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OFT moves to extend its jurisdiction over NHS mergers

The Office of Fair Trading has moved to take over responsibility for assessing mergers between NHS trusts and foundation trusts, in a development which could have significant implications for the “pipeline” of aspirant FTs.

It would go beyond the reforms brought in by the 2012 Health Act, which gave the competition watchdog responsibility for reviewing mergers between foundation trusts.

Until now, mergers between FTs and non-FTs have been reviewed by the NHS Co-operation and Competition Panel, which will become part of healthcare sector regulator Monitor in April. However, the OFT has now concluded that these mergers also fall within its jurisdiction, under law predating the Health Act.

OFT mergers director Sheldon Mills told a recent seminar in London that the 2002 Enterprise Act gave the watchdog responsibility for reviewing all mergers between distinct “enterprises”, meaning undertakings carried out for “gain or reward”.

Policy changes introduced over recent years meant both FTs and NHS trusts had “a substantial level of financial autonomy to apply any surplus that they derive from their activities for their own benefit”, he told the Westminster Health Forum on 29 November. “In essence,” he said, this meant NHS trusts were “acting in one sense as independent entities in a market based healthcare economy”.

Sheldon Mills

While services were free for patients, commissioners paid for them. The OFT thought that “clearly” meant those services were “provided otherwise than free of charge”.

Mr Mills continued: “In sum, therefore, we think it’s reasonable to conclude that NHS trusts are enterprises under the provisions of our act.”

He added that the way the OFT looked at mergers was “relatively similar” to the way in which the CCP had been reviewing them in the past.

However, one senior competition lawyer told HSJ the development could affect NHS trusts seeking to attain FT status by merging with an existing FT. Over the years, he explained, the CCP, Monitor and the Department of Health had developed a “particular policy approach” to the competition implications of NHS mergers: “On some transactions,” he said, “the CCP has taken a more pragmatic view, recognising that we’ve got to have some consolidation in this sector.

“If the OFT comes in and looks at this afresh, they might say ‘why are we approving any of these things?’”

He added: “If the involvement of the OFT signals a more formal approach to mergers, this may have implications both for the FT pipeline timetable, and also for the resources merging trusts will have to secure and pay for to navigate through the process.”

A Monitor spokeswoman said it was currently working with the OFT and the CCP “to decide who will have oversight in the future” over NHS trust-to-FT mergers.

Readers' comments (5)

  • Thought the idea was to make things easier across the NHS,that was surely the spirit of the Act .Looks like more red tape which will further delay and over complicate the FT pipeline.FTto FT mergers was one thing,but this? How many potential business models can one sector tolerate? Perhaps we should rebrand to become the National Health Enterprise Service.

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  • It's not red tape, it's consistency with the way the rest of the healthcare market is treated.

    For any market - and patient choice - to be effective, it cannot become dominated by even larger suppliers.

    We may not like the transition towards market-based ways of working but ultimately there either IS a market for NHS care or there isn't (and, again whether we like it or not, the decision has already been made that there is/should be).

    As an aside, I wonder how long it will be before NHS FTs are treated as "external" suppliers to commissioners and placed outside the scope of in-house/direct awards of business?

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  • A typical example of a quango looking to spread its wings and ensure its survival; whatever happened to the 'bonfire of the quangos'? With such duplication we have no chance of ever reducing the national deficit.

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  • What market? The CCP was as useful as a chocolate fireguard and just wasted everyone's time. What is the OFT going to do? Look at the market share of healthcare delivery in secondary care - miniscule. How many patients migrate beyond their local hospital. The only organisation convinced that there is a pluralistic market for healthcare in England is UNISON!

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  • Roy Lilley

    Doesn't the H&SC Act make the position clear?

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