Research and analysis

Choice and competition toolkit: scenarios for GPs working together

Published 1 June 2015

Applies to England

1. Introduction

In response to our call for evidence on GP services we heard that GP practices are being encouraged to work together to address the challenges facing general practice and that increasing numbers of GPs are doing so. In our follow-up interviews with GPs around the country they told us about how they are coming together to improve the quality and efficiency of general practice. We also heard that uncertainty about patient choice and competition rules was impeding the development of new ways of working in primary care.

There are good reasons GPs might want to work together − it could improve quality, increase the scope of services provided to patients, and enable services to be delivered more efficiently. The Five Year Forward View describes new models of care that involve increased co-operation between different GP practices, and between GP practices and other providers. However, there may be circumstances in which such arrangements could, even unintentionally, have adverse effects by reducing incentives to improve service quality and value for money, or denying patients the ability to make choices about their care.

Monitor is responsible for overseeing the rules relating to patient choice and competition in healthcare services, including GP services. In all cases we seek to enforce the rules fairly and in the interests of patients. For more information about our powers and how we exercise them, see this guidance for NHS providers^{[footnote 1]}. Some arrangements between GPs may also be subject to the scrutiny of the Competition and Markets Authority (CMA), including if they involve a change of control and constitute a merger.

2. How to use these scenarios

With these scenarios we aim to show how GPs^{[footnote 2]} can work together to benefit patients within the framework of rules regarding patient choice and competition. We’ve set out a range of scenarios depicting common features of arrangements of GPs working together: what the providers working together are hoping to achieve, the adverse effects that type of arrangement^{[footnote 3]} could have, and the questions we would ask to make sure these effects do not materialise.

2.1 The scenarios are:

• bidding together for contracts
• commissioners favouring GP arrangements
• arrangements containing terms that stop members competing
• excluding some providers from an arrangement
• arrangements between GPs and hospitals

We focus here on the incentives that competition creates to innovate and improve the quality of services for patients. However, we do recognise that competition is just one way commissioners can encourage GPs and other providers of healthcare services to provide the best possible care for their patients.

Our engagement shows that there are a range of views among GPs on the extent to which GPs compete and how choice and competition can help improve the quality of GP services. These scenarios address the uncertainty about the rules that GPs have told us is impeding working together: they are not an assessment of the role of choice and competition in GP services.

3. Bidding together for contracts

3.1 Scenario:

We learned that a federation of over 60 independent GP practices, covering over 500,000 patients, decided to bid for dermatology services commissioned by the local clinical commissioning group (CCG).

3.2 How could this cause a problem?

One of the reasons GPs work together is to enable them to bid together for enhanced, community, out of hours or other services that can be provided by primary care professionals. This can bring benefits for patients and commissioners if bidders can pool a range of skills and experience to provide services that might otherwise not be available locally. It can also create new and innovative ways of delivering services, or add to the number of potential suppliers a commissioner can choose from.

However, issues may arise where providers could have bid outside the arrangement and there are few potential other providers because commissioners will have fewer providers to choose from, and may not be able to choose the most capable provider providing the best value for money. In these circumstances providers bidding together have a reduced incentive to develop the most attractive offer (the best quality service for the best value for money to maximise their chances of being selected).

3.3 Areas for consideration

Is the purpose of the joint bidding arrangement to reduce competition?

A joint bidding arrangement could be problematic if it was specifically designed to reduce the options available to commissioners and thereby make it easier for the providers bidding together to win the tender.

Does the joint bidding arrangement in fact reduce competition?

If the arrangement is not intended to reduce competition, it may still be a problem if it has the effect of reducing the choice available to commissioners. This would depend on whether the providers bidding together could have bid outside the arrangement and whether there are other potential bidders for the services. If a number of other providers could also submit strong bids to provide the services, the effect on competition would be small. All the GPs in an area could bid together and this would not be a problem if they could not have bid separately or the commissioner has other good options such as the local community or acute trust, or independent providers. However, if some of the strongest potential bidders for the contract bid together the local CCG could be left with fewer strong bidders or even a single bidder. If this were to happen the incentives for providers to deliver high quality services and offer value for money could be reduced to the ultimate detriment of patients.

