A guide to the Outsourcing of Health services

A guide toThe outsourcing of health services and using scrutiny to challenge it

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This guide has been prepared for UNISON by Alyson Morley at the Democratic Health Network (DHN). DHN provides policy advice, information, research and a forum for the exchange of good practice in partnerships between local government and health bodies. DHN is a partner organisation with the Local Government Information Unit.

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Contents

Introduction 4

Legal and policy context on consultation and involvement 6

Commitments and policy on consultations 8

Action you can take locally 11

More information 15

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Introduction

The involvement of the private sector in the NHS has been one of the key components of the government’s modernisation agenda for the past 10 years. Initially, private sector involvement related to capital projects such as the Private Finance Initiative (PFI) and Local Improvement Finance Trust (LIFT) in the provision of new hospitals, primary care facilities and other health facilities. This has involved private businesses taking over the ownership, financing and management of health facilities – now the dominant template for almost all new health facilities.

More recently, the focus of private sector involvement has shifted to provision of treatment initially in secondary and tertiary care through national procuring of Independent Sector Treatment Centres (ISTCs) and at a local level, through local commissioning by primary care trusts. Many fear that polyclinics, one of the key features of Lord Darzi’s Next Stage Review of the NHS, will provide a greater opportunity for the private sector to move into primary care.

The clinical, legal and financial issues relating to private sector involvement are often complex but it is important for trade unionists to keep seeking clear answers to common sense questions on behalf of the people whose interests they represent.

This guide is a response to concerns that primary care trusts (PCTs) may decide to commission health services – including GP and other community health services – from the private sector without proper consultation. We summarise the policy context for outsourcing NHS services and identify local accountability mechanisms that trade unionists can use to ensure that such decisions are subject to rigorous scrutiny and that their voices are heard.

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What is the public’s view?

A recent survey highlighted public fears of an increasingly privatised NHS. A survey of 1,000 people found that:

l 93% believe that the NHS should continue to be funded from UK taxes and remain free at the point of use

l 51% oppose the government’s policy of encouraging commercial companies to provide NHS services

l 58% do not support commercial companies making a profit from providing NHS care

l 50% believe that in 10 years time they will have to make a contribution to the costs of NHS care.1

The strong public feeling against involvement of the private sector in providing NHS services has not influenced government policy, which continues to advocate the involvement of the private sector in the provision of services as a way of improving choice and diversity and encouraging competition to improve cost effectiveness and quality of services. Locally, however, campaigns against outsourcing to the private sector are likely to have public support.

1Health Policy and Economic Research Unit, “Survey of the general public’s views on NHS system reform”, British Medical Association, June 2008

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Legal and policy context on consultation and involvement

The Health and Social Care Act 2001 - this Act introduced a range of duties and powers to promote the inclusion of patients, communities and other stakeholders in health services, including proposals to change services. The main provisions of the Act are summarised below.

The power of health overview and scrutiny - for all “upper-tier” local authorities (those with social care responsibilities) in England. Health Overview and Scrutiny Committees (OSCs) are seen by the government as the primary way of holding local health services to account on behalf of their local communities. Furthermore, NHS organisations have a duty to involve patients and the public when “substantial developments or variations” to health services are proposed. Pages 11-13 below give more information about the role of health overview and scrutiny committees.

Patient and public involvement – all NHS bodies have a duty to involve patients and the public at all stages of the planning, provision and monitoring of health services. The Local Government and Public Involvement in Health Act 2007 formalised this duty and extended it. Not only do NHS bodies have a duty to involve patients and the public in health services and undertake consultations, they are also required to show what influence, if any, the public’s view had on the development of health services.

Local Involvement Networks (LINks) – the Local Government and Public Involvement in Health Act 2007 abolished patient and public involvement forums and created LINks for each upper-tier local authority area. These are inclusive networks of local people and organisations to influence the commissioning, provision and review of health and social care. LINks will:

l promote and support the involvement of people and organisations in the commissioning, provision and scrutiny of local health and social care services

l “visit and view” some aspects of local care services

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l obtain the views of people about their need for, and experiences of, local health and social care services

l enable people to monitor and review the commissioning and provision of care services

l make known the views of local people and make reports and recommendations about how local care services might be improved.

All upper-tier local authorities have a duty to procure a “host” organisation – usually a voluntary or community organisation – to provide support for the LINks. LINks officially “went live” on 1 April 2008 but in reality, because many local authorities have not yet completed the procurement process for the host organisation, LINks are by and large in the early stages of development. A recent leaflet published by the Department of Health to inform the public of LINks states that “most LINks should be up and running by September 2008”.

