NHS mergers: learning the lessons of Bournemouth and Poole

The Competition Commission's rejection of the proposed merger in Bournemouth and Poole has amplified concerns that the application of competition law to NHS mergers and service reconfigurations is blocking and delaying service changes that both providers and commissioners see as necessary and urgent.

Passions run high, with many feeling that the process of scrutiny by the competition authorities is over-burdensome, time consuming and costly. In a tax-funded and cash-limited system, time and money spent on dealing with merger cases could have been used to provide patient care and this feels uncomfortable.

The Health and Social Care Act 2012 makes clear that competition law applies to health care mergers that involve foundation trusts. The competition authorities (the Office of Fair Trading and the Competition Commission, shortly to be merged themselves into the Competition and Markets Authority) take as given that competition benefits patients by providing choice and the stimulus to drive up quality. Any other benefits that will outweigh the damage caused by a loss of competition, or arguments about damage that will result if the organisations cannot merge, need to be clearly evidenced. The evidence can then be weighed and the impact of a merger can be quantified and analysed.

The NHS is used to taking a very different approach, making service changes based on evidence that is less clear cut. With no shareholders to consider, the NHS can ensure that benefit to patients is paramount in all its decisions. But, while there is often a very positive narrative in the NHS about the benefits of mergers and reconfigurations for patients, there is a poor track record either in providing evidence of those benefits or in making sure that they are realised. This leaves both the NHS and competition authorities in a difficult position, as the outcome of the Bournemouth and Poole case illustrates. With many more mergers in the pipeline, the question that arises is: what can be done to bridge the different cultures of the NHS and the competition authorities?

One way forward would be to change the law to exempt mergers that involve foundation trusts from the reach of the competition authorities. This would probably require changes, not only to the Health and Social Care Act 2012, but also to the legislation that created foundation trusts, and potentially to the legislation that governs the competition authorities. The alternative would be to recalibrate the current approach to ensure that scrutiny of mergers is proportionate and sensitive to the particular requirements of the health sector. The joint statement issued by the competition authorities and Monitor following the Bournemouth and Poole decision indicates that this is already happening, with these organisations making a commitment to ensuring that 'the merger review process is well understood, and operates as quickly and predictably as possible'.

The statement makes clear that Monitor will have a bigger role in future in scrutinising and challenging the strategies of foundation trusts at an earlier stage. There is also an expectation that the competition authorities will give 'significant weight' to Monitor's advice. These commitments can be interpreted as signalling a return to the position set out by ministers during the passage of the 2012 Act in which they argued that Monitor, as the sector regulator, should have a major role in regulating the health care market, with the Office of Fair Trading and the Competition Commission having concurrent powers. This offers the promise of mergers being reviewed more appropriately in future, provided that Monitor is able to call on relevant expertise in framing its recommendations.

It is also clear that foundation trusts will receive more advice in future as they prepare merger proposals, learning lessons from the Bournemouth and Poole case, which illustrated the challenges in providing hard evidence of the benefits for patients of the merger. This must include evidence on the 'counterfactuals', that is, the consequences in relation to both the financial sustainability of providers and the quality of care for patients if mergers do not proceed. The time and expense involved in the Bournemouth and Poole case will not have been wasted if foundation trusts are able to make more convincing cases that address adequately the concerns of the regulators, allowing merger proposals to be considered without undue delay. The accumulation of case law should assist in this process.

Whether these steps and the other ideas contained in the joint statement by the competition authorities and Monitor will be sufficient to allay concerns about scrutiny of mergers remains uncertain. What is clear is that the NHS can ill afford to incur expense and delay on the scale that occurred in Bournemouth and Poole at a time when financial and service pressures are increasing by the day. Making sure that proposed mergers really are considered on a case-by-case basis and are dealt with proportionately will be critical. A heavy burden now rests on Monitor to take on the enhanced role it has been given both to protect patients from mergers that offer little prospect of benefit and to expedite those that do. The sector regulator will need to strengthen its own capabilities if it is to rise to this challenge and ensure that the interests of patients and concerns about quality and safety are at the forefront of its considerations.

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Comments

#40948 Paul Thackray
Public Governor

This is another example of a badly thought out process getting in the way of good practice and common sense. The polititians have failed to think things through yet again, finishing up with conflicting objectives.