Does the joint bidding arrangement deliver benefits to patients?

If the joint bidding arrangement does reduce competition it will still be permissible under the rules if the benefits to patients arising from working together offset the reduction. Such benefits might be in the form of improvements to the quality or value of services achieved through the providers working together.

4. Commissioners favouring GP arrangements

Scenario:

A GP told us that one of the potential advantages of being a member of a local GP federation is that some local CCGs favour GP federations over other bidders when awarding contracts. The GP was concerned that this was because of close ties between the GP providers and CCGs, rather than because these providers offered better value for money or higher quality services. In particular, they suggested that CCGs may be developing services, or delaying the commissioning of services, to allow local GP federations to bid for them.

4.1 How could this cause a problem?

One way to improve the sustainability of the NHS is by ensuring people are cared for in the right setting and reducing reliance on care in acute hospitals. The Five Year Forward View explains that out-of-hospital care needs to become a much larger part of what the NHS does.

GPs working together to provide services traditionally provided in hospital can provide an alternative that patients value as well as having financial benefits for the NHS. In most cases these additional services will be commissioned by the local CCG. This means there are some risks that need to be managed when CCGs are commissioning services from local GPs. The first and most apparent risk is conflict of interest. CCGs are specifically prohibited from awarding contracts for services where conflicts of interest affect, or appear to affect, the integrity of the contract award.

Even where conflicts of interest are managed appropriately, there is still a risk that CCGs might design service specifications or procurement processes that (possibly unintentionally) favour local GPs over other providers who might be better placed to meet patients’ needs and provide the best value for money.

4.2 Areas for consideration

Has the CCG appropriately screened for, and managed, any conflicts of interest?

There are several sources of guidance available on conflicts of interest in healthcare. As well as our advice on managing conflicts set out in guidance on the ‘Procurement Patient Choice and Competition Regulations’, both NHS England and the British Medical Association offer guidance. CCGs need to take care to manage potential conflicts appropriately and the actions required to achieve this will depend on the circumstances. For example, we looked at a CCG that needed to manage potential conflicts of interest in commissioning a new community service.

Essentially, we thought they managed it well by:

• excluding potentially conflicted clinical members of the CCG governing body from the assessment or approval of both the business case for the procurement and the recommendation for contract award
• bringing in clinical expertise from a neighbouring CCG area to make up for the expertise lost by excluding clinical members

Has the CCG favoured the group of GPs in designing or procuring services?

Many CCGs are supporting the formation of GP federations in their areas in order to improve patient care and facilitate new ways of working. This is not a problem under the rules; the potential issues arise when it comes to designing services and awarding contracts to provide services.

CCGs can and should commission services from GP federations where the federation is the best placed provider, but it is important that they keep an open mind about who can provide services in their area. Favouring certain providers, or types of providers, risks not getting the provider most capable of meeting the needs of patients or providing the best value for money. The ‘Procurement Patient Choice and Competition Regulations’expressly prohibit commissioners (including CCGs) from favouring a provider or type of provider.

5. Arrangements containing terms that prevent members competing

Scenario:

We were contacted by a provider of general practice services who told us that if they joined a local GP arrangement they would be required to agree to a non-compete clause. This would mean that they could not compete for any contracts against other members of the GP arrangement for the duration of the agreement and for some time afterwards. The provider wanted to work with the other GPs to bid for certain contracts, but also wanted to be able to compete for other contracts by themselves. They were also concerned that agreeing to the terms of the local GP arrangement would mean they could not compete for some of their existing contracts that came up for renewal.

5.1 How could this cause a problem?

Some GPs may be concerned that a provider in a group could use the arrangement to their own advantage and to the detriment of the other providers in the group. For example, a group of practices considering bidding for a contract as a consortium might be concerned that one member of the arrangement might work to shape the bid but then also bid separately and undercut the consortium.

