Earlier this year Calderdale NHS 38 Degrees asked Calderdale Clinical Commissioning Group(CCG) to change its Constitution, in order to protect Calderdale NHS from back-door privatisation.

Reviewing its constitutution and procurement policy in response to 38 Degrees’ request, Calderdale CCG decided there was no need to change the constitution – despite acknowledging a public perception that commissioning healthcare services from private healthcare companies “is a fundamental threat to the sustainability of NHS providers”, and also endangers the provision of health care that is free at the point of need.

This Review is the subject of a Report to the CCG Governing Body: CCG’s approach to Procurement: Procurement Policy & CCG Constitution. The Report recommended minor clarifications to CCCG’s Procurement Policy. The CCG Governing Body accepted the Report’s recommendations, which came into effect on October 20th 2013.

Ken Cheslett, Chair of Calderdale 38 Degrees, said,

“Calderdale 38 degrees are concerned and disappointed that Calderdale CCG do not appear interested in a more liberal interpretation of the regulations. We know there are authorities that have decided against putting services out to tender, therefore, in the interests of retaining our services within the public domain, we call on CCCG to devise a similar policy”

Unlike Calderdale CCG, Haringey CCG has amended their constitution as suggested by the local 38 Degrees group.

These amendments make the Haringey CCG more accountable, transparent and help keep big business like Virgin and Care UK out of the NHS locally.

But Virgin and Care UK are already running services in Calderdale NHS.

Rod Wells from Haringey 38 Degrees said,

“Haringey CCG have adopted amendments stating contractors/providers must be “good employers” i.e. be reputable, meet tax and NI obligations and keep to Equal Opportunities legislation. Other amendments exclude companies convicted of offences, and prohibit companies that use improper tax avoidance and offshore schemes. These all help protect the NHS locally from corporate involvement.”

Calderdale CCG- open to public scrutiny of its procurement activities and decisions

Calderdale CCG’s Report  said,

“…the CCG is open to public scrutiny of its procurement activity and the decisions it takes to award contracts for the provision of services…It is in the light of this scrutiny that the Procurement Policy has been reviewed to determine whether it remains ‘fit for purpose’.”

and that the Calderdale CCG Constitution commits to a Procurement Policy that will:

“ensure that…all relevant clinicians (not just members of the CCG) and potential providers, together with local members of the public, are engaged in the decision-making processes used to procure services” .

 

What you make of this commitment hinges on what “engaged in the decision-making processes” means, in practice.

Calderdale CCG will privatise services when required by law, or if this offers value for money

The decision  by West Cheshire CCG not to put its Community services out to tender  shows that CCGs don’t necessarily have to put services out to tender, but can stay with the services already provided by the NHS.

The Calderdale CCG Report states that:

“The CCG shall ensure that competitive tenders are invited where these would offer value for money and/or are a legislative requirement.”

To identify when a legislative requirement exists to put a health service out to competitive tender, CCCG relies on the Health and Social Care Act (HSCA) 2012, and also the Public Contracts Regulations 2006.

The Public Contracts Regulations 2006 are the source of CCGs’ legislative requirement to put services out to tender when the contract is above a threshold amount.

As the example of West Cheshire CCG shows, and the Calderdale CCG Report acknowledges, deciding when there is a legislative requirement to invite competitive tenders may well be a matter of interpretation.

The Report notes:

“The Department of Health has provided guidance on how these Regulations  may be interpreted but this guidance is not binding on CCGs; ultimately it is for CCGs to ensure that they comply with applicable law.“

How does CCCG calculate ‘value for money’?

A judgement about value for money is not straightforward. It all depends on what costs and benefits you choose to include in the calculation.

It is standard corporate practice to evade a variety of costs by externalising them – making other people (or the environment) pay.

Does Calderdale CCG make sure that no costs are externalised when it identifies contracts that would offer better value for money than existing NHS services do?

Does it include social benefit considerations?

A GP online article  says that according to David Hunter, a procurement specialist at City law firm Bates Wells Braithwaite, the Public Services (Social Value) Act 2012, is designed to allow public service commissioners to put social benefit at the centre of procurement decisions.

Mr Hunter explained that, in itself the Social Value Act would not negate the requirements of the section 75 regulations, but it would allow commissioners to take into account social or environmental benefits related to the service.

Mr Hunter added,

“If you are in a situation where you say the specification of the service will include (the social benefits), and we know there is only one provider who can do that, then rather than go through the expense of the procurement process, you can go with that provider.”

A narrow, short term view of costs and benefits would focus only on the particular service in question, over the limited time frame of the contract – and ignore the effects on Calderdale NHS of taking away this service and procuring it from a private health care company.

Hidden costs of “choice” and “competition” rules

For example, if Calderdale CCG decides to put a specialist hospital service out to tender, under the Any Qualified Provider (AQP) “choice” and “competition” rules, GPs will have to offer patients who need that service the choice of treatment from a list of registered “qualified providers”-  unless the patient has told the GP that they only want to receive healthcare from NHS providers.

Under AQP rules, the patient will not know which providers are NHS and which are private. And when they go for treatment they won’t find out either, since the private healthcare companies operate under the NHS logo.

But if patients choose a non-NHS provider, the payment for their care will go to the non-NHS provider, and some of it will most likely end up as profit paid to shareholders as a dividend. Many private healthcare companies then siphon their profits from NHS contracts into offshore accounts where no tax is payable.

The result will be that the income of NHS providers – hospitals and community health services – will be cut and services will be fragmented.

NHS providers will be left to provide expensive, complicated services that can’t cover their costs, while AQP providers bid for tenders for cheap services where they can make a profit.

Additional costs of NHS privatisation would include the costs to Calderdale NHS and its staff of ceasing to provide the service. Costs like redundancy payments and, for staff, loss of income. And, for the public, of paying benefits to staff who lose their job and can’t find other employment.

And the costs to the public of having to pay for private health insurance if, as a result of losing various services, Calderdale NHS becomes hollowed out and unable to continue to provide the full array of (unprofitable) services that private healthcare companies have no interest in tendering for.

Calderdale CCG need to clarify how they assess the costs and benefits of privatising the specific services they put out to tender on grounds of “value for money”.

The Report doesn’t say.