Health secretary Andy Burnham’s rewriting of NHS competition rules undermines local decision making, conflicts with Labour’s manifesto and could breach competition law, argues Paul Corrigan. He claims commissioners should ignore it

On 17 September, Andy Burnham entered what he called “the debate” on the role of competition in the NHS. He said: “Let me begin with where I stand in this debate. The NHS is our preferred provider.”

Commissioners have a clear duty to commission care that improves the health of their populations

In his speech to the King’s Fund he went on to say that while “it is important for the commissioner to test whether these services provide best value and real quality”, they should “provide an opportunity for existing providers to improve before opening up to new potential providers”. He has now begun to clarify this personal preference through a letter to Brendan Barber, general secretary of the TUC.

What Mr Burnham will know is that over the last few years the NHS has moved from a single organisation with an individual at the top to a system which he and others are managing.

So while he may have a preference for one provider over another, it is also the case that commissioners have been given a clear duty to carry out their work with a single clear preference for the best patient outcomes. This duty overrides any preference they may have for one provider or another. 

And within the system there are a range of reasons why commissioners should decide to continue with this duty rather than follow the secretary of state’s individual preference.

First, commissioners have a clear duty to commission care that improves the health of their populations. Of course, on many occasions commissioners will look at the best interest of patients and, as a direct result of this, commission care from an NHS provider. On some other occasions they may recognise a struggling provider is improving and needs to be given some time to improve. Often this is clearly in the interests of patients.

But there will be those times when their view of how to improve outcomes will lead to different actions. They may have the opportunity to bring in a new provider that will provide better services at better value. They will do that because it is in the best interest of patients.

Detrimental impact

If there was a clash between the health secretary issuing guidance about his preference for a particular kind of provider, the board of a primary care trust would be correct to interpret their duty as one of improving the health and healthcare of their population.

Second, in the same speech, Mr Burnham said he wanted to dismantle some of the old apparatus of top-down changes. Given this belief in local drivers for improvement he would not want to tell every commissioner how to make every decision about commissioning healthcare.

Most PCTs have taken the government policy of local commissioning for local people to heart. It would be strange for a health secretary who argues for local decision making to then undermine that local process.

Third, denying commissioners the opportunity to make such a decision will also, on those occasions when they feel they have to go out to the market, have a detrimental impact on quality. The link between commissioning different providers to provide quality was made clear in one of the main announcements in Mr Burnham’s speech.

He announced an intention to extend the quality element in the payment by results programme, suggesting an important extension of the tariff to add payment for quality. The aim will be to encourage improved outcomes by rewarding providers for better quality. Better providers will gain more commissions and less resource will go to those that are not so good.

This adds a new quality improvement element to the competition that already exists.  Given this, it would be odd to expect commissioners to stop the competition.

The fourth issue concerns the independent providers that are now to be discriminated against. The government has spent time helping a new and larger third sector of providers to develop. They recognise this is a vital and growing part of our society. It provides services and organises social capital in new and exciting ways.

The third sector is already looking to realise the increased opportunities in primary and community care. The Department of Health had many discussions with commissioners and third sector providers about how this market could flourish. Indeed the DH has spent public money on developing this area. But third sector organisations are not “the NHS” and therefore would, as far as Mr Burnham is concerned, not be “preferred” by him.

Legal dilemmas

Patients and the public deserve this choice and I am sure commissioners will want to go on providing them with that opportunity. Any guidance from the health secretary about his personal preference will not stop commissioners from using the third sector.

Fifth, there is the role of the cooperation and competition panel. Andy Burnham’s predecessor, Alan Johnson, recognised the NHS would have to commission services working within competition law, so he set up the panel to provide guidance to commissioners and providers to keep on the right side of that law. It was there to show everyone that anti-competitive behaviour would not be allowed.

Apparently Mr Burnham is now looking at changing the rules the panel works to. If these are amended to enforce the preferred provider policy, the panel will be enforcing anti-competitive behaviour. Under these circumstances an organisation that was set up to protect the NHS from the application of competition law would have become anti-competitive. Commissioners would then have to make their own judgements about whether their actions were legal.

Sixth, the day before this speech the DH published its world class commissioning assurance regime. Over the next few weeks every PCT in the country will be judged against its capacity to deliver on these competencies.

Several of the competencies demand that PCTs are able to make markets, intervene in them and procure health services to create the best value for money. For example, competency seven says PCTs need to stimulate markets and “the benefits of changing providers”. Competency nine on procurement says that PCTs should have contracts with defined break clauses.

World class commissioning does not say PCTs should tender everything all the time. It does say they should have the opportunity and the skill to do this when they think it is right for the health and healthcare of their population.

Weapon of competition

PCTs’ success in meeting these competencies will be judged on a four-point scale. If PCTs follow the health secretary’s provider preference they will all be at risk of getting the lowest grades on these competencies.

Apparently Mr Burnham wants to issue new world class commissioning assurance guidance that would in some way back up his provider preference. Does that mean he will tear up what was issued a month ago and instead issue a set of guidance which gives high marks to PCTs that don’t create markets and that don’t procure? Or in fact is the new guidance going to have to wait for next year and therefore, for this year, PCTs will still be expected to make markets?

Seventh, the health secretary says he expects PCTs to improve value for money at a much faster rate. To achieve this they will need every possible lever of power and influence over the health system.

As a result, this is not the best time to deny the NHS the weapon of competition to drive up value for money.  

PCTs have been working with these seven different policies to improve the outcomes they commission for patients. They should continue to follow that approach.

PCTs are non-political organisations. But, as part of the NHS, they could look to the manifesto the government was elected on. There they would find the policy people voted for said: “Whenever NHS patients need new capacity for their healthcare, we will ensure that is provided from whatever source.”

So both the electorate and commissioners place a preference for patients over that of any single provider.

Andy Burnham stands ground after taking fire on competition rules