Questions about new Bill’s health services procurement rules, as NHS public-private alliance fails to agree contract terms

This is about a 15 minute read

  • One of the biggest NHS integrated care contracts has come unstuck before it even started, with its alliance partners unable to negotiate the required alliance agreement.
  • The big public-private alliance contract was procured under a light touch regime without competitive tendering – like new procurement rules in the Health and Care Bill, which is due its second reading in the House of Commons on 14th July, only a few days after its publication.
  • Does this call into question the future of unregulated NHS procurement under the new Bill?

The failure to launch the 10 year, £440m alliance contract for North East Essex Integrated Community Services (NICS), awarded earlier this year, must surely cast doubt on the unwieldy procurement process for huge public-private NHS contracts.

But such contracts are likely to become increasingly common under the new Health and Care Bill’s imposition of a ‘duty to promote integration’ – despite strong evidence that the whole basis of the innovation and integration Health and Care Bill is misguided.

Awarded to four alliance partners under the ‘light touch’ procurement regime using a process of due diligence and shared dialogue, the huge North East Essex Integrated Community Services contract was procured without competitive tendering.

This will become the norm under the new Health and Care Bill, which abolishes the requirement for competitive tendering. NHS contracting could then become as corrupt and secretive as the government’s contracting under Covid-19 emergency legislation, which suspended existing procurement rules designed to ensure transparency and accountability.

Please tell your MP to Kill the NHS Slash and Trash BIll at its second reading on 14th July!

Mismatched alliance partners fail to agree contract terms

July 1st was the scheduled start date for the North East Essex Integrated Community Services contract. Staff at Anglian Community Enterprises, a community enterprise company that had held the previous £240m North East Essex Care Closer to Home contract, were due to transfer to what the Health Service Journal has called a “flagship public-private alliance”.

But come July 1st, the four ‘mismatched’ alliance partners had not agreed the contract terms, despite this being a requirement from North East Essex Clinical Commissioning Group.

All four providers – East Suffolk and North Essex Foundation Trust, the North East Essex primary care provider company GP Primary Choice, Virgin Care and the mental health trust, Essex Partnership University FT – were required to sign the NHS Standard Service Contract AND to agree and sign an alliance agreement with each other and the Commissioners.

Without the alliance agreement to deliver services together, the contract was unworkable, with no employer for the staff of Anglian Community Enterprises.

So in a last ditch move on July 2nd, North East Essex Clinical Commissioning Group announced it had transferred the staff to the lead partner in the Alliance, East Suffolk and North Essex Foundation Trust.

(Formed in 2018 through the merger of Colchester Hospital University NHS Foundation Trust and Ipswich Hospital NHS Trust, East Suffolk and North Essex Foundation Trust has kept A&E as well as maternity at each hospital, but other units have been centralised in one hospital or the other, leaving people to travel from quite rural areas with little affordable public transport. The merger was opposed by Support the NHS Colchester.)

Now this lead partner is to “caretake the services whilst the alliance agrees over the next 18 months its final delivery model”, according to the Health Service Journal.

This has not gone down well with one of other alliance providers, North East Essex primary care provider company GP Primary Choice, which reported concerns “about how well an alliance could work when the partners are so mismatched in size and power”.

Has the formation of primary care provider companies strengthened the position of GPs in the NHS?

Owned by 32 GP Practices in the area, the purpose of GP Primary Choice is to provide,

“a vehicle and the skills to successfully bid for local services…to ensure that work appropriate for General Practice is maintained and developed in local practices”.

This is very similar to the aims of Calderdale’s Wainhouse Healthcare Ltd, aka Pennine GP Alliance. In 2015 its first CEO, John Tacchi, said its purpose was to put GPs in a clear leadership position in redesigning the NHS.

Critics of such GP Federations say that their formation has been engineered by government cuts to GP funding, that are designed to lead to commercialised/privatised primary care.

And the aim of successfully bidding for local services is hollow, when alliance partners’ agreement of contract terms fails.

The North East Essex Integrated Community Services alliance agreement, which has apparently not been discussed and negotiated, is between providers and commissioners. Alliance agreements include:

  • Each of the alliance partners’ roles and the governance of the alliance
  • Agreed arrangements relating to the Services Contracts for the delivery of the Services, ensuring improved coordination of care and greater collaboration between the different services (eg primary,community, acute and social care).
  • How the alliance partners manage performance, financial risk and benefit sharing mechanisms.

“System leaders” apparently blame the pandemic for preventing discussion and negotiation of the North East Essex Integrated Community Services alliance agreement, the GP Primary Choice Chair, Dr Milne, told the Health Service Journal.

