCB) and CCGs would have to procure the service from providers that were capable and offered best value for money. However, the regulations also required commissioners to act in a transparent and proportionate way, and treat all providers equally (in particular not to discriminate against providers on grounds of ownership).
This obligation to treat providers equally may be interpreted as requiring health services contracts to be advertised and it seemed likely that there would inevitably be more competition in the sector as a result. That is certainly how the regulations were greeted by some medical professionals and politicians, who feared the regulations would lead to further privatisation and fragmentation of the NHS. However, Health Minister Norman Lamb has now stated that the regulations were not intended to go any further than the existing regime and that the regulations will be redrafted.
Therefore we await the updated version of the regulations to see if there are any substantive changes in approach or if it is, as Norman Lamb claims, more a question of presentation. Assuming the substantive position remains unaltered, the upshot of the regulations from a procurement perspective is likely to be that:
- The existing rules on Part B services contracts continue to apply.
- The value of the new regulations to a disgruntled bidder, unless they are amended in this respect, may simply be the ability to bring an action for discriminatory treatment irrespective of any cross border interest in the contract.
For a detailed analysis of the regulations, see Article, New procurement regulations for NHS healthcare services: big bang or evolutionary competition?.
Public health
Local authorities will be gearing up for the arrival of NHS employees who transfer along with certain public health functions on 1 April 2013. The budget for local authority public health functions has been announced, see Legal update, £5.45bn budget announced for local authority public health services which will enable authorities to form longer term commissioning plans. In addition, more information on the scope and organisation of local authority public health services has been published (see Legal update, NHS Bodies and Local Authorities (Partnership Arrangements, Care Trusts, Public Health and Local Healthwatch) Regulations 2012 (SI 2012/3094) laid before Parliament). The same regulations set out the prescribed nature of the Local Healthwatch organisation and matters to be included in its contract with the local authority.
Health scrutiny
On 8 February 2013, the Local Authority (Public Health, Health and Wellbeing Boards and Health Scrutiny) Regulations 2013 (SI 2013/218) were laid before Parliament (see Legal Update, Local Authority (Public Health, Health and Wellbeing Boards and Health Scrutiny) Regulations 2013 (SI 2013/218) made).
The regulations set out the new scrutiny regime for health services. Under the new regime, local authorities may review and scrutinise any matter relating to the planning, provision and operation of the health service in their areas. The NHSCB and CCGs must consult their local authority when considering any proposal for a substantial development of or variation to the health service in the local authority’s area, with the timescale for the decision. The local authority must take into account the effect or potential effect of the proposal on the sustainability of the health service in its area and can refer the proposals to the Secretary of State.
Monitor’s licence published
From April 2013, Monitor will have new powers to issue and enforce a licensing regime applicable to providers of NHS services and to enforce competition in the healthcare sector (see Legal Update, Monitor published new NHS provider licence).
The licence conditions reflect the key principles behind the reforms such as promotion of patient choice and integrated care, as well as reflecting some of the concerns raised during the passage of the HSCA 2012 through Parliament, such as whether providers would be required to charge fees in line with the National Tariff and concerning the protection of key services where a provider is in financial distress.
The HSCA 2012 is covered in detail in the following Practice notes: