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.