He added:

“As one of the smaller partners in the alliance we are concerned that, once things have been ‘lifted and shifted’ to ESNEFT, we will lose sight of any of the funding and the autonomy of the community services…those of us who have worked in the area for a long time, view community services as a valuable separate enterprise… It takes a lot of understanding from the bigger partners to give up some of the power and money even if the community providers are better situated to deliver services.”

A lot of money is at stake

The total indicative funding for year one of the 10 year, £440m contract is around £39m. The split between the 4 alliance providers and their many associates is unknown. This information should presumably be given in the alliance agreement AND the individual Service Contracts – the NHS England template alliance agreement says:

“Completion is conditional upon the execution of a Service Contract between the relevant Commissioner Participant and the relevant Provider Participant. [Each Service Contract shall include a specification incorporating the Alliance Objectives.]”

A wide range of services are included in this transformational contract. The Prior Information Notice announced that,

“NHS North East Essex Clinical Commissioning Group and Essex County Council (‘the Commissioners’)… have set ourselves a bold and challenging goal to create multi-agency/multi-disciplinary teams in North East Essex who are empowered and supported to deliver the North East Essex Health and Wellbeing Alliance Live Well outcomes. North East Essex Integrated Community Services needs to underpin these plans, delivering a transformation of community services that seeks meaningful integration with acute, primary care networks, primary care, mental health, voluntary sector services and other NEE H&W Alliance partners”

The North East Essex Health and Wellbeing Alliance describes itself as

“ a collaboration of commissioners, providers and other system partners working together as an integrated system to transform the health and wellbeing of the population of north east Essex”.

It seems to be what the government and NHS England call a “place based” integrated care system, within the regional Suffolk & North East Essex Integrated Care System .

The North East Essex Health and Wellbeing Alliance Partnership members are:

  • Anglian Community Enterprise – a Community Interest Company (now without the contract for community health and wellbeing services in North East Essex, or the staff who provided them)
  • Care UK- “England’s largest independent provider of NHS services, delivering more than 70 different healthcare services throughout the UK including Suffolk and North East Essex.”
  • Colchester Borough Council
  • Community360 -” assist[ing] members of the public, voluntary and community organisations by providing passionate, intelligent leadership in Colchester, Essex and beyond. ..establishing innovative ways of working to benefit public services.”
  • East of England Ambulance Service
  • East Suffolk and North Essex NHS Foundation Trust – “The new NHS Trust covering all NHS hospitals in Colchester, Ipswich, Clacton, Halstead, Harwich, Felixstowe and Aldeburgh.”
  • GP Primary Choice (already described)
  • North East Essex Clinical Commissioning Group (soon to be abolished if the NHS Slash and Trash Bill is passed in Parliament)
  • St Helena – “a Hospice in Essex”
  • Tendring District Council
  • Virgin Care – Richard Branson’s Virgin Care already has the contract for the Essex Child and Family Wellbeing Service. They provide a range of children’s community services. in partnership with Barnardo’s on behalf of Essex County Council and the NHS.

North East Essex Health and Wellbeing Alliance Partners that are not part of the North East Essex Integrated Community Services Alliance seem to be Associates of that Alliance, according to this North East Essex Clinical Commissioning Group press release.

Essex Partnership University FT is the only partner in the North East Essex Integrated Community Services alliance that isn’t also a partner in the North East Essex Health and Wellbeing Alliance – and it looks as if Anglian Community Enterprise is the only partner in the North East Essex Health and Wellbeing Alliance that isn’t also a partner or associate in the North East Essex Integrated Community Services alliance.

So what was the problem in “transforming” community services through seeking

“meaningful integration with acute, primary care networks, primary care, mental health, voluntary sector services and other NEE H&W Alliance partners”?

Is the integrated/alliance community services model just plain wrong?

This is the conclusion of a recent ‘Systematic review of reviews of the impacts of collaboration between local health care and non-health care organizations and factors shaping how they work’:

“In theory, collaboration between local health care and non-health care organizations might contribute to better population health. But we know little about which kinds of collaborations work, for whom, and in what contexts. The benefits of collaboration may be hard to deliver, hard to measure, and overestimated by policymakers…

“Many partnerships end up being costly, hard to manage, and struggle to navigate the various cultural, organizational, and accountability issues they face. When subject to closer inspection, even the most mature partnerships can appear less robust and ready to transform their community’s health than their reputations might suggest .

“Lack of evidence on effectiveness of local partnership working has not deterred policymakers from promoting it.”

So is the Integrated Community Services alliance model just plain wrong, lacking a robust evidence base? An “aspirational” construct like the Calderdale and Kirklees Care Closer to Home proposals dismissed by the Yorkshire and Humber Clinical Senate in 2016?

