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Monday 26 September 2016
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Does general practice need competition and new providers?

Legal & Finance

David Jenner
MB ChB MRCGP
NHS Alliance GMS/PMS Lead
General Practitioner

David is the NHS Alliance GMS2 and practice-based commissioning (PbC) lead and support to the NHS Alliance practice manager network. David is also a part-time principal in general practice in Cullompton, Devon. He writes and talks extensively on subjects pertaining to the new GMS/PMS and PbC

There can now be no doubt that the government is serious about trying to introduce new providers to the market since the publication of the white paper Our Health, Our Care, Our Say in January this year.

Stories about the tendering of a single small practice in Cresswell and Derby to the corporate behemoth of UnitedHealth Europe (UHE), and the subsequent judicial and high court review, have stimulated conspiracy theories and questions of probity, and have even developed into a national debate.

The latter story, of course, sits well in the English media with its David vs Goliath undertones and our traditional support of the underdog – in this case the chair of the local parish council who has forced the retender of this contract. Yet while this particular play has been acted out under the floodlights, nearby practices in Normanton have been awarded to UHE, and a GP-led private company – Aston Healthcare – has taken over practices without a ripple of excitement or media interest.

This is the stage on which the players now emerge: a New Labour government that now espouses the philosophy of markets and competition it so rudely discarded in 1997. The government has responded to opinion in the great public consultation that stimulated the NHS Plan, which asked for more and better-paid doctors and nurses, and reduced waiting times for treatment.

No-one in general practice can complain about the pay rises and the increase in practice profits (approaching 40%), yet few new GPs seem to be appearing, apart from those who have migrated to the UK, particularly from Poland and Europe.

The government is now impatient that primary care services in some areas, especially inner-city areas in England, have not been seen to improve, and that health inequalities remain stark and are possibly even increasing. Its answer is to seek to inject a new stimulus to drive both quality and productivity in primary care – and that means competition and new private providers.

Quite rightly, the government feels that, in the vastness of the NHS, underdoctored areas have remained underdoctored, and incentives such as the Quality and Outcomes Framework (QOF) have tended to make GPs in affluent areas even more affluent, since they can more easily achieve higher QOF scores and the financial bonuses associated with them.

Finally, to set the scene, we must remember what GPs voted for back in 2003 when they accepted their new contract. They wanted better pay, the ability to control workload, more flexible career options and rewards for quality, as captured in the British Medical Association (BMA) survey that informed the negotiations.(1)

The government wanted to secure the workforce, incentivise quality and access, introduce an element of competition, and redistribute resources to areas most in need. Most GPs, however, simply voted for the promise of a 30% pay rise and the end to out-of-hours commitments!

Most of the GPs and the government's aspirations have been fulfilled, albeit at a greater cost than anticipated, but there has been virtually no progress on financial distribution. The government, though, has gained the legislation now in place, which effectively allows it to introduce new providers and competition. The government is now intent on using this.

Current situation
So far, only a few bold private providers have entered the fray – mostly led by GP entrepreneurs such as Dr Rory McCrea (ChilversMcCrea Healthcare), Dr Mark Hunt (Mercury Healthcare), Dr James Heath (Aston Healthcare) and, of course, no less than the contract negotiators themselves: Dr John Chisholm and Dr Simon Fradd.

Currently, the big corporates have not really entered the market – Tesco and others have yet to see greater profits in healthcare than retail!

So, are new private providers a good or a bad thing? Well, I think it's really quite simple: if general practice is providing a high-quality service that is readily accessible and good value for money there is no need for new providers. However, where these services – for whatever reasons – are not being delivered, then competition could be a powerful tool for driving improvements.

GPs have largely escaped the realities of the marketplace for years, but I think they can no longer avoid the need to be commercially aware and consider themselves a consumer service. New providers, particularly if they are sensitive to local communities, can quite probably succeed where others have failed, by securing new premises, staff and quality services where conventional general practice has struggled to provide these.

But is it the nature of the provider that is the issue? Or the funding and contractual limitations that prejudice against quality services in these areas? Just what is there to fear from a new primary healthcare market? Markets normally bring three main possibilities: competition, collaboration
or conflict.

Competition
Competition for patients is yet to be a reality in most areas but will start particularly in the "underdoctored areas", as specified in the white paper, where new providers are encouraged. General practice should not become paranoid – patients are incredibly satisfied with our services already, and if we ensure we maintain a high-quality service, with great customer satisfaction and prompt and convenient access, our patients are unlikely to desert us quickly.

Complacency is likely to be dangerous, as most practices do need to improve some basic customer care processes and also open a little longer and at more convenient times. This is where the competitors will be aiming: the so-called "8-till-late service". Get there before them and their job is much harder – approximately 85% of new brands fail in business, and incumbent GPs have the market share already. The easiest way of beating any competition is to make it uncompetitive for anyone to try to move in on your patch by providing the best possible service – even if this is at the expense of some profit initially. The opportunity costs of savings in advertising and marketing will quickly be recouped.