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Commitments and policy on consultations

DH guidance on “substantial variations or developments”

NHS bodies are required to formally consult health overview and scrutiny committees when a proposal will entail “substantial variations or developments”2. The Department of Health (DH) does not define what might be considered “substantial” in the regulations. In some areas health overview and scrutiny committees and NHS bodies have developed local agreements, protocols and criteria about what might be regarded as substantial. The majority of local areas, however, do not have any formal process or protocols and there can be disagreement between OSCs and local NHS bodies over what constitutes a “substantial” change.

In the absence of any clear local guidance, many OSCs have turned to the general criteria in the DH guidance of what might constitute a substantial variation or development. They include:

l changes in accessibility of services – including proximity to public transport, the physical accessibility of premises and accessibility for all communities, in particular those who are less likely to access health services

l the impact of the service on the wider community or knock-on effects on other services, including economic impact, transport and regeneration

l the number of patients affected – changes may affect the whole population of an area or a small group – it may still be considered substantial if it will have a major impact on that group

l methods of service delivery – changing the location of a service, or the times at which it is available.

2Department of Health, Strengthening accountability: involving patients and the public policy guidance, February 2003

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If there are no agreed criteria or protocols in your area, it is important to refer back to the original DH guidance to determine whether proposals are “substantial” and therefore subject to formal consultation procedures.

The North East Derbyshire ruling

In 2005, North East Derbyshire Primary Care Trust appointed a private supplier to run GP services in some of its area – a decision which was challenged by a local resident. This decision was subject to Judicial Review on the grounds that the PCT had not adequately consulted the community. The Judicial Review found that the consultation had not met the legal requirements set out in the Health and Social Care Act 2001 but the appointment of the private company was legal because the local people had neglected to use the existing communication channels and the commissioning process was conducted fairly.

This ruling was overturned at the Court of Appeal on the grounds that the PCT had breached its duty to consult. Clearly, the NHS must take seriously their duty to consult patients and the public but this does not mean that the NHS body is then obligated to act in accordance with the dominant public view.

Since this ruling, the DH has been keen to avoid lengthy legal processes aimed at opposing the entry of the private sector into the NHS. DH guidance has stressed that change of provider in itself should not be considered as “substantial” and recent advice from the NHS National Centre for Involvement states that: “people do not need to be consulted about changes in services where the manner of service delivery and range of services available to them remains the same”.

Lord Darzi’s NHS Next Stage Review

Lord Darzi’s final report of the Next Stage Review of the NHS was published in June 2008 and set out the vision for the NHS and the steps by which this vision will be achieved. Many commentators are concerned that the creation of polyclinics will provide an ideal opportunity for the private sector to enter the primary health care market. In an attempt to allay such concerns, in advance of his final report Lord Darzi published five pledges to the public and staff on how the NHS will implement changes to services. PCTs will have a duty to honour these pledges:

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Change will always be to the benefit of patients – by improving clinical outcomes, experiences or safety.

Change will be clinically driven – and will be led by clinicians on the basis of sound clinical evidence.

Change will be locally led – local needs will be addressed by local solutions.

You will be involved – patients, carers, the public and other key partners will be able to “have their say and offer their contribution” to any proposals for change.

You will see the difference first – existing services will not be withdrawn until new services are operational.3

In a press statement announcing the five pledges Lord Darzi stated that “empowered patients and empowered staff are the key to world-class standards”. If changes are proposed in your area, ensure that your PCT honours the pledges.

3Department of Health, Leading local change, May 2008

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Action you can take locally

In the past, outsourcing of health services has been undertaken at national or regional level through national procurement programmes. Often local people, including trade unionists, have found it difficult to have an influence on commissioning decisions. However, the Department of Health has now moved the bulk of commissioning decisions to the local level (through PCTs or practice-based commissioning clusters), so there is more potential for local branches to get involved in discussions about commissioning decisions, LINks activity and OSC reviews.

Contact your health overview and scrutiny committee

Health overview and scrutiny committees have an important role in holding the NHS, and providers of NHS services, to account. They are the “official consultee” for consultations on substantial variations and, as such, have powers to request information, request attendance of PCT officers and make reports and recommendations.

They can refer matters to the secretary of state for health if they decide that the consultation has been inadequate or if the proposals are not in the best interests of the local community.

