Merger probe should consider wider financial context, trusts argue

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CMA is examining the planned merger of Central Manchester University Hospital FT and University Hospital of South Manchester FT
The trusts argue greater centralisation of control in the NHS has lessened the role of competition
CMA blocked the merger of Royal Bournemouth and Christchurch Hospitals FT and Poole Hospital FT in 2013

An investigation by the competition regulator into the proposed merger of Manchester’s teaching hospitals should be viewed in the context of the financial deterioration and reduced autonomy of NHS foundation trusts, they have argued.

The Competition and Markets Authority is examining the planned merger of Central Manchester University Hospital Foundation Trust and University Hospital of South Manchester FT, due to “a realistic prospect of a substantial lessening of competition in some elective acute services”.

In a landmark decision in 2013, the CMA blocked the merger of Royal Bournemouth and Christchurch Hospitals FT and Poole Hospital FT.

But in their submissions to the CMA, the Manchester trusts argued that greater centralisation of control in the NHS in recent years has limited the role of competition.

They said: “The trusts believe that changes to the administrative and regulatory framework for the NHS in the past 12 months… largely in response to the financial constraints that have been placed on the NHS, have had an important impact on how NHS mergers should be viewed.

“Specifically, the deterioration in the financial performance of NHS acute trusts (which has been a consequence of the NHS budget not increasing in line with demand or cost pressures) has led to an increased emphasis on centralised management, and a reduced emphasis on NHS acute trust autonomy.”

They said centrally mandated financial “control totals”, the establishment of regional sustainability and transformation partnerships, and the introduction of an integrated oversight framework for FTs and trusts have further limited the freedom to “pursue independent strategies aimed at improving service quality and attracting patient referrals”.

The submission added that even without the formal merger, commissioners in Manchester have nevertheless signalled their intention to implement a single contract for acute services in the city, which “will inevitably reduce competition given the lead and subcontractor arrangements that this implies”.

The trusts also said UHSM’s ability to compete with CMFT can be expected to “progressively decline” if it remains an independent entity, due to the loss of further specialist services on top of the financial challenges presented by its PFI commitments.