Competition investigations spell problems for mergers

Last month the Office of Fair Trading referred proposals for the first merger between two foundation trusts – Royal Bournemouth and Christchurch Hospitals and Poole Hospital – to the Competition Commission for an in-depth investigation.

Before doing so it had seen Monitor’s advice on the matter, made public last week, which disagreed with the trusts’ case for merger.

It said that only one of five service reconfigurations proposed by the trusts had long term benefits which outweighed the loss of choice created, and which could not be achieved through other means.

It also disputed claims from the trusts about the level of back office savings which could be realised through the merger or that an enhanced ability to raise capital was of benefit to patients.

Bruce Kilpatrick, head of the city competition team at law firm Addleshaw Goddard, commenting on the advice, told HSJ the OFT required “significant evidence” of benefits to patients, including demonstrating the merger is essential to those benefits being realised.

Jeremy Roper, a partner at DAC Beachcroft, told said it demonstrated trusts were likely to find it difficult to evidence those benefits before they had put the plans into operation.

Meanwhile, the Cooperation and Competition Panel earlier this month said it had decided to review long standing plans to reconfigure some acute services in Bristol. This also raises questions about the impact of competition concerns on service and organisational change.  

Under the Bristol Health Services Plan, which has been in development since 2003, North Bristol Trust would run all breast care and urology services in the city while University Hospitals Bristol Foundation Trust would take on  head and neck; ear, nose and throat; orthodontic; and oral and maxillofacial services.

These plans are separate to ongoing discussions about a full organisational merger of the two organisations.

However, the panel concluded that as the service transfers were interdependent they constituted a merger, which it will carry out a review of.

The trusts have been warned not to close any services before the review is complete in early April. However, they are pressing ahead with reconfiguration of services as planned beginning on March 25.

Mr Roper said it was not uncommon for the CCP to get involved in service changes plans until a late stage, as they have in Bristol, because many commissioners and providers are not aware of the reach of its role and definition of competition. He said ideally NHS organisations should talk to the panel about plans at an “early stage”.

In both Bristol and Dorset the plans have the support of commissioners and NHS South of England.

NHS Confederation chief executive Mike Farrar told HSJ there would be “difficult times ahead” if the OFT and CCP approached healthcare in the same way as consumer goods.

“I’m concerned if they are simply applying the same rules and mind sets as they would to other sectors that we might not get the right outcomes,” he said.