Monitor has moved to address concerns that competition rules are thwarting much needed service reconfiguration. It follows warnings that clashing regulations are leaving trusts trying to merge in a “catch-22” situation.

The Competition Commission last week announced it was blocking the merger of Royal Bournemouth and Christchurch Hospitals and Poole Hospital foundation trusts on the grounds the trusts had provided insufficient evidence that the merger would benefit patients. However, the trusts argue it is impossible to provide greater detail ahead of a statutory public consultation, which could have an impact on the service changes.

King’s Fund chief executive Chris Ham said: “There is a real clash of different requirements. On the one hand there’s the regulation of mergers and, on the other hand, the sensitivity of reconfigurations. I think trusts are in a bit of a catch-22.”

Commission chair Roger Witcomb told HSJ the trusts had not provided enough evidence that a proposed new maternity unit would actually be built or enough detail about plans to reconfigure the two accident and emergency departments on one site. He highlighted the fact trusts had not identified where the main emergency department would be located - or considered the knock-on effect on other services that would need to be co-located.

“People from whom we took advice, including NHS England and Monitor, said that kind of decision needed fairly detailed local assessment. That assessment wasn’t done. It really is as simple as that,” Mr Witcomb said.

However, Poole chief executive Chris Bown said the trusts had revealed “as much detail as would have been possible for any NHS body to put forward” while “recognising there is still a need for public consultation”.

Mr Bown said the trusts were advised by management consultants to “merge first, reconfigure later” so the service change could be led by one “corporate body”. He said foundation trusts’ licences required them to make decisions in the best interests of their organisation, making it difficult for them to advocate plans under which they would lose significant services and, therefore, income.

The commission, Office of Fair Trading and Monitor last week published a joint statement on the assessment of NHS hospital mergers. It said in future Monitor would offer “informal advice” to trusts in the early stages of planning a merger and the OFT and commission would place “significant weight” on Monitor’s advice regarding the potential patient benefits.

Mr Bown said although this could be helpful, the commission’s problem with the trusts’ plans had been “whether they believed the benefits would in fact be delivered”.

“No matter how strong the benefits case you make, their requirement for certainty around delivery would still come up against the dilemma around public consultation,” he added.

The statement also seeks to clarify how the “failing firm” test used by the OFT and the commission applies to NHS organisations. This allows a firm facing failure to merge, even if it reduces competition, because it would disappear anyway. In last week’s case, the commission rejected the argument that Poole, which is predicting a deficit in 2014-15, was likely to fail without a merger. It argued the trust would not exit the market in the traditional sense as commissioners would ensure core services continued to be provided.

However, the regulators’ statement said it would not be “necessary for a provider to have failed before we can find that, without the merger, it will not be a strong competitor”.

In addition, where hospitals are “demonstrably failing” - meaning they are subject to regulatory action by Monitor or the Care Quality Commission − the competition authorities “may conclude that the proposed merger has no impact on patients” because they would lose the alternative choice of provider anyway.

Sharon Lamb, partner at Capsticks’ commercial department, said these were “important aspects” of the announcement. “Monitor and the OFT say that their approach will depend on the evidence that is offered to them. This means, of course, that this approach may not be helpful if a trust considers that, in due course, it is likely to fail but doesn’t yet have the evidence to show that it will fail,” she said.

The joint statement will be followed by a memorandum of understanding later this month setting out how the organisations will work together.

Monitor chief executive David Bennett said the organisation’s involvement earlier should make the process more straightforward and mean fewer mergers are referred to the commission.

Topics