#40949 Andy Harding
Health services researcher
Bournemouth University

From what I understand there are also alarm bells ringing about the financial sustainability of Poole - which was a key reason for the proposed merger. Poole tends to run at a loss (or close to), whilst Bournemouth always has a surplus.

Under new proposals, if Poole were to 'fail' for financial or other reasons, wouldn't Bournemouth have to step in to take it over anyway?

This governments grandiose vision of NHS competition - lots of competing GP Consortia (oops...I meant CCGs) - seems to be crumbling. Now the talk and emphasis is on CCGs working together in Federations, and CCGs now often mirror the size of PCTs in many areas (meaning there has only been modest increases in the amount of purchasers).

In respect of FTs, I'm sure mergers will present challenges for service reconfiguration and quality etc. However, it must be remembered that competition and 'choice' (particularly in a quasi market where choice and support to make good choices is limited/poor) are themselves contentious issues. Surely the bottom line has to be the provision (and thus sustainability) of a good local (based on my reading most peoples choices tend to be local) service?

As a colleague of mine often says, we can only have what we can afford. If I was to go wildly off point I might point at the comparatively low levels of health services expenditure as a % of GDP... anyway, back the point - I think many associated with Poole see sustaining services as being in doubt now.

#40950 Dr Alan Cleary
Contracts Auditor
Accorde

In relation to organisational mergers complexity conceals corruption and all to often the tail wags the dog. The Bournemouth-Poole merger creates an operational environment with potential for achieving and maintaining very high standards of service to local patients. The organisations are there to improve health. They are not a couple of corner shops. As Professor Kieran Walshe has suggested, no one appears to exercise informed control of the NHS at the Centre. On that basis surely simple logic demands that the merger decision be taken locally, then made to work.

#40951 Craig Waakeham
Dorset GP
Cerne Abbas Surgery

The need for the merger was a natural consequence of the financial system of FTs and PbR (or rather payment for activity). There is a substantial amount of evidence that healthcare systems benefit at least as much from collaboration as artificial competition. Unfortunately we have an accounting and governance system that is not fit for purpose; the consequence is that local organisations (Dorset CCG) will have to pick-up the cost of the failure of the regulatory system to meet the needs of the local population. The opportunity costs consequent on this will reduce resources available for patient care. However I'm sure that the politicians will pull their dogmatic beliefs about the benefits of competition more tightly around themselves…like a well-worn comfort blanket.

#41036 Carol Morgan
Secretary

I have jsut twice been a patient in Poole Hosptial and have received excellent treatment.It is clear to me that Poole deals with major A and E patients where it is impossible to estimate how many emergencies will arrive at any time.Bournemouth does elective surgery i.e hip replacements and can therefore budget accordingly.Poole is not overspending but meeting the needs of local people.It alos has to deal with a huge amount of tourists during the summer months and I wonder how much extra money is allowed for that. I am frustrated and angry with the presne tgovernments emphasis on so called competition.It is absloutley not necessary and is detrimental in all ways.I remember as a child being in a London hospital where the wards gleamed when the cleaning contracts where privatised that is when we starte to have such high infection rates.There is a lot of jargon used to describe quite simple concepts ,one of which is that the NHS is NOT meant to make a profit and allowing many private hospitals to make money is totally against the basic pricinciples of the NHS.If a private hospital performs any procedure which then has any kind of complication for the patient why do they not then have to pay the NHS for the extra work it then has to take on.My biggest frustration for me is that no one will listen .How about a lot more in the media about problems experienced in othe countires with their medical or in some cases non existent medical carei.e Cabada USA Australia etc

#41463 Kim Davies
Specialist nurse
Betsi Cadwaldr University Health Board Trust

A very different situation here in North Wales but there are other reasons why mergers arent the good idea they might seem to be on the surface. 3 Trusts across N. Wales merged a few years ago. I work over in the West, the most isolated and largest geographical area which, like Poole has a very large holiday population. However, the West has the most stable workforce although does have some difficulty attracting doctors, but it also functioned well financially. Since the merger it has been stripped financially, with most managers based in other areas, and a ridiculous amount of time is spent by a large number of staff driving from one end to the other for meetings. Managers were rationalised across the sites but they have an unbelievable 10 year protected pay, early release schemes have cost a fortune, and many staff rarely see their managers now. The Trust has been severely criticised with senior executives resigning. Morale is very low. I'd love to know if they've saved any money at all because all I see is less and less flexibility and little effective leadership.

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