The first ever merger between two foundation trusts is to be scrutinised for its impact on competition by the Office of Fair Trading, HSJ has learned.
The proposed merger between Royal Bournemouth and Christchurch Hospitals, and Poole Hospital foundation trusts is due to be referred to the OFT next month.
Mergers between NHS organisations are usually referred to the Co-operation and Competition Panel, which takes account of the “special features of the health sector” when applying the principles of competition.
HSJ understands the OFT believes that foundation trusts’ independence from the health secretary and ability to make a profit mean they could be considered “enterprises” under the terms of the 2002 Enterprise Act. The act states mergers of two or more enterprises, where the smaller organisation has a turnover of more than £70m, as in this case, come under the jurisdiction of the OFT.
A spokesman for the OFT said clause 79 of the Health Act, which has yet to come into force but stipulates FT to FT mergers be referred to the OFT, had “clarified” the matter.
In contrast to the CCP, the OFT’s focus is on ensuring “open, fair and vigorous competition” to maximise choice for “consumers”. This will be the first time it has adjudicated over a merger of NHS organisations.
Joint rogramme Director for the proposed merger Gareth Corser told HSJ the different approach to competition taken by the OFT meant all parties were in uncharted territory.
He added: “As the first organisation going through this we will be under the spotlight and learning [about the process] as much as anybody else.”
The two trusts announced they were pressing ahead with a merger at the end of last year in order to ensure the “retention of sustainable services”.
Royal Bournemouth and Christchurch hospitals are within 12 miles of Poole Hospital. The nearest alternatives, Dorset County Hospital Foundation Trust, Southampton Foundation Trust and Salisbury Foundation Trust, are all more than an hour’s drive away.
If the OFT finds the merger anti-competitive it can ask the organisations involved to make changes to how they do business. If it finds a “substantial lessening of competition” it can refer the proposal to the Competition Commission for a more in-depth investigation. If this happens the process is likely to take 12 months in total.
In a joint statement the trusts said they were confident their proposals would be in the “best interests of the communities” they served and stressed no plans for significant service change had yet been proposed.