Competition On Price?

The Coalition government made assurances to the Future Forum [1] that it would not allow competition on price only on quality.

5.25. Finally, we will maintain our commitment to extending patients’ choice of Any Qualified Provider, but we will do this in a much more phased way, and will delay starting until April 2012. Choice of Any Qualified Provider will be limited to services covered by national or local tariff pricing, to ensure competition is based on quality. We will focus on the services where patients say they want more choice, for example starting with selected community services, rather than seeking blanket coverage. There will be some services, such as A&E and critical care, where Any Qualified Provider will never be practicable or in patients’ interests.

Further, the AQP rules on the Supply2Health website, says [2]:

Any Qualified Providers are paid a fixed price for that service, which is either national tariff (and includes MFF), or where a national tariff does not yet exist for that service, commissioners will set the price for the service locally and that price is paid to all providers qualified by that commissioner.

However, Dorset County Hospital NHS Foundation Trust [3] notes in their Forward Plan that their commissioner was making below tariff AQP a requirement of the tender:

NHS Dorset, Bournemouth and Poole commissions nearly 90% of the Trust’s contractual clinical income and the Commissioner has signalled its intention to test three services under the Any Qualified Provider contractual basis. Two of the services included in this process are Community Endoscopy and dermatology which are strongly linked to the acute services offered by this Trust. This provides an opportunity for the Trust to expand services into the Community but it is noted that the Commissioner has included an affordability clause seeking a 6% discount on national tariff. The Trust does not believe that Community services in a dispersed rural economy can be delivered at this level of discount and has not bid at this time.

Such “affordability clauses” are not allowed under the AQP rules which imply that the commissioners have overstepped their authority.

Poole Hospital in its Forward Plan [4] also lists AQP as a threat:

The Trust faces increased competition or lower prices or both through the commissioners’ plans to tender certain services to “Any qualified Provider”. Current plans include dermatology, endoscopy and pain services

Another trust in Dorset, Royal Bournemouth and Christchurch, says in their April 2012 Board Papers [5] that there was disagreement between the commissioners and the trust on the clinical specifications of the services that will be tendered through AQP:

Recently Dorset cluster has publicly issued its specifications. Clinical consultants in these fields were asked to comment on a draft. The clinicians were dismayed that their comments to help ensure quality standards have been ignored. The PCT have not formally consulted on these proposals. They have informally mentioned these areas as possible AQP topics to stakeholders primarily to meet the significant growth pressures in these areas. The actual proposals though are significantly different from that informal briefing.

Royal Bournemouth and Christchurch were pessimistic about the result:

In Dermatology the express intention of the PCT is an [sic] effect 80% reduction in funding for the specific work undertaken by the three current Dermatology units. This equates to at least an £800k loss for Dermatology and £500k loss for Endoscopy. No provider could sustain current services and these losses. The direct effect could be the closure of services.

Clearly the trust feels that tendering these services would have a significant effect on their finances and could lead to the trust no longer providing them. Further, the trust said that this could lead to “price competition”:

Despite trying to discuss this with local commissioners, there has been no substantive engagement and no indication they are willing to consider alternative ways of achieving their objectives. If the tender proceeds then GPs will have price competition for the same type of service but at different prices. This will destabilise the complex and acute care provided locally, as AQP providers “cherry pick” easy, profitable work.

The June 2012 board papers [6] indicated that AQP would be detrimental to integration and multi-disciplinary teamwork:

Both the PCT and potential bidders have failed to appreciate the importance of integration including how any third party providers would properly interface with existing MDT meetings when discussing future patient pathways. It is clearly critical that any patients with cancer are discussed at an MDT meeting and thus far no arrangements have been made that will enable this to occur.

The board papers indicated that there was a serious disagreement between the PCT and the consultants of all the trusts involved:

The Consultant Dermatologists have already made plain that they do not support the current specification and are not willing to engage in an exercise to bolster new providers in the context of providing a service that is sub-optimal and not of a standard currently offered by the Trusts.

The disagreement was taken up by the Borough of Poole Health and Social Care Oversight and Scrutiny Committee, which discussed the issue on the 9 July 2012. The Committee wrote to the Secretary of State for Health saying [7]:

After careful consideration the Committee felt it had no alternative but to refer the matter to the Secretary of State for decision and to request that the PCT suspend its process of implementation in respect of these proposals until the outcome of such referral is known. We have not been adequately consulted and believe the proposals are not in the interests of the local health service (Health and Social Care Act 2001, 2002 regulations).

The Secretary of State referred the case to the Independent Reconfiguration Panel [8] who rejected the HSCOSC concerns:

Whilst that decision is ultimately the committee’s prerogative, its consequences are also their responsibility. Given the timing, the decision introduced potential delay for the start of new services for patients, affecting the legitimate interests of others across Dorset. In these circumstances, there is a need to act quickly and pragmatically with the local NHS to agree and execute the further consultation with the HSCOSC that would address their residual concerns. This has not happened yet and so there remains the clear opportunity and responsibility to resolve the matter locally as quickly as possible for the benefit of patients.

The Dorset trusts gave warnings that AQP would lead to “a service that is sub-optimal and not of a standard currently offered by the Trusts”. The situation in Dorset appears to be that the government wants AQP to result in competition on price.

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[2] Paragraph 2.3
[5] p72
[6] p47