OFT chief rejects need for law change on NHS merger controls

But, in an exclusive HSJ interview, Clive Maxwell rejected the suggestion floated recently by NHS England chief executive Sir David Nicholson that the government might need to legislate to prevent the new system of competition regulation from obstructing improvement to NHS services.

Under the 2012 Health Act, the OFT has taken on responsibility for reviewing all mergers involving NHS foundation trusts. The watchdog began its first such review – of a proposed merger between Poole Hospital and Royal Bournemouth and Christchurch Hospitals – in May 2012. In January 2013 it referred the proposals to the Competition Commission, which, in October, blocked the merger.

There has been widespread concern in the health service that the new system of merger controls is too time consuming, too expensive, and will stand in the way of necessary reconfigurations. Speaking to NHS commissioners in September, Sir David said the government had not intended its competition reforms to have the effect they were having, and suggested a change in the law might be necessary.

But when HSJ put this suggestion to Mr Maxwell, he replied: “I think the important thing is we aim to make the system we’ve got work effectively, and that’s what’s on the table at the moment.”

He said that while design of the law was “ultimately a matter for Parliament”, he believed there were “benefits of having an approach to mergers which goes across the whole economy”. The current rules require the OFT to take advice from Monitor on the potential patient benefits of any merger that could substantially lessen competition. Mr Maxwell argued they meant “we can benefit hugely from the expertise of that [healthcare sector] regulator”, adding: “I think that sort of regime is the right one.”

Mr Maxwell said that where Monitor was saying the potential patient benefits of a merger were “significant and worth having” that would be a “a very significant factor in [the OFT’s] judgement” on whether or not the merger should be referred. However, he could not say “definitively” that the OFT would not refer in such cases.

Making the system work well would depend on close working and cooperation between the OFT and Monitor, he continued: “I also think, perhaps more importantly, that the engagement between the authorities and the individual hospitals needs to be as strong and as effective as possible, and that is where I would primarily see the scope for some significant improvements.”

This involved encouraging would be merger parties to come to the OFT and – more importantly – Monitor “as early as possible”. Mr Maxwell pointed to the recent joint statement by the OFT, Monitor and the commission, in which Monitor committed to providing informal advice to trusts on how they might assess the prospective patient benefits and potential competition implications of merger proposals. He said this was an “important” change, that would help trusts think through their options better.

HSJ also asked Mr Maxwell if the OFT would get involved in the proposed merger between integration pioneer Torbay and Southern Devon Health and Care Trust and acute FT South Devon Healthcare. Totnes MP Sarah Wollaston recently told MPs this merger would be “held up by the OFT”.

Mr Maxwell declined to comment on individual cases, but added the “general observation” that “competition authorities like the OFT tend to be less concerned about cases where you have mergers going on between organisations which provide different services from each other”.

In April next year most of the OFT will itself be merged with the Competition Commission to form the Competition and Markets Authority. Mr Maxwell said he did not expect this to lead to a “significant change in policy and arrangements”.