NHS losing contracts because bids not
‘thought out’ properly

As we heard this week, growing numbers of NHS contracts are being awarded by Clinical Commissioning Groups (CCGs) to private providers. This is partly as a consequence of the new-ish CCG system which puts GPs in greater control of how services are provided – and who provides them. CCGs tender out services in a competitive manner, with NHS and private providers putting together service proposals and costings – bids – and the CCG choosing the one that most closely matches its needs. By needs we mean what the doctors think is best for patients, balanced with the budget they are working within.

Bidding is a pretty complex process, and having someone within a CCG or NHS Trust (or private provider) explain it to you doesn’t always make it easy to understand. There’s a bit of a guide to how CCGs work here, and some information on ‘Any Qualified Provider’ (AQP) – a system which gives patients further choice – is available here.

For someone like me, who believes that choice and patient focus are key to good healthcare, these developments are welcome. No longer is a patient restricted to using a poorly performing local NHS service – the NHS provider can lose the contract and an alternative provider gain it, or under AQP the patient can choose to avoid a provider they have had a poor experience with. NHS providers should respond to this by improving their services. I don’t have an ideological opposition to good NHS providers continuing delivering services – of course they should. This system helps to break their monopoly and ensure that patients are getting the best care possible.

Another benefit is that because services are being commissioned on a local level, smaller providers can get a piece of the action. At the moment this may not be the case – the system is relatively new, putting larger organisations already adept at navigating bureaucracies and bidding processes at an advantage. But over time, we can hope for change in this. An interesting area to watch in this space is the development of healthcare mutuals – awarding contracts to these is classed as privatisation too, but they are quite different to what most people think of when they hear the ‘p’ word.

But why is the NHS losing contracts?

I move now to the most important question: why is the NHS losing these contracts? For people with lots of experience of the NHS this may not be a difficult question answer. Suffering with Crohn’s disease means I require quite a lot of healthcare, so I have experienced a variety of NHS services. I often walk away thinking “there must be a better way”, and I suspect that is what has happened across CCGs too, where doctors who have for years been frustrated by systems are now making decisions. Of course cost will also be a motivating factor, but remember these are not mean Tory politicians making contracting decisions – it is GP led CCGs.

This morning’s BBC report on outcomes for patients who have undergone knee and hip replacements seems to support this view – it found that people receiving private care (paid for by the taxpayer) had better outcomes than those receiving NHS care. It is careful to point out that this is an averaging out of figures, so individual NHS and private providers may not fit this trend.

This kind of data supports the commissioning decisions that those GP led CCGs are making, but it doesn’t explain fully explain how they are reaching their contracting conclusions. So I spoke with a business manager in the NHS who wishes – for obvious reasons – to remain anonymous. They told me:

“The NHS on the whole, in my experience, does not have the right approach to running projects and falls down at the first two hurdles: the Project Mandate (what’s the objective, what do they hope to achieve) and the Project Initiation (the main part of which is scoping, which in turn tells an organisation of the feasibility of the Project). This will be apparent in any bid writing as it will be evident that the whole process has not been thought out, leading to a lack of reassurance in their ability to plan, deliver and sustain.”

Interestingly, they also suggested that some of those private contracts find their way back to the NHS:

“Often an AQP will win a contract but be unable to provide all elements of it and so will sub-contract some of it, often to the same Acute Trust that has just lost the entire contract. An AQP will see this as a win that will pave the way for future business with the same commissioners. Acute Trusts will want the little piece of business from the AQP because when the contract is up for renewal they hope they will have shown their ability to provide a good service, and win the business. It is a good method of creating competition, but there is no fluidity and because contracts are usually for 3 years, there is reluctance and difficulty to plan longer term, as there is a cost attached for which they may see a loss. Having said that, I’m not sure the NHS has the ability to approach business/care in this way because, going back to what I said earlier, I don’t think they have all the right people in place.”

Whereas private providers:

“Tend to have the right people in place and provide them with the right balance of incentives, work performance expectation, accountability, professional development and involvement/ownership.”

Taken together, this builds a picture of poor business management in parts of the NHS. Leadership is a continuing problem that cannot be fixed by throwing money at it – or monopolising the service.

On the money side of things, my source told me that:

“Another block for the NHS winning contracts is that the commissioners, especially in the current climate, are most likely to go for the lowest cost. They’re desperate to save money.

“Private providers often have more money to spend because they’ve made money elsewhere and can begin by introducing a few services as a loss leader, and build from there.”

In support of CCGs

This process is by no means perfect, and there is a good deal of continuing learning to be done, but what we can see is that when private providers win contracts CCGs are making rational decisions on behalf of their patients. I am sure some mistakes will be made, but on the whole CCGs have greater agency to be proactive with the services they commission, and responsive to patient needs.

As I say, good NHS providers should continue to win contracts and deliver services – but why should public ownership be an excuse for poor service and poor patient outcomes? Now CCGs have the power to make sure it isn’t, and that’s what this privatisation means.