Law is an ass…reflections on the recent Court of Appeal verdict on NHS England’s Accountable Care Organisation contract

Roger Steer is a director of Healthcare Audit Consultants Ltd who advise local authorities on health reconfigurations proposals, including in NW London and SW London. He recently acted as an expert witness in two judicial reviews and co –wrote a review of Sustainability and Transformation Plans for South Bank University with Sean Boyle and John Lister.

Here he explains why he thinks the law is an ass in relation to the Court of Appeal verdict on NHS England’s Accountable Care Organisation contract (which the quango has rebranded as Integrated Care Provider contract.

It is always a risky business to put faith in our legal system. Its flexibility in interpretation gives judges a lot of power to make it up as political expediency allows.

In an ideal world an independent judiciary is an important bulwark of a democratic society and is a barrier to the executive doing things without parliamentary approval. The executive don’t like legal constraints however which they perceive as an obstacle for doing what the executive judges as for the best. There is always a problem when the judiciary intervenes and it encourages those voices that would water down their powers and funding. For example, judgements by the European Court of Justice (ECJ) have encouraged Parliamentarians to pursue Brexit so that the ECJ will not constrain the UK in future. Similar attacks have been made against what is perceived to be judicial activism by the Supreme Court of the UK.

This is where the appeals court has gone wrong in this case and has allowed a dubious decision to be made because of the distress this might cause to the executive. The case has been heard to establish whether a return to block contracts (Whole Population Annual Payment (WPAP)) is lawful despite all the changes to legislation promoting an NHS market in healthcare. It is clear (to me at least) that the NHS is moving away from the legal framework embedded in the 2012 Health and Social Care Act which if my memory doesn’t fail me was based on competition between providers, guided by local commissioning led by local GP’s, and away from “political” decision making to one driven by market forces, subject to economic and quality regulation.

Market forces are expressed by reference to a national tariff applying to the pricing of services and which provides incentives for cost control and provides the resources to supply services of at least average quality.

What has happened post 2012 is the appointment of Simon Stevens, recently blooded in the US healthcare system as a senior manager of United Healthcare of America which is much taken by the promise of integrated care, in the guise of Accountable care organisations (ACO), to address the fragmented and uneconomic US healthcare system. Naturally as a leading promoter of Accountable care organisations (ACO) in the USA he has brought the same ideas to the UK.

I have no problem in applying lessons learnt from other countries healthcare systems for application in the UK. But as the memorable words go, “I wouldn’t start (from here)” with the USA as the example to follow.

Nonetheless there has been inexorable progress toward Accountable Care and Integrated care since 2015. Commissioning has moved (or is moving…) from a local base to one framed by the Sustainability and Transformation Partnership footprint. Providers are consolidating into fewer and fewer entities and being encouraged to affect internal reconfigurations not previously possible between competing providers and which required agreement between many parties according to an agreed reconfiguration plan. The pretence that all this is as a result of economic decisions by a hidden hand of market forces has been discarded in favour of the far from hidden hand of NHS fiat.

Thus in the legal case in question there has been a dispute over whether measures to introduce Whole Population Annual Payment contracts are lawful. In old parlance these are block contracts to provide services at a fixed price. As such they go against the spirit of an NHS internal market and mark a return to cash limited budgets for the provision of healthcare that applied from the mid-seventies to the advent of the internal market at the start of the nineties.

They were rejected in the late eighties as it became clear, as described by Enthoven (Enthoven A. (1985) Reflections on the management of the national health service. The Nuffield Provincial Hospitals Trust), they provided perverse incentives to limit healthcare provided and they provided perverse incentives in providing efficient healthcare. It resulted in a consensus to introduce a purchaser-provider split and the pricing of healthcare at a patient level in pursuit of a quasi –market in healthcare within the NHS. It was seen by many at the time as a commercialisation process to prepare the NHS for full privatisation.

This hasn’t happened despite the NHS deepening the commercialisation process with only a modest increase in sub-contracting to the private sector. What has happened is a turn from a quasi-market to a crony capitalism model intent on distributing rights to local monopolies to provide healthcare for specific ill-defined populations (subject to gaming) on the back of no evidence the approach is appropriate to England or that it can work to square the circle of rising demand and reducing real resources. “Trust me I’m a respected ACO provider from the United States” is not sufficient in my view to convince anyone of the merits of moving away from what Parliament decided in 2012.

The path of plausible deniability is taken at this stage as it said that this is not the intention and that “help” will be provided to the NHS by external expertise. It rings as true as claims by the Japanese not to be intent on reintroducing commercial whaling.

It is not as if there is not a well-trodden route for changing the legislative structures. Discussion papers (Green papers) are produced; responses carefully evaluated from all the stakeholders involved, and eventually a White paper and draft legislation presented to Parliament. There is even scope for pre-emptive action by the executive in the expectation that legislation will be passed by Parliament in the near future. (The pre-emption of Parliament: 13th report of session 2012-13By Great Britain: Parliament: House of Lords: Select Committee on the Constitution)

But none of this applies in this case. No discussion papers have been produced, no draft legislation exists and no debates have taken place in Parliament. What has happened is that the NHS itself has decided the system designed by Parliament doesn’t work in practice and is being dismantled and replaced.

It has resulted in legal challenges, including the one discussed here on Whole Population Annual Payment contract arrangements. In this case the appeals court has decided (para 88) in its wisdom that that the arrangements proposed are lawful, despite they being contrary to the spirit of the legislation and at odds with the direction that Parliament had determined. The Court has interpreted benignly the words in the legislation encouraging innovation to allow for the opposite of what was intended. An extreme analogy would be releasing prisoners detained by the courts under legislation to allow for an innovation in Penal policy, without discussing this in Parliament. It would be preposterous and yet something similar is being proposed in this case.

It is unlikely to be the end of the matter however and a number of commentators have agreed that the current legal impasse is unsatisfactory and clearly call for legislation to be presented. This however is not only unlikely but potentially unpredictable with Parliament without a strong ruling Party and deep controversy likely on a new reorganisation of the NHS, so close to the last one and designed at the moment to allow for the widespread introduction of Accountable Care Organisation contracts written in America.

Could not the judges have said so? They pointed out that they were not called upon to judge on the merits of the contracts being introduced but on whether they were lawful. By turning a blind eye to this question and allowing a liberal interpretation of the issue of whether ACO contracts are allowed by law, prior to legislation permitting them, the Judges are backing away from an active view of their role in guiding the debate on the legislative framework.

This is good news for Simon Stevens and the NHS executives running NHS Improvement but is less good news for others. It will only encourage more experiments to push the legal boundaries of what is permissible and cause more legal actions to challenge the action being taken to defy the elements of current legislation at odds with what the top management of the NHS intend.

Although many in the NHS and many outside the NHS have been highly critical of the NHS internal market and of the commercialisation of the NHS they will quickly learn that the ACO arrangement will not mark progress but merely encourage the wholesale contracting out of swathes of the NHS within new contractual arrangements. It is unlikely therefore to be passively accepted and will bring more legal challenges.

But maybe that’s what the judges really want…

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