As new Clinical Commissioning Groups (CCGs) come into existence there is much to consider - the authorisation process, commissioning support, the impact of dwindling resource, and the complex transition between old and new healthcare regimes. Many CCGs will have been too busy to consider the impending changes to procurement and competition rules.

Under current guidance, Primary Care Trusts must take account of the "Procurement Guide for Commissioners of NHS Funded Services" and the "Principles and Rules for Co-operation and Competition" when commissioning services. These documents have the status of guidance only, and were not intended for use by non-NHS bodies to challenge procurements and anti-competitive behaviours.

As from April 2013, a new statutory procurement and competition regime will apply. The Department of Health is currently consulting on the detail of the regulations; while nothing is final at this stage, the consultation document does offer some useful pointers as to the scope and focus of the impending legislation.

What's changing?

The underlying themes for the new regulations are that commissioners must:

  • Secure best value for patients
  • Use the best providers
  • Harness choice and competition, as appropriate, to raise standards

The regulations will enable any providers with a legitimate interest in a procurement of healthcare services - NHS, independent sector and third sector organisations - to submit complaints to Monitor. These might relate to how the procurement was run, perceived infringements of patient choice, and anti-competitive behaviour that works against the interests of patients.

As set out in sections 75 - 77 of the Health and Social Care Act 2012, Monitor will have the power to respond to complaints, run an investigation on its own account, and declare a contract ineffective if it finds the rules have been contravened. CCGs which breach the rules could find months of procurement effort is wasted and that service continuity and quality are seriously affected.

Another important aspect of this regulatory change is the drive towards the commissioning of integrated care. In a commissioning landscape, where long-term conditions affect 30% of the population and account for 70% of NHS spending, "simply doing the same things in the same way will not be affordable in the future" (Department of Health's consultation on "Securing the best value for NHS patients).

Commissioners must always follow transparent, rigorous, legally-compliant commissioning and procurement processes, since these are inherent to securing best value. Monitor will act as an independent regulator, exercising its duty to promote the provision of economic, efficient and effective healthcare for the benefit of patients. Monitor's brief will involve scrutiny of the commissioning/procurement process, and the degree to which commissioners have responded to the underlying purpose of the regulations.

CCGs will have two sources of guidance about the forthcoming regulations: Monitor, whose guidance will cover compliance; and the NHS Commissioning Board, which will issue guidance on procurement best practice. The two bodies are currently working together on a choice and competition framework to help commissioners shape their decision making.

Key features of the new procurement regime are likely to include the following:

  • Commissioners should use those providers best capable of meeting patients' needs and delivering value for money - regardless of whether they are an NHS, private sector or third sector organisation
  • Commissioners should use choice and competition as appropriate to improve quality and efficiency
  • Commissioners should keep an audit trail of their decision processes
  • Commissioners should establish arrangements for determining which providers are in the market - guidelines will be published about when and how to advertise opportunities
  • There will be no requirement for commissioners to tender contracts where there is only one provider capable of delivering the service, or in cases of unforeseen urgent need
  • Commissioners should establish transparent and non-discriminatory criteria for selecting any qualified providers (AQP), but this must not involve duplication of licensing or other regulatory requirements
  • All providers should be treated equally - this includes no discrimination in respect of provider organisation type - NHS, private sector, third sector;
  • Commissioners should promote equality - including no undue discrimination between patients

A matter of patient choice

Patient choice remains at the forefront of the ethos expressed in the NHS Constitution. Accordingly, CCGs will need to procure services in a way that is consistent with patients' rights to exercise choice. The consultation document does recognise, however, that placing additional requirements on commissioners is not appropriate at this juncture; instead, Monitor will be charged with examining how patient choice is developing and making recommendations about extending patient choice over time.

Creating a competitive climate

The current rules on competition are to be simplified. In short, this will introduce a single prohibition on commissioners, whereby they must not enter into agreements or take actions that restrict competition against the interest of those using the services. In this way, competition is used as a tool to drive quality and efficiency, rather than as an end in itself.

Commissioners should note that this prohibition captures both formal agreements and informal arrangements - where services have always been provided in a certain way, sometimes without sufficient scrutiny.

But there is no prohibition on restricting competition where it serves patients' interests - to ensure that integrated care could be delivered along a treatment pathway, for example. Indeed, Wragge & Co is working with some commissioners to look at models for commissioning integrated care that drive quality and innovation in the absence of competition.

Commissioners will need to show that they have evaluated the benefits and disadvantages of restricting or introducing competition in order to act in patients' best interests. The new regulations will, however, create a climate for competition, since it is proposed that any restrictions on competition will need to be indispensible to delivering the intended benefits.

Another requirement is for commissioners to show they have considered alternatives and explain why it was not possible to secure benefits for patients and preserve competition. While Monitor will be publishing guidance on this, it is intended that the regulations will give commissioners discretion to decide on appropriate strategies to achieving positive outcomes for patients. Competition will be an important tool in supporting this process.

Next steps

The Department of Health's consultation on primary care procurement closes at the end of this month and will feed into the regulations to be published next April. We await the detail, but the emerging theme is clear: more informed, patient-focused procurement by commissioners, with a remit to use competition to drive service improvement.