This is of course exactly what the government wants to achieve: better quality at no extra cost, without upsetting patients. Just imagine the uproar if local people are told their friendly family practice has lost its tender to provide services!

Collaboration
In mature markets this is the only real way forward. Look at the motor industry, for example, with Ford and Volkswagen joining forces to compete against the Renault Espace. New private providers might well bring new opportunities to current general practices – for example, in developing and managing the premises, providing human resources expertise or bringing tendering skills to win contracts. These could bring healthy alliances, leaving GPs and their staff to do what they do best while retaining control, yet benefiting from the commercial and corporate skills of the private sector. Marketing and advertising costs are again reduced this way.

Conflict
Conflict is a very real and possible outcome of markets and can be very destructive and costly, especially when lawyers get involved or where there are aggressive marketing campaigns. It rarely benefits anyone, least of all the patient. Look at the Cresswell and Derby issue here. How much has been spent on this? Have the local community had a good primary healthcare provider for the last year?

Risks of an open market
Markets can bring positive change: customer focus, responsiveness, better productivity and value for money are clearly what are expected from this process. However, there are very real risks when the Pandora's box of market economies is opened.

The big issues I see are:

  • Increased costs.
  • Greater capacity requirements.
  • Managing market exit.
  • Carve out.
  • Monopoly development.

Increased costs
Markets bring competition and the need to manage this process. This especially applies to general practice, as it looks likely that commissioning will remain in the hands of the NHS. Each tender process includes a financial and human resource cost for each tendering organisation and the contract-awarding body. This has to represent resources that could otherwise be spent on direct healthcare if a cooperative model was in operation. We need only to look at the costs of providing healthcare in the USA (150% of UK) to see this effect in action.(2) Can we not make the NHS work better without this?

Excess capacity
Choice is a fundamental aspect of markets. To make choice work you need an excess of capacity, unlike the current situation in most of primary care. This needs to be built and funded from somewhere, but no-one got rich from leaving assets unused, especially staff on which primary care is so dependent. This has to be funded, and again this will represent a potentially wasted global resource. One thing current general practice cannot be accused of is leaving staff idle!

Market exit
Markets bring winners and losers – and losers can go out of business! What will happen to patients when practices close? The NHS has no history of letting organisations fail, and to do so may leave some people without care or disrupt the long-term relationships between clinician and patient on which primary care is built. This will need careful planning and managing to ensure patients do not suffer, especially when the reason the service has failed is because it is uneconomical rather than of poor value.

Carve out
In most markets there are some products that are more profitable than others. There is a huge risk that new providers will cherry-pick these services and leave more complex and costly services alone. Ask any acute trust finance manager and they will tell you where the money is to be made: on day-case surgery, not the frail, elderly ill. The buyers – primary care trusts (PCTs) – will need to be eternally alert to the dangers of providers carving out the profitable ends of the market and leaving other areas unprovided. Health is about humanity. PCTs will have to ensure our most vulnerable patients are not left without care.

Monopoly development
We now live in a globalised economy where markets encourage and breed bigger and bigger suppliers of services. These successful providers often change the nature of provision of services and can ultimately restrict choice and access. Just look at supermarket business in the UK and the consequences become clear. Cornershops have gone out of business and petrol stations are closing down, leaving rural communities without local services. These possible effects need to be scoped and managed alongside the undoubted benefits markets can bring in quality and price.

Summary
So should we welcome or fear the introduction of a market to primary care? In my opinion the biggest risk is of fragmented and contradictory policy introduced without an open and explicit discussion with NHS staff, contractors, potential providers and, most of all, the public. Political forces have ensured that an explicit debate on this was missing from the Your Health, Your Care, Your Say consultation, and only now is the public aware of what is really happening.

I can see benefits of some healthy competition to drive quality and value – this was a feature of general practice in the past – but also grave risks, particularly to those most in need. I also doubt the ability of current NHS providers and commissioners to stand up to the powerful forces of big business. Large corporates hold the ability to run loss leaders to gain market share, then threaten a withdrawal of services unless prices are increased.

There is bound to be more competition, but with a little nous, some service improvement and some healthy collaboration, UK general practice can best deal with it by ensuring it never really happens! Remember the QOF – throw us a challenge and we are likely to meet it. And of course we hold 98% market share already!

References

  1. British Medical Association. National survey of GP opinion. London: BMA; 2001. Available from: http://www.bma.org.uk/ap.nsf/Content/GPC+%2D+National+Survey+of+GP+opini...
  2. Organisation for Economic Cooperation and Development (OECD). OECD health data 2006. How does the United States compare? June 2006. Available from: http://www.oecd.org/dataoecd/29/52/36960035.pdf