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Could the NHS Long Term Plan mean less opportunity for NHS contracts?

23 January 2019. Published by Genevieve Isherwood, Senior Associate

The NHS's Long Term Plan includes a provision to repeal elements of the Health and Social Care Act 2012; in this blog we consider the potential impact on private providers and their opportunity to tender for NHS contracts.

Amidst all the column inches and airtime devoted to Brexit and Trump, it was easy to miss the recent announcement of the NHS Long Term Plan. In early January, the Government announced a 10-year plan designed to make the NHS 'fit for the future', and to ensure the country is getting 'the most value' out of every pound of investment. It also set out how the £20.5 billion budget settlement for the NHS (announced by Theresa May last summer) will be spent over the next five years.

Even easier to miss (nestled in one paragraph on page 114 of the 136 page document), is the Plan's recommendation that the procurement requirements under the Health and Social Care Act 2012 are repealed. This is a significant development which could potentially have a huge impact on private healthcare providers which contract with the NHS.

The 2012 Act currently requires NHS Clinical Commissioning Groups to put out to tender any contract worth £615,278 or more. These types of contract represent a hefty part of the NHS purse; the Department of Health's published accounts reported that £13.1 billion of the NHS's budget in 2017/2018 was spent on non-NHS organisations (including the voluntary sector, local authorities and private providers).

This requirement means that non-NHS entities have the opportunity to tender for a significant number, and wide variety, of NHS contracts; and has led to many NHS contracts being awarded to private companies (Richard Branson's Virgin Care alone holds over 400 individual contracts).

However, the Plan concludes that the current set-up leads to wasted procurement costs and fragmented provision (particularly in the GP / urgent care sectors), and identifies this as an area ripe for streamlining and cost-saving. The BMA has voiced its support, with Chair Dr Chaand Nagpaul describing the procurement requirement as a 'wasteful use of resource'.

The intention is for the provisions in the Act to be replaced by 'statutory guidance'. This means that NHS Commissioners will be able to decide when and where procurement should be used, subject to what is described as 'a 'best value' test to secure the best outcomes' (with no further explanation given). Without further guidance, it is unclear when NHS Commissioners will choose to tender contracts and whether or not there will be a uniform approach across the UK.

Private providers should note that the contracts they currently hold could, in future, be kept within the NHS, without there being an opportunity to re-tender. Likewise, providers hoping to expand their businesses by tendering for future contracts may not get the chance. For those providers whose work currently involves a large number of NHS contracts, consideration needs to be given to the potential impact that losing those contracts may have on their business.

Before such a change is made, the relevant provisions of the Act will need to be repealed (which will involve passing another Act, with all the drafting, debate and readings in Parliament that this would entail). In the current political climate it seems unlikely that much planned legislation will progress in the near future and so providers can sleep easy – for the time being at least. However, the inclusion of the recommendation in the Plan lays down a marker as to the Government's intention: providers should take steps now to prepare themselves.