Editor's blog Friday 25 February 2011: Competition matters. Will the real David Bennett please stand up?

The New World is becoming clearer and the battle lines drawn even more sharply.

Labour’s shadow health secretary John Healey wrote to SOS Lansley on Tuesday evening regarding the recent confusion over price competition.

Healey says in his letter that he was ”interested and encouraged by recent communications from your Department denying the intention to introduce of price competition under your reorganisation. Sir David Nicholson, in a letter to the service on 18 February, wrote that ‘there is no question of introducing price competition’. His deputy, David Flory, emphasised on the same day that allowing managed flexibility on price did not mean a move to price competition: ‘I want to stress that this flexibility is not intended to signal a move to price competition’.”

He also cited Health Minister Simon Burns’ words in a Newsnight interview on 19 January 2011, “It is going to be a genuine market. It is going to be genuine competition”.

In the text of the Bill, Healey singles out Clause 103: “(1) If a health care service is specified in the national tariff (as to which, see section 104), the price payable for the provision of that service for the purposes of the NHS is— (a) the price specified in the national tariff for that service, or (b) where the national tariff specifies a maximum price for that service, such price not exceeding that maximum as the commissioner and the provider may agree”.

Healey’s letter concludes, ”Given the statements from your senior officials contradict your own views and legislation, you have a duty to make clear your intentions for the future market you are creating … if you intend to pursue this price competition as a key part of your plan to turn the NHS into a genuine market then I suggest you inform your officials, and expect the Opposition, along with independent experts and professionals, to continue to expose and oppose the deeply damaging results this will have for NHS services”.

Co-operation and competition?
Meanwhile, the NHS Co-operation and Competition Panel issued its interim assessment of the Any Willing Provider challenge for routine elective care, which concludes that there is a case to answer regarding berhaviour by commissioners that is inconsistent with the Principles and Rules of Co-operation and Competition.

The specific issue prompting the challenge is the change from national contracts with independent sector providers (under the Extended Choice Network (ECN) / Free Choice Network (FCN)) to PCT-based contracts. 70 PCTs have been reported to the CCP for behaviour inconsistent with the Principles and Rules. The CCP correctly notes that the justification for this ”depends, in many cases, on whether the actions that restrict choice also deliver offsetting benefits to patients and taxpayers.

"Submissions from SHAs and PCTs so far have emphasised the financial pressures PCTs are under, the need to control expenditure, and the cost-savings available from restricting patient choice and other actions that may ultimately limit patient choice, such as locally negotiated prices that are below the national tariff. Providers have also given examples of cost saving measures by PCTs such as imposing uniform minimum waiting periods before patients can be treated.”.

As a consequence of its review, the CCP recommends that ”the existing Extended Choice Nework / Free Choice Network arrangements be extended as a temporary measure so as to prevent unnecessary, and potentially damaging, interruptions in the availability of patient choice; and the implementation of new contractual provisions which may be found to be inconsistent with the Principles and Rules of Cooperation and Competition.”

The CCP will publish its final report in June 2011

The CCP is also assessing a specific complaint from property investment vehicle and workers’ co-operative Circle Health that NHS Wiltshire PCT (also acting on behalf of NHS Bath and North-East Somerset) has been guilty of this behaviour as regards Circle’s new Bath hospital.

Closing time
And today, NHS Supreme Soviet Chair Comrade Sir David Nicholson began the softening-up of public awareness of acute closures, telling BBC News’s Nick Triggle, ”Most hospitals will be able to survive and thrive in the new world. But undoubtedly there will be those that will find it difficult. The hospital service has grown enormously over the last 10 years in particular and we are going into a period where growth in the NHS is what they describe as 'flat real'. Those hospitals whose business model is based on increasing capacity have got to seriously look at the way they operate. That is why some hospitals are looking towards taking over community services".

Nicholson also told the interviewer that his "expectation" was that hospitals would not close completely. There’s a thing.

Will the real David Bennett please stand up?
Monitor’s newly-appointed chair, its former interim chief executive David Bennett has had an interesting week in the media.

He told Health Service Journal that Monitor ”will not be, must not be, subject to any form of direct political pressure” on the “politically sensitive” question of whether NHS pensions prevent private providers from entering the market.

Bennett added, in a reference to his period advising former PM Tony Blair at Number 10, “speaking as someone who has been very close to politicians making political decisions… I think on these really difficult issues it’s highly desirable that you take any inappropriate influence out of these things”.

This follows Bennett’s clear comments to the Health Bill committee that the numbers behind DH / KPMG assumptions regarding a 14% NHS advantage over private providers were ”an incomplete analysis”, and not ones on which Monitor would want to rely.

We looked into the 14% solution a while back.

Bennett told HSJ’s Charlotte Santry that the DH / KPMG impact assessment’s emphasis on the factors making the playing field less level for the private sector was ”unfortunate”: this is Whitehall-speak for ‘cretinous’.

In a rather contrasting interview, Bennett told The Times that Andrew Lansley’s metaphors of healthcare as a deregulated industry sets the lead.

Bennett told the paywalled-off-paper, “I worked for a very long while in lots of different countries in the energy sectors, in power and gas, doing exactly this sort of thing. There’s lots of evidence of benefits being produced … Some people talk about the idea that foundation trusts could link up into chains and there are some arguments for doing that.”

“It is too easy to say, ‘How can you compare buying electricity with buying healthcare services?’ Of course they are different. I would say ... there are important similarities and that’s what convinces me that choice and competition will work in the NHS as it did in those other sectors.”

“We, in the UK, have done this in other sectors before. We did it in gas, we did it in power, we did it in telecoms, we’ve done it in rail, we’ve done it in water, so there’s actually 20 years of experience in taking monopolistic, monolithic markets and providers and exposing them to economic regulation”.

So. Competition – it’s the way forward. Isn't it?