healthcare update - issue 16
GP commissioning consortia
Does the law require them to comply with procurement rules when commissioning for the NHS?
By April 2013, the role of PCTs as commissioners of NHS-funded
services is likely to have been replaced by new powers given to
local consortia of GP practices to commission services for their
patient populations. The aim is to bring decision-making as close
as possible to patients themselves.
It is a truism that PCTs, as public bodies as well as NHS
commissioners, need to have regard to the EU public procurement
rules and apply them in each commissioning undertaken. Most
contracts relevant to commissioning by PCTs are for
partially-regulated “Part B” services, although some contracts let
by them – catering and cleaning, for example - are inevitably
subject to the entirety of EU procurement law and, accordingly,
require full advertisement in the OJEU when their value falls above
threshold.
But will GP commissioning consortia actually be required to do
the same? As a matter of policy, they may well be. But will they
legally be required to comply with EU procurement law in the way
PCTs are? In other words, will they be public bodies in the eyes of
the EU law?
The Procurement guide for commissioners of NHS-funded
services[1] (which the Department of Health may amend as the
coalition’s NHS White Paper[2] is implemented) appears to advocate
due procurement process as a requirement upon all NHS
commissioners, without offering any view on whether GP consortia
will actually be “contracting authorities” for the purpose of the
EU rules. If they are not, then such consortia will be under no
legal requirement to comply with the EU rules, no matter what the
policy may dictate.
The key will be whether such consortia are “bodies governed by
public law”, for which the EU rules set out a three-stage test.
Each element of the test has to be satisfied before an organisation
can be required to comply with the EU rules as a “contracting
authority”:
- The incorporation test - As groupings of GPs working together
for a common aim, then (even if not “incorporated” in the legal
sense) this test will be satisfied. If the following two tests are
also satisfied, then GP consortia will be subject to the EU
rules.
- The specific-purpose test - This test requires that the bodies
concerned are “established for the purposes of meeting needs in the
general interest, not having an industrial or commercial character”
– in other words, established purely for the purpose of healthcare
commissioning, with no commercial element to their operations. If
there is any commercial element, then these consortia will not be
subject to the EU rules.
- The control test - This looks at the extent to which the
financing, management supervision and boardroom control of the
undertaking concerned lies with a public body as opposed to the
private sector. Assuming that (in the case of a GP consortium) the
first two tests are satisfied – the second being satisfied by
reason of the fact that the agendas of these consortia will be
purely NHS-mandated, then it only remains necessary to determine
whether (a) over half of their financing is public, (b) they are to
be subject to management supervision by the NHS or a particular
part of it, and (c) their activities are to be subject to boardroom
control by the NHS or a particular part of it.
It is the control test which, in the case of GP consortia, it
may be trickiest to answer, at least until the “bones” of the White
Paper are fleshed out. On the basis that the handing of the ability
to commission services to GPs represents a devolution of power from
the NHS, one expects that the way in which GPs will be able to go
about that activity will be fairly tightly regulated. Secondly, the
fact that GP commissioning is likely to be anchored on a largely
statutory footing will mean that total freedom on the part of the
consortia to control their own activities is unlikely. Budgets will
be allocated directly to consortia and there will undoubtedly be
strict controls on the way those budgets will have to be
applied.
On this basis, the likelihood is that, in relation both to
financing and management control, GP consortia will satisfy the
third limb of the test. Which is good news – since, by being
required to apply the procurement rules, where necessary, in
furtherance of their commissioning activities as well as operating
within their own statutory framework, they are more likely to
commission services which are genuinely in the best interests of
patients and taxpayers: the power and budgets afforded to them will
not be able to be applied in setting up contracts which have been
procured in anything less than a totally fair and transparent way.
Furthermore as there is an expectation within the White Paper that
there will be a shift to commissioning for outcomes with an
emphasis on health and well being, it is likely that some
commissioning will either be integrated with that to be
commissioned by Local Authorities or, such as the current example
of learning disability services, transferred en bloc to Local
Authorities.
There would be a definite slope in the level playing field if
some services are the subject to the full rigour of EU law -
learning disability, public health and health promotion i.e. those
that sit with and may transfer to Local Authorities; whilst others
were not i.e. those that may sit with the new GP Consortia.
We anticipate that both the regional arms of the National
Commissioning Board and the extended remit of Monitor, as an
economic regulator, will have a role in levelling out the playing
field, so that all publicly funded health services are the subject
of EU law. It would certainly maintain contestability in those
services that fall to be commissioned by the GP consortia.
It would also give providers certainty as to the marketplace and
rules of engagement in that playing field so that the scope of
current provision is extended, whether by reference to
private-public / third sector partnerships in whatever form, or by
reference to the emerging social enterprises “umbrella’d” under
primary and community care service provision.
[1] Gateway reference 14611, published 30 July 2010 and
superseding the PCT Procurement Guide (March 2010). See also the
Principles and Rules for Co-operation and Competition.
[2] Equity and excellence: Liberating the NHS – July 2010 (Cm
7881)
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