The NHS Long Term Plan - Procurement and Competition

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The NHS Long Term Plan - Procurement and Competition

Published 18 January 2019

The NHS Long Term Plan raises some interesting issues for anyone involved in procurement and bidding in the health sector.

The Long Term Plan raises some interesting issues for anyone involved in procurement and bidding in the health sector. The most obvious being the proposal to repeal the NHS (Procurement, Patient Choice and Competition) (No.2) Regulations 2013 and allow NHS commissioners to decide the circumstances in which they should use procurement, subject to a best value test to secure the best outcomes for patients and the taxpayer. There is also the proposal to free the NHS from wholesale inclusion in the Public Contract Regulations 2015 (PCR) and instead set out statutory guidance for the NHS to follow. Presumably, the latter point relates only to the procurement of health care services because NHS organisations will still have to comply with the PCR when procuring supplies, works and other types of services covered, until this is amended following Brexit.

Does this mean that procurement professionals should be dusting off their CVs and providers should be concerned about a lack of opportunities in the future? - We don't think so, given that in order for commissioners to satisfy a "best value test" to secure the "best outcome for patients and the taxpayer" (our emphasis), it will be difficult to do without some market engagement and testing.

At the moment, the LTP has established only high level plans, and it will be interesting to see what the guidance for commissioners sets out: whether it will give clarity on some of the conflicting aspects of the legal framework issues that NHS commissioners face (such as issues around managing v. preventing conflicts of interest), and whether disgruntled providers will have the opportunity to complain and stop the awards of contracts through a Court or through a regulator. 

It is certainly the case that the current procurement legislation for NHS commissioners throws up a number of barriers to integration, and these have come to light over the last few years when looking at new models of care.  For example, the issue of whether or not to run a competition in the first place has arisen for a number of commissioners, and the nature of integration requires a transformation from the current way services are provided over a long period of time, with potential changes having to be made during that period of time. And it is hard to specify exactly what this looks like upfront in a procurement process – which makes compliance with the procurement legislation challenging.  It is difficult to see, however, how there could ever be no competition, or at least the testing of quality and pricing of providers, particularly following the lessons learned from the Uniting Care Partnership failure (that triggered the development of the ISAP by NHS England and NHS Improvement) and the Carillion collapse.  

There are a number of proposals within the Long Term Plan that will have procurement implications for commissioners and providers such as the proposal to reform diagnostic services including pathology and imaging networks (it is not clear how these will be different (if at all) from the Pathology Networks initiated by NHS Improvement in 2017). Pathology contracts tend to be procured and put in place for a term of at least 7-10 years in our experience. If these contracts have to be varied, unpicked or indeed terminated to fit into pathology networks, then there will be potential procurement risks to be considered on the part of the Trusts. The market will no doubt be keeping a watchful eye on developments.

The focus on early detection and treatment to help patients live longer, healthier lives will require the procurement of digital technology and mobile services for lung CT scanners, for example. The impact of changes to service models will require suppliers of products into the NHS to possibly adapt/change their delivery models. 

Since the new NHS Supply Chain category towers have been set up, there is a push for more collaboration on a national scale to achieve further savings.  The Long Term Plan sets out the aim to double the volume of products purchased through NHS Supply Chain to 80% and to extend the number of nationally contracted products. This could have an impact on suppliers to the NHS, particularly where NHS Supply Chain Framework Agreements are rationalised.  However, there is still no absolute mandate to purchase through NHS Supply Chain and if Trusts can achieve further savings by purchasing direct, they may still do so.

The proposal to simplify costs and overly bureaucratic contracting processes, requiring commissioners and providers to redesign and reduce the costs of transactional services could require significant change across some organisations and is likely to encourage more collaboration.

In conclusion...

The Long Term Plan could arguably lead to further opportunities for suppliers to the NHS, those involved in digital technology and any product/service that will deliver savings to the NHS. The plans in relation to repealing/revising the procurement legislation could be helpful at unlocking integration, and whether dissatisfied providers will have any rights to challenge/prevent contract awards will be interesting. 

Clearly, there will be a further opportunity for Parliament to revise procurement legislation if and/or when the UK leaves the EU. The draft Procurement (Amendment etc.) (EU Exit) Regulations 2019 were published in December 2018 – they do not propose to radically alter the procurement regime in terms of how procurement processes will be carried out and, interestingly, they do not include revisions in relation to the health care services, so perhaps we will see a revised draft over the coming months.

Authors

Mary Mundy

Mary Mundy

Leeds

+44 (0)113 251 4727

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