10 min read

Editor's blog Friday 8 April 2011: Does Mr Lansley understand how competition law may apply to NHS commissioning?

Good morning.

I'm once again grateful to a friend of Health Policy Insight for transcribing Secretary Of State For The Time Being Andrew Lansley's appearance on BBC Newsnight, which appears below.


Click here for details of 'A pause for not-listening and telling us a love story', via subscription-based Health Policy Intelligence.


A thought or two, further to yesterday's posting of Mr Lansley's written answer to the Health Select Committee, in which he wrote, "case law suggests commissioners of NHS services, including GP consortia, would not be considered 'undertakings', for the purposes of competition law, in relation to their purchasing activities".

It's a point of view.

Of course, it relates to case law as the NHS was - and prior to Mr Lansley's explicit intention to make choice, competition and commissioning the three key drivers of change. The future NHS is to be very different indeed.

What is rather interesting, however, is the fact that Our Saviour And Liberator won't show anyone the actual legal opinion on which his view is based.

So what legal opinion can we see?
Some of the published legal opinions on this subject make for interesting reading:

Page 4 of this document from the NHS Confederation PCT Network and Mills & Reeve on procurement and competition for GP commissioners is interesting.

It is clear that "Whether or not competition law actually applies to GP commissioning consortia in the future will, however, depend upon their exact form and functions and the precise legislative framework under which they act.

"Also, competition law is a highly complex area which is constantly developing, with new cases being decided and new guidance being issued all the time. This leads to uncertainty as to its application.

"The proposed reforms make it clear that competition will be more robustly enforced in the health sector in future. Consortia will therefore need to consider competition law as the proposals develop".

"The NHS Principles and rules for cooperation and competition ... remains in force and expressly applies to both PBC clusters and shadow GP commissioning consortia. This means that GP commissioning consortia will need to be aware of, and comply with, the requirements of the PRCC as they begin to take on a commissioning role.

"Understanding and complying with competition policy may also assist in reducing the likelihood of non-compliance with competition law, if in the future it extends to GP commissioning consortia".

Have a look at this clear Q&A document from Primary Care Commissioning, which was written by by Edmund Forey, a solicitor specialising in commercial and competition law with Morgan-Cole.

It says, "The competition rules apply to “undertakings” (entities that engage in economic activity – that is, the offering of goods or services on an economic market, with the potential to make a profit). Case law also makes clear that where health bodies fulfil a social function, based on the principles of universal cover and national solidarity (being funded by social security contributions and other state funding), to provide a service free of charge, they do not engage in “economic activity” and so are not undertakings for the purposes of the competition rules.

"That means that the competition rules do not apply to health bodies, where these criteria are met. It may be that GP commissioning consortia will meet these criteria, with the result that they are not caught by the competition rules. However, caution is needed and each consortium will need to assess its own position carefully".

Lord Owen; 'If commercial enterprises are involved in a health system, this heightens the possibility that competition law will apply.'

And Lord Owen cites an interesting legal precedent on page 19 of his Fatally Flawed document.

Owen writes that "Simon Burns, the Minister responsible for the Bill, told the Commons Public Bill Committee that the GP commissioning consortia would not constitute economic “undertakings” (which would place them underc ompetition law) in their commissioning role, although they would continue to fall into this legal definition “when competing for services as providers”. (Commons, 15 Mar 2011:Col 766) .

"The Minister also claimed that competition law would not prevent vertical integration or an
expansion in a provider’s range of services, and that competition and choice “would strengthen incentives for providers to work together in integrating services. (ibid)

"The test of whether an entity is an “undertaking” for competition purposes is whether it is engaged in an “economic activity” and whether it performs an exclusively social function based on the principle of national solidarity (author's emphasis). As commissioning consortia develop using the autonomy available to them under the Bill, it is by no means clear that they would benefit from exemption from competition law.

"In the 2002 BetterCare case (BetterCare Ltd v Director General of Fair Trading [2002]) the UK Competition Appeal Tribunal rejected the argument that the local health and social services trust did not constitute an undertaking simply because it was carrying out a social function in purchasing care for the disadvantaged.

"The Tribunal argued that the trust was using “business methods” in its contracting. Academics claim that this decision: “suggested that European competition law will apply to an entity that participates in markets, even if the purpose is a social one, and even if the market is highly regulated.” (Mossialos, 2010:321-322)".