OSCs are able to:

l assess complex financial and political issues from the perspective of the best interests of local people

l gather evidence from a wide range of witnesses, including local people, clinicians and other staff, patients, members of the council’s executive and NHS bodies to assess the impact of private sector involvement on the provision of health services and the health of local people

l give a voice and influence to local people, staff, trade unionists and other people that are not often heard and not included in discussions about outsourcing

l assess the impact of outsourcing elements of NHS provision on the local health economy

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l scrutinise all aspects of the commissioning process to ensure that patients and public have been involved and that their needs and concerns have been addressed in commissioning plans

l make reports and recommendations regarding changes to services, and can require NHS bodies (and private sector providers where this is specified in their contract) to provide information, attend OSC meetings and respond to recommendations saying what, if any, action they will take in response to reports.

OSCs can consider several different aspects of outsourcing.

The rationale – they can consider whether outsourcing is the best and only option for commissioning health services. How has the service been provided to date and is there evidence that a change of provider is necessary? What impact will outsourcing have on efficiency, service quality, accessibility of services, integration of services or increasing choice and diversity?

The outline business case – the OSC may wish to scrutinise the outline business case for outsourcing services currently provided by the NHS. The PCT may be unwilling to provide this information to the OSC on the basis of commercial confidentiality but this information should be routinely available to all potential bidders. You could request that they consider the following issues:

Affordability – is the scheme affordable in the medium or longer term and how will the PCT meet any funding gaps? What impact will there be on funding for existing services?

Competitiveness – are the assumptions made by the PCT or practice based commissioning (PBC) cluster in drawing up the cost comparisons between private and public sector providers robust? Are the assumptions about levels of demand for the service or costs of service provision sound? Does it include an identification and analysis of the transfer of risk from the public sector to the private providers?

Accountability – does the model of service provision allow for maximum accountability to the OSC, the PCT or PBC cluster and to local people through LINks?

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Impact – has the PCT/PBC cluster considered fully the implications on other services?

Involvement – has the PCT/PBC cluster involved all interested groups, not just current patients, in consultations about their needs and expectations?

Workforce issues – have these been fully considered?

The contract – again, because of commercial confidentiality it may be difficult for the OSC to have access to the contract before it is signed off by both parties but, if they do, they may wish to look at how the contract will be monitored and what the penalties are for poor performance.

Contact your local LINk

NHS bodies have a duty to consult and involve local patients and the public – including LINks – at an early stage in consultations on changes to existing services and in developing new services. Unlike the previous patient and public involvement forums, anyone with an interest in health and social care services can get involved with LINks. The fact that LINks are such new organisations presents both challenges and opportunities: the challenges are that LINks may not yet have the skills, profile and relationship with local health bodies and OSCs to make an impact and have an influence on the planning and provision of health services; the main opportunity is that LINks have the potential to be far more inclusive organisations, involving a wide range of individuals and groups – including trade unionists.

l Through your local council, contact your LINk and get involved with their work.

l Make sure that the PCT is consulting them on proposals to outsource services and, if not, alert the host organisation to the situation.

l If the PCT continues to bypass the LINk, get the LINk to refer the matter to the health OSC for their consideration.

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Ask these questions

There are a number of questions that branch activists can raise with LINks or with OSCs in relation to outsourcing of local services.

l Has the PCT considered other ways of providing the service? Are there are any other options that could be considered?

l What is the business case for outsourcing services?

l What is the nature and scale of the services being outsourced?

l What effect will this outsourcing have on the local health economy and on local authority services?

l Do patients and the public know about the proposals to outsource? What is their view on the proposals?

l What impact will outsourcing have on efficiency, service quality, accessibility of services, integration of services or increasing choice and diversity?

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More information

For more UNISON information about outsourcing:

www.unison.org.uk/healthcare/keepNHSworking/

www.unison.org.uk/positivelypublic

For more information about health overview and scrutiny:

www.cfps.org.uk

www.dhn.org.uk

For more information about LINks:

www.nhscentreforinvolvement.nhs.uk

www.dh.gov.uk/en/Publicationsandstatistics/Publications/

PublicationsPolicyAndGuidance/DH_086056

See also the previous DHN / UNISON Guide to LINks, available here:

www.unison.org.uk/acrobat/A6681.pdf

Designed by UNISON Communications Unit. Published and printed by UNISON, 1 Mabledon Place, London WC1H 9AJ. CU/September 2008/17621/2718/UNP xxxxx.