CCGs and NHS England have a fair degree of discretion in deciding how they will ensure compliance when commissioning healthcare services, writes Laurence Pritchard

Clinical commissioning groups and NHS England are required by the NHS procurement, patient choice and competition regulations to ensure that they commission NHS healthcare services from those providers that are most capable of securing the needs of patients, of improving the quality and efficiency of the services and that provide the best value for money.

‘CCGs and NHS England need to consider what steps to take to ensure compliance’

They are also required to ensure that arrangements are in place that enable potential providers to express their interest in providing the services.

A recent decision by healthcare regulator Monitor makes it clear that CCGs and NHS England have a fair degree of discretion in deciding how they will ensure compliance with these legal obligations when commissioning healthcare services.

Laurence Pritchard

Laurence Pritchard

In that case, a CCG in Devon carried out a commissioning exercise for the provision of community services for adults with complex care needs. Rather than going though a full blown tendering process, the CCG instead invited prospective providers of the service to propose their solutions to address the CCG’s objectives and used those proposals to select Royal Devon and Exeter Foundation Trust as preferred provider for the £100m contract with which to do further work.

The incumbent trust, Northern Devon Healthcare, which is set to lose the contract, complained to Monitor that the commissioning process used by the CCG was not compliant with the regulations. In particular, it said that the process operated by the CCG was in effect a direct award of the contract to Royal Devon and Exeter FT without competition rather than a truly competitive process consistent with the regulations.

Monitor disagreed. Consistent with its previously published guidance, Monitor made it clear that a formal competitive tender process is not always necessary to ensure compliance with the regulations.

A fair process

It ruled that the process used by the Devon CCG was fairly applied against all potential bidders, the CCG having undertaken public engagement and consultation over a two year period.

Although the proposals put forward to the CCG by the various healthcare providers interested in providing the services did not address all relevant points, Monitor concluded that the CCG was able to compare those proposals in the context of its commissioning objectives and to determine which proposal was preferable.

‘Issues relating to the regulations are unlikely to go away’

Monitor was therefore satisfied that it was reasonable for the CCG to rely on the outcome of its evaluation and moderation process to select Royal Devon and Exeter FT as the preferred provider and to proceed to do further work with it.

Monitor’s decision in this case can be contrasted with an earlier decision last year, when it investigated the commissioning by NHS England of cancer surgery services in Greater Manchester and Cheshire following complaints from two FTs that the process adopted was not based on quality of service, patient outcomes or patient preferences.

Monitor investigated the following specific issues regarding that commissioning process:

  • a requirement that bidding hospitals had to have university teaching hospital status;
  • a requirement that hospitals submit joint bids;
  • the use of a provider board in the decision making process comprising a number of, but not all, potential bidders for the services.

Following the initiation of Monitor’s investigation, NHS England discontinued the commissioning process and confirmed to Monitor that it would develop a new process, which would be fully compliant with the regulations; in particular:

  • it would not include a requirement related to a bidding hospital’s status as a university teaching hospital;
  • it would not include a requirement for potential providers to submit joint bids with another provider;
  • it would retain the provider board in a consultative capacity only.

Monitor has made it clear that the approach adopted by the Devon CCG will not work in all cases. CCGs and NHS England need to ensure that for each commissioning process they consider on a case by case basis what steps to take to ensure compliance with the regulations. Sometimes this will result in a full tender process, although it is clear that this is not necessarily the correct default option.

In other cases a full tender process will not be appropriate - for example, where a CCG is confident, based upon robust and cogent evidence, that an existing provider of services is the most capable and that it delivers the best value for money, it may legitimately decide not to run a competitive tender process.

Issues relating to the regulations are unlikely to go away, with Monitor having recently announced that it is conducting an investigation into the commissioning of elective care services in north east London following a complaint by Care UK.

Commissioners will be well advised to ensure that the steps which they take, and the reasons for those steps, are fully and accurately recorded in case they are subsequently the subject of challenge.

Laurence Pritchard is head of competition law at Weightmans LLP