Lord Owen continues, "If commercial enterprises are involved in a health system, this heightens the possibility that competition law will apply. This has been raised in the context of competing sickness funds within the Netherlands social insurance system. The European Health Management Association has expressed concerns that the threat of the application of competition laws may limit healthcare reform across Europe (Saltman et al., 2002:pp44-45).

"It has been stated that 'If a Member State chooses to operate a health service predominantly on the basis of social solidarity, decisions of the bodies comprising it will not be covered by competition law. If, however, a Member State decides to introduce competition – for example, by contracting services out to competing suppliers of health care provision or by creating a competitive internal market – then competition law will apply, as the various bodies involved will be acting as undertakings.” (Mossialos, 2010)".

Meanwhile, a lengthy article in the BMJ by Rupert Dunbar-Rees (GP and healthcare management adviser) and Robert McGough (solicitor) concludes that "the technical argument reinforces the logical argument that the reforms further open up the NHS to EU competition law. ... the rules for procurement of goods and services will have the greatest effect ... the exact process to be followed depends on the nature and value of the services in question. However, procurement skills will remain a key requirement for commissioners.

"Procurements will need to be run exceptionally carefully when consortiums have bidders for a service from within their constituent member practices. Involvement of secondary care colleagues in the commissioning process is vital to ensure best outcomes, but commissioners will have to be careful not to prejudice the principles of transparency and fairness by favouring a provider whose staff have given advice".

Publish the legal advice
The competition issue looks significantly less black-and-white than the Secretary Of State appears to realise.

So why won't Mr Lansley publish his legal advice?

Isn't that the kind of thing you'd do if you were having a pause to listen and reflect?


Click here for details of 'A pause for not-listening and telling us a love story', via subscription-based Health Policy Intelligence.


Newsnight, BBC 2, 6 April 2011
Gavin Esler: Do you think you’ve done a good job of explaining these reforms?

Andrew Lansley: Well, of course, the modernisation of the NHS was something we set out in the White Paper last year and, actually, the principles of that have been widely supported in the professions and in the public, so, to that extent, yes, because putting –

Esler: Why are you in trouble now, then?

Lansley: Well, I’ll explain that, because putting patients at the heart – you know, “No decision about me without me” has been really embraced across the NHS and we’re really going to put patients centre stage in delivering better care. Devolving decision-making to people in the NHS at the front-line – absolutely supported. Transferring public health responsibility to local government – supported.

Esler: Yes, but you’re having to think again! I mean, we –

Lansley: I’ll explain where we’re thinking – I’ll explain where we’re –

Esler: But you have not explained it very well, otherwise you wouldn’t be having this pause for thought!

Lansley: You’re being kind of, you know – if you listen – stop and listen and engage with people in some areas, and we’ve set out that we will – that, therefore, by extension we haven’t engaged with people and secured their support in others. Actually, on many of these principles that I’m describing, including focusing on outcomes and getting world-class outcomes in the NHS, we’ve absolutely engaged with people. The BMA have engaged and agreed –

Esler: You’ve been Health Secretary and Shadow – seven years you’ve been doing this.

Lansey: And my point is we’re now going through the legislation – it’s about turning those principles on which people have agreed and supported into something that works for the NHS.

Esler: Do you also accept that – the Prime Minister’s words, you’ve been “charging ahead”, you’ve been trying to do too much too fast, you’ve not been bringing people with you.

Lansley: No. What we’ve been very clear about –

Esler: Charging ahead –

Lansley: What we’ve been very clear about is we’re not going to charge ahead with the legislation. We’re going to stop, we’re going to listen, we’re going to engage with people, we’re going to reflect and then we’re going to improve the Bill further. In the country, of course, the point is people are doing this, they are modernizing the NHS, they are coming together to make it happen – whether it’s NHS Trusts who know they want to be Foundation Trusts, whether it’s people in local authorities who want to take on the responsibility for public health in their area, whether it’s GPs in their – 88% of GPs across England who have now said “we want to be in consortia, commissioning”.

Esler: Yeah, but hold on, hold on.

Lansley: They’re doing it and we’re not stopping them doing it, they should be doing it.

Esler: They have said that, but as one – the BMA says of this “just because someone gets into the lifeboat doesn’t mean they support the sinking of the ship”.

Lansley: But the BMA support General Practice-led commissioning, they want clinical commissioning.

Esler: But it’s not –

Lansley: So it’s not a case that they don’t agree with us about that. They agree with us.