Cost-cutting new care models

Care Closer to Home schemes, and their more elaborate successors like the North East Essex Integrated Community Services alliance, are cost-cutting “new care models” based on Accountable/Managed Care Models from the USA, Spain, Israel and New Zealand.

These new care models have been imposed on the NHS over the past three decades, starting with New Labour’s Kaiser Beacon pilot schemes that tested a cherry-picking private healthcare system practiced by the American company Kaiser Permanente.

The new care models are designed to enable cuts to hospital services, which are then shifted into “integrated” community, primary care, mental health and social care services, and onto the shoulders of patients, family, friends and volunteers in the name of “empowering” patient self-care.

The new care models cut costs by applying actuarial calculations to clinical decisions, with the result that patients’ access to so-called elective treatments is limited to those that represent good value for money. Alliance contracts, which pass the risk of overspending the fixed contract budget onto providers, “incentivise” this cherry picking of patients.

At the same time, routine NHS funding has been removed from a growing number of elective treatments and diagnostics, meaning that Commissioners holding the purse strings, not clinicians, decide if a patient can access these services.

Cuts and centralisation of hospital services, and the related shift of services out of hospital, accelerated from 2010, as the ConDem government used the bankers’ bail out with public money as an excuse to drastically cut spending on public services.

From 2014, new care models were piloted in the English NHS by NHS England’s Vanguard programme, run by the New Care Models Programme Director Samantha Jones. The aim was to pilot different models of integrated care that

“dissolve the traditional boundaries between primary, community, and hospital services.”

In these new care models, no one organisation is able to provide all services, which is where alliance contracts – a transitional form of the Integated Care Provider Contract – come in.

USA Centene Corporation and its Spanish subsidiary have shaped NHS new care models

The 50 ‘Vanguard’ schemes in NHS England’s New Care Models Programme – a key part of NHS England’s 5 Year Forward View 2014-2019 – were on the receiving end of “advice” from the USA’s Centene Corporation and its Spanish subsidiary, Ribera Salud.

Centene Corporation, a World Economic Forum Strategic Partner, is a Fortune 100 company that makes massive profits from managing “Obamacare” public health insurance programmes, covering 25 million people in all 50 states in the USA,  while selling private healthcare insurance alongside them. It has a long list of offences and violations that includes:

  • profiteering
  • inadequate provision of doctors, specialists, hospitals
  • healthcare fraud
  • failure to release accurate financial information related to the acquisition of a healthcare insurance provider 
  • serious mismanagement and non-compliance with federal or state Medicaid contracts or rules and so on

Centene Corporation’s Spanish subsidiary Ribera Salud pioneered a form of Private Finance Initiative that covered not just buildings but “integrated” health care delivered by hospitals, GPs and community services for the whole population in designated areas.

By 2016 there was clear evidence from Spain that the Ribera Salud Accountable Care model was deeply flawed, susceptible to fraud and corruption, under police investigation and no longer welcome on its home turf.

As Centene Corporation’s Spanish Accountable Care gravy train derailed, the company used Ribera Salud to expand both companies’ presence and influence in the English NHS. Key enablers included the then Health Secretary Jeremy Hunt, the Kings Fund, the NHS Confederation – and crucially, Samantha Jones and her successor Louise Watson as the New Care Models Directors.

Both of the New Care Models directors jumped ship from NHS England to UK subsidiaries of Centene Corporation. Samantha Jones became Centene’s UK lynchpin, with 16 directorships of Centene’s UK subsidiaries. At the end of March this year she resigned them all to become Boris Johnson’s NHS Transformation and Social Care Adviser.

What went wrong in the contract procurement?

Given the complexity and dodgy provenance of the new Integrated Community Services care model, surely the alliance partners’ concerns about sharing power and money should have been recognised during the procurement of this massive alliance contract.

Dr Ed Garratt, Chief Executive of the NHS North East Essex Clinical Commissioning Group which awarded the contact, seems oblivious. Announcing the contract award, he claimed:

“The selection of the partnership has been a very rigorous and thorough process.  The organisations demonstrated a strong commitment to quality, service delivery and learning from patients’ experience.  They have been working together for some time as part of our alliance, and so have a strong relationship to build upon and a good understanding of the local population.”

Such massive integrated contracts seem to be beyond the competence of Clinical Commissioning Groups to procure successfully

The NE Essex Integrated Community Services Alliance is not the first high profile integrated care contract to flounder. In 2106 a similar Lead Provider contracting approach resulted in the collapse of a Cambridgeshire and Peterborough £700+m contract for integrated care of the elderly, only 15 months after its award.  Leading to the suspension of a similar Staffordshire “community” End of Life and Cancer Care contract procurement process.

