The lead provider framework could have been a valuable vehicle in the evolution of the market had it attracted more interest, so where does it stand now?

The lead provider framework, launched last week, represents the culmination of an 18 month journey and considerable effort by NHS England, commissioning support units and private sector participants. It is a key plank in NHS England’s commissioning support strategy.

‘The key issue is how few suppliers made the list’

Its primary aim is to provide clinical commissioning groups with a mechanism to enable them to “source, as quickly as possible, a range of excellent and affordable services from quality assured providers”, according to the framework handbook.

From the list of successful bidders announced last month, and more generally, there is a serious question over whether this has been achieved.

The key issue is how few suppliers ultimately made it. There are 200 plus potential purchasers in this market, all of which have an imperative to recontract their support within the next 13 months. There are now only nine potential suppliers, the vast majority of which are geographically restricted CSUs.

Resourcing challenge

For CSUs, simply handling bids for their existing client base in this timeframe would be a near impossible challenge. The resource demands alone will be huge and will draw key resources away from supporting critical functions.

The ability of CSUs to launch bids outside their existing territory will be greatly constrained.

‘NHS England places huge emphasis on CCGs working together to gain volume discounts’

The private sector players, while well versed in the art of bidding, will still have limited capacity and “bid budget”. They will focus on a carefully selected and ruthlessly “qualified” number of “high value” target CCGs.

CCGs that fail to score highly on this assessment are likely to struggle to attract interest from these organisations and will be reliant on stimulating competition between local CSUs.

NHS England seems to be aware of this risk and places huge emphasis on CCGs working together to gain “volume discounts” and to ease the process generally.

While it is certainly true that a larger group of CCGs buying collectively is likely to significantly improve their chances of attracting bidders, most CCGs will know how challenging and time consuming this is to achieve in practice.

Too much information

For all participants this process will also not be as simple as the framework literature makes out. For bidders to properly formulate their prices and give CCGs a genuine baseline to evaluate, they will require a raft of information on the existing services.

This will be necessary irrespective of how much or how little of the standard framework documentation CCGs use.

‘The staffing implications alone will take months to unravel’

The organisations that will predominantly produce this information are CSUs. They are likely to struggle to provide this support on top of the demands of the day job and the tsunami of bids they will need to respond to themselves.

Aside from the capacity constraints and process impediments, the implications of a CCG or group of CCGs then exercising a choice to move suppliers provides a further major complication. The staffing implications alone – TUPE (transfer of undertakings) or not – will take months to unravel.

The “stranded cost” implications of this must also surely be factored into the evaluation upfront, in order for CCGs to build a robust business case that satisfies NHS England’s increasingly stringent evaluation.

Where TUPE doesn’t apply, redundancy risk falls on the incumbent provider – thus in most instances, NHS England – and this is likely to be pushed back onto CCGs under emerging “stranded cost” rules, which may well scupper any argument they had to move in the first place.

Impossible process

Faced with this almost impossible process, many CCGs may conclude that it is just too hard and it is much simpler to take services back in-house.

The framework has not entirely created this situation. However, the lack of bidding capacity and effective choice – one of the key aims of the process – is a major shortcoming and has been caused by the complete failure to garner sufficient interest in this putative market.

This has been hugely exacerbated by the parallel drive to radically reduce the number of CSUs.

‘The framework really misses its principal aim’

All of which means that the framework really misses its principal aim. The very limited number of successful bidders also throws some doubt on the claims that the framework can be viewed as providing “the best and most affordable services in the market”. The sheer number of major providers that did not even bid is an obvious challenge to this claim.

The problem CCGs now face is exacerbated by the very tight timescales, which require all these tender processes to be completed in the next six months.

Other options

There were and still are alternative options for CCGs, other than simply insourcing, with the vast majority of support services being available from any number of existing public sector frameworks.

In hindsight, it might have been a better approach to require CSUs to bid for access onto these existing frameworks and use this as a mechanism for supporting CCGs’ procurement efforts. That approach would, however, have pitted CSUs against the full force of the commercial world and it is likely that some would have failed to succeed in such an environment.

‘It’s no surprise that given this unorthodox situation, the wider market largely absented itself’

The framework was potentially a sensible middle ground. Had it attracted more interest, had the CSU numbers not diminished so markedly and had it been available much more quickly, it could have been a very valuable vehicle in the ongoing evolution of this market.

NHS England now finds itself in the uncomfortable and seemingly protracted position of being custodian of a market in which it is both the majority supplier and, at the same time, fully regulates the purchase side. It is therefore no surprise that given this unorthodox situation the wider market largely absented itself.

Using the framework to control the market on both the supply and demand side, and to give CSUs a chance to get established, was an understandable and pragmatic response from NHS England. But it was fundamentally at odds with the policy of nurturing the market and allowing CCGs choice.

Instead, these interventions largely created hostility and disillusionment among potential suppliers and customers, leading to market contraction rather than growth.

Tim Andrews is director of the Commissioning Lab and a former managing director of Cheshire and Merseyside CSU