Esler: But you’re making it sound as if the GPs are out there saying “this is a fantastic idea!” – they’re not, they’re saying “we will implement it”.

Lansley: Well, how many doctors have you talked to?

Esler: Well, not as many as you have, but how many have you listened to?

Lansley: All of them.

Esler: All of them.

Lansley: I mean –

Esler: So when they say: “this might not work” –

Lansley: That is why we are listening and having a pause now.

Esler: Now –

Lansley: Because the GPs came back to us and said: “look – we’ve come together in the consortia. We weren’t around a year ago, collectively as consortia, looking at how we’re going to take this forward. We’re there as Pathfinders now, we want this to work for us, ’cause we’re going to take on these responsibilities. We want to know, for example, that we can really bring the doctors and nurses and other health professionals alongside us to do clinical commissioning.” They want the structures to make that happen. They want to see how the NHS Commissioning Board is going to work –

Esler: Sorry, this is a bit more complicated. Just let me make sure I understand that.

Lansley: OK.

Esler: In terms of the GPs, are you prepared to say: “look – the GP consortia – perhaps we do need other people of expertise on board –”

Lansley: Yes, yes –

Esler: “– other health professionals, perhaps patients’ representatives, local councillors”?

Lansley: Well, we’ve been very clear that we’re talking about clinical commissioning and that that’s where – exactly where the GPs are, that they don’t want it to be the GPs on their own, they want the GPs to be designing services alongside other health professionals, this is precisely one of the areas that we’re engaging with people and listening to now.

Esler: So you can give a bit on that, that’s a very important area.

Lansley: It’s about clinical commissioning and clinical joint decision-making.

Esler: But in that sense, I mean, why don’t you just have PCTs? I mean, what’s the big change?

Lansley: Because that wasn’t clinically led, was it?

Esler: Well –

Lansley: Clinical leadership is what this is all about. What we’re looking for is something that isn’t a top-down management system. We’re looking for something where we take one-third out of the real terms cost of management by getting the decision-making into the front line. I started – I – when I became Secretary of State last year, I started with not only the Department of Health and the NHS Executive but ten Strategic Health Authorities and 152 Primary Care Trusts and 909 Practice-Based Commissioning groups – it is too much, it is too many and it is top-down and it was management and administration led rather than clinically led.

Esler: But is –

Lansley: So actually that transfer is at the heart of what we need to do and get right.

Esler: But doesn’t that just bear out – principal criticism of you, which is you’re too bogged down in the detail – you’re not seeing the big picture and the big picture is –

Lansley: You think I’m too close to the NHS?

Esler: I didn’t say that: “too bogged down in the detail” is not the same as “too close to the NHS”.

Lansley: That’s where I am and if I – I’m perfectly willing to own up to a fault, which is that maybe I spend too much of my time with the NHS and too little, you know, trying to sell the politics. I’m not in this for the politics, I’m in this for the NHS. I’m a – you know, I’m in politics to give the NHS what I think it’s really needed for a generation – is an opportunity for those who are delivering the care for patients and the patients themselves really to feel empowered to make decisions on their own behalf as patients and on behalf of patients as clinicians.

Esler: Can you do it by 2013, April 2013, ’cause Nick Clegg seems to think you can’t?

Lansley: Well, there’s various things in the legislation, for example we – when we listened to the consultation last year, we – people said “you can’t get all of the NHS Trusts to Foundation Trust status by 2013, so we said 2014. So we are looking, and we have looked, at how we can do this. But I would say to you: remember also, we didn’t think at this point that 88% of England would have Pathfinder General Practice-led consortia already in place and working.

Esler: Well, we’ve dealt with that. Just a final thought –

Lansley: You may have dealt with it, but from my point of view it’s pretty important when you’re looking at the timetable.

Esler: Well, we’ve dealt with it by me saying to you the BMA says “just because someone gets into a lifeboat doesn’t mean they support the sinking of the ship”. This is the sinking of the ship!

Lansley: But they are there, that’s the point.

Esler: Well they’re in the lifeboat – there’s a lifeboat!

Lansley: Ask the BMA again: do they agree with clinical commissioning, with GPs taking the lead in commissioning services? They do. So it’s hardly a case of their being press-ganged into it. It’s actually – GPs want to do it because they know that they are people who are best placed in their area, on behalf of the people they serve, to design the services for patients in their area.

Esler: Health Secretary, thank you.

Lansley: Thank you.