The lead Commissioner for a huge Integrated Urgent Care service covering the whole of Yorkshire and the Humber admitted at a West Yorkshire and Harrogate Joint Clinical Commissioning Committee meeting that they didn’t know how to procure it and were paying £238K to the management consultants Attain to do it for them, using a Structured Dialogue approach.

The NE Essex Integrated Community Services Alliance contract was procured through the same Structured Dialogue process. The Commissioners announced they were not required (and did not intend) to run the procurement in accordance with one of the specified procedures in the Procurement Regulations (e.g. Restricted, Open, etc.). Instead, they utilised

“the flexibilities available to them under the ‘light touch regime’, opting “to undertake a due diligence assessment alongside dialogue, which will form the basis of ‘Structured Dialogue’.”

In response, the four NE Essex Integrated Community Services alliance partners made a joint bid for the contract which “received…subsequent detailed evaluation.” 

But apparently not detailed enough to identify whether the alliance partners had any glimmerings of how to share money and power, as required in the alliance agreement.

Surely this has to raise questions about the future of procurement by Integrated Care Systems, under the new Health and Care Bill (aka NHS Slash and Trash Bill).

The NHS Slash and Trash Bill would turn NHS contracting from a regulated to an unregulated market

The Bill, which is to receive its second reading in the House of Commons on 14th July, removes the 2012 Health and Social Care Act’s requirement for competitive tendering (Health and Care Bill Part 1, Section 69, 2) and replaces it with new Procurement Regulations. (Health and Care Bill Part 1, Section 68,2).

These regulations “may make provision…in relation to…procurement processes” and, with the Secretary of State’s approval, NHS England “may publish guidance about compliance with requirements imposed by the regulations.” (Part 1, Section 68, 5 and 6)

This is all pretty vague. Basically the Bill retains sections of the 2006 NHS Act which relate to powers to commission health services, (2006 NHS Act Sections 3,3A, 3B and 4), and who commissioning arrangements can be made with – “any person or body” (2006 NHS Act Section 12ZA).

As big integrated public/private contracts are already procured without competitive tendering, for instance by using the Shared Dialogue process, questions have arisen about the government’s real reason for abolishing the requirement for competitive tendering. By definition, this has to be carried out through an open invitation to bid and is subject to some requirements for transparency and accountability.

The corrupt and secretive contracting that has been carried out during the pandemic was enabled by emergency legislation that suspended the requirement for competitive tendering. How are we to know that this will not also be the consequence of the Health and Care Bill’s vague and minimal Procurement Regulations?

Plus, tucked away in the Bill’s Explanatory Notes (which “explain what each part of the Health and Care Bill will mean in practice”), is the clarification that as a consequence of the Bill’s “removal of the current procurement rules” for commissioning clinical healthcare services, the Public Contracts Regulations 2015 would no longer apply. (Explanatory Notes-114).

This would turn NHS procurement from a regulated to an unregulated market, removing protections in the Public Contracts Regulations 2015 which allow contracting authorities to:

  • include social, ethical and environmental aspects into contracts, and
  • exclude suppliers who have violated certain social, labour and environmental laws. These include International Labour Organisation conventions such as the Freedom of Assembly and the Right to Strike.

For the time being, though, “the procurement of non-clinical services, such as professional services or clinical consumables, will remain subject to the Public Contract Regulations 2015 rules, until these are replaced by Cabinet Office procurement reforms” (Explanatory Notes-116). But under the Bill, even procurement of non-clinical services would be immediately exempted from the Public Contracts Regulations 2015, if they were part of a “mixed procurement” – such as “ if a health service is being commissioned but in the interests of providing joined up care some social care services are also commissioned as part of a mixed procurement.” (Explanatory Notes-116)

The Bill’s only obstacle to corrupt and secretive procurement practices seems to be the Slash and Trash Bill’s Procurement regulations section 68, 3:

“The regulations may, in particular, make provision for the purposes of—
(a)  ensuring transparency or fairness in relation to procurement,
(b)  ensuring that compliance can be verified, or
(c) managing conflicts of interest.

So, there may be some procurement regulations and they may specify how the bodies with commissioning powers procure health and health-related services (which includes housing) in a transparent and fair way and that conflicts of interest can be managed.

But with the example of the Shared Dialogue procurement of North East Essex Integrated Community Services in front of us, who can be confident that commissioners know what they’re doing and are capable of carrying out due diligence on potential providers?

And there is now strong evidence that the whole basis of the innovation and integration Health and Care Bill is misguided:

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