NHS England moves to undo the damage done by outsourcing

Published date
24 May 2019
NHS England has published proposals to help the delivery of its long-term plan. These proposals set out the changes to support integration and new models of care that NHS England would like to see happen in the next five and ten years.

The proposals include promoting collaboration and integration, better leadership and governance arrangements for local health services, shared responsibility and joined-up national leadership.

They also include changes to existing primary legislation in order to reduce the impact of marketisation and competition within the NHS. This will bring the NHS a step closer to better integration and better service delivery for patients.

Two significant proposals focus on repealing section 75 of the Health and Social Care act (2012) and removing arrangements between NHS commissioners and NHS providers from the scope of the Public Contracts Regulations. Both pieces of legislation created a legal framework aimed at opening up the NHS to a market-based system, leading to wasteful and legal administration cost.

This has been recognised by NHS England in its latest proposals:

Current procurement legislation can lead to protracted procurement processes and wasteful legal and administration costs in cases where there is a strong rationale for services to be provided by NHS organisations, for instance to secure integration with existing NHS services. It also makes it more difficult for NHS organisations to ensure they are using their collective financial resources in the most effective way for local populations. Furthermore, the current legislation can discourage NHS organisations from collaborating to develop new models of care, in case this is challenged on the grounds of not treating all providers equally.

NHS England - Implementing the NHS Long Term Plan: Proposals for possible changes to legislation, Paragraph 10

This acknowledgment that competition has potentially inhibited innovation and the delivery of new models of integrated care is crucial for the future of the NHS. Back in 2015, the Health Service Journal reported that NHS England and Monitor were facing calls to exempt ‘vanguard’ areas from requirements to tender services, amid fears that procurement processes could undermine efforts to establish integrated primary, community and acute care models.

Most outsourced staff employed on private contracts are not covered by Agenda for Change pay rates and national collective bargaining in the NHS. And they are not offered the same training opportunities that they would have if they were directly employed by the NHS. Outsourcing is also often associated with decline in quality of care and cuts in services. Outsourcing companies regularly hit the headlines for failing to deliver appropriate care, putting patients at risk of harm.

Since the Health and Social Care act came into force in April 2013, the amount of NHS care awarded through the market has rapidly increased. NHS Support Federation found that between April 2013 and July 2017, the total value of contracts awarded through the market was around £25 billion, bringing the value of awards to the private sector for clinical work to around £9bn.

Just for the financial year 2016/17, for-profit companies won £3.1 billion worth of new contracts, representing 43% of the total value of awards advertised (up from 34% in 2015/16).

Reducing competition may also protect the NHS of potential disastrous impacts of post-Brexit trade agreements. The threat of a UK-US free trade deal taking advantage of the market-based system in the NHS is real. And although current proposals don’t suggest ending procurement and outsourcing altogether, they could certainly mitigate the risks of opening up future areas to private providers.

In the current proposal, competition regulations could be replaced by a “best value test”, with criteria yet to be defined. We argue that these should prioritise the quality of patient care, employment standards and the interests of the public – “a public value test”.

Economic regulations are inappropriate for health care. Limiting competition in the NHS and introducing public value in commissioning decisions will improve quality and accessibility of services and working conditions for staff. There are still a lot of concerns about appropriate funding, transparency and accountability within the NHS, but we believe that NHS England proposals are a step in the right direction.