The emphasis on competition in the NHS has shifted considerably over the last five years. Andrew Lansley’s reforms were predicated on the role of markets in driving quality and efficiency. The Health and Social Care Act 2012 created a framework in which competition could operate in the NHS, including a clear role for the CMA. However, the policy context has moved on. Jeremy Hunt’s recent reference to ‘natural competitiveness’ and the push towards new care models in the NHS Five year forward view (5YFV) signify renewed focus on integration and collaboration as a means of moving towards more financially and clinically sustainable care. But on the other hand, there has been no signal that there will be legislative change to amend how competition law is applied in the NHS.

The current approach is a far cry from Lansley's concept of competition between providers, subject to competitive tendering, being the future of the NHS

Conflicting priorities

The 5YFV made clear that the NHS cannot continue to run harder and faster within existing care models. Instead the sector needs to focus on a longer term strategy and adopt more integrated and collaborative models of care, which Simon Stevens has confirmed will “involve mergers and reconfigurations in some cases”, as well as the development of networks and vertical collaborations.

This approach is a far cry from Lansley’s concept of competition between providers, subject to competitive tendering, being the future of the NHS.

Moreover, the commitment to enabling this approach is evident. We already have 37 vanguard sites beginning to develop some of these models and the national bodies have helpfully committed to providing local flexibility in the way regulatory requirements and other mechanisms are applied.

Do new care models raise competition concerns?

So far the national bodies have said that the CMA’s review process should not pose a problem for the vanguards: “as long as the organisations coming together do not provide the same services then competition should not be a barrier as patient choice is not affected”. However it is not just full-scale horizontal mergers or acquisitions that could fall within the CMA’s jurisdiction and as the CMA’s analysis of patient choice includes analysing GP referral data it seems possible that vertically integrated models, such as Primary and Acute Care Systems, might not sail through a CMA competition review process. Not to mention the acute care collaboration model which will involve providers either collaborating on single or groups of acute services, or exploring the collaboration of whole institutions.

More informal forms of collaboration such as alliance partnerships, may also find themselves under the CMA’s microscope – due to a potential breach of the Competition Act. The CMA has recently taken formal competition law enforcement action in healthcare for the first time and claims that the “case demonstrates the CMA’s commitment to taking action in specialised and regulated sectors” as per its statutory remit.

Why should we be concerned?

The alignment of the national policy narrative with the current application competition law is still somewhat confused.

While the CMA reviews each proposal on a case-by-case basis and has only blocked one transaction in the NHS, the process is lengthy and costly for all involved (including trusts, the CMA and Monitor). The CMA is required to follow a relatively rigid, consistent and template approach which cannot be flexed to respond to national policy priorities as such.

Some may argue that this is completely appropriate for an independent judiciary.

However our concerns are that if NHS organisations are unable to pursue longer-term strategic options, including vertically integrating or establishing joint ventures to deliver shared services, they could potentially fall into financial or operational difficulty with a direct impact on quality and access to services.

We are concerned that if NHS organisations are unable to pursue longer-term strategic options, they could fall into financial or operational difficulty

Going forwards and possible solutions

Despite these risks, it does not look like the role of the CMA with regard to the NHS is likely to be amended soon. Therefore below are some suggested solutions to make the current framework work better in the current context

• There is a need to ensure full clarity about how the proposals set out in the5YFV interact, and align with, the existing body of competition law. The CMA should also work with the arms length bodies (ALBs) on the development of new care models as the vanguard programme progresses, providing advice and guidance on competition at an early stage.

• Monitor must take a proactive approach to advising the CMA on these national policy priorities in the NHS and how proposals will help mitigate financial and clinical risk as well as how proposals will assist providers to meet required national quality standards, such as minimum staffing levels and seven day services.

• To avoid being blocked at the last hurdle, NHS providers considering a significant transaction should engage with Monitor and the CMA at an early stage to consider any competition concerns. They should be able to articulate the patient benefits of the proposed transaction and be clear on how the transaction is the only way the benefits will be realised.

For more information on the CMA’s UK merger control process, see our briefing Competition reviews in the NHS: what do providers need to know?