To address this, some arrangements between GPs include provisions that prevent members of the arrangement providing particular services or engaging in certain activities for a period of time. These provisions are sometimes referred to as non-compete clauses.

If properly constructed, a non-compete clause can be an effective way of reassuring providers that their willingness to work together will not be exploited by others in the arrangement. If, however, the clause is too broad it could prevent members of the arrangement from doing things that might benefit patients. For example, where a GP would like to bid for a contract but is prevented from doing so by a non-compete clause, the commissioner might have fewer providers to choose from and not be able to choose the most capable provider providing the best value for money. Also, if a GP is prevented from expanding its practice or acting to attract patient registrations the incentive to innovate and improve service quality to attract patients is reduced.

5.2 Areas for consideration

Does the non-compete clause reduce competition?

Whether the proposed restriction meaningfully reduces the choices available to patients or commissioners depends on the local circumstances and the nature of the agreement. If the providers that are party to a non-compete clause are not likely to compete for contracts or patients in any case, there is little scope for the clause to restrict competition. It is also unlikely to be a problem if there are many other providers not subject to the restriction that provide good alternative choices for patients or commissioners.

Is the non-compete clause necessary to achieve benefits for patients?

Any non-compete clause should be directly related to, and necessary for, achieving the benefits the arrangement is directed at. We would expect most non-compete clauses to be effective for no longer than the lifetime of the arrangement for working together, depending on the circumstances. For example, if the parties have made considerable investment in the arrangement, the non-compete clause might last longer to reflect this. We would also expect a non-compete clause not to restrict activities beyond those within the scope of the arrangement. If the federation is established chiefly to embed good practice and integrate care, there is unlikely to be any need for a non-compete clause.

We would look at clauses that restrict GPs from trying to attract patient registrations (for example by advertising their services) in the same way. We do not think there will be many situations where GPs agreeing among themselves not to register or attract patients is necessary to achieve a benefit to patients.

6. Excluding some providers from an arrangement

Scenario:

A provider of GP services told us that it had been excluded from some arrangements between local GPs because it holds an alternative provider medical services (APMS) contract. The provider told us it wanted to join these arrangements, because it believed it would be better placed to compete for contracts as a member of an arrangement than on its own.

6.1 How could this cause a problem?

When GPs decide to enter into an arrangement to work together they are likely to set criteria for joining the arrangement which will mean that some providers are excluded from being part of the arrangement.

GPs are under no general obligation to allow any provider to join an arrangement for working together. If, however, commissioners have decided that providers must be members of the arrangement in order to provide services, new members should be permitted to join unless there are good reasons for their exclusion.

If a new provider cannot provide services because they are excluded from an arrangement, there is a risk patients might miss out on an extra choice of provider they would value and the providers within the arrangement could have a reduced incentive to keep quality high.

6.2 Areas for consideration

Is being part of the arrangement necessary to provide services?

The first question is whether the commissioner requires that providers be members of the arrangement in order to be commissioned to provide a service. It is not enough that providing services would be easier from within the arrangement or that providers within the arrangement are better placed to compete. Requiring providers to be members of an arrangement in order to be commissioned is different from where a commissioner has commissioned the arrangement to provide a service. A consortium of providers commissioned to provide a service is not required to allow new providers to join the consortium.

So if, for example, a commissioner requires that all providers of GP services in its area be members of the local GP federation then the GP federation should permit new members to join. If, on the other hand, the commissioner has commissioned the local GP federation to provide a particular service there is no requirement that other providers be allowed to join the federation.

Even though the members of an arrangement might not be required to allow other providers to join, we would still expect them to work together to integrate the care they provide in the interests of patients.

Are there good reasons for excluding providers?

If the commissioner requires that providers be members of the arrangement to provide services, there would need to be good reasons for excluding a provider. We would expect the commissioner to have worked with the arrangement to set appropriate criteria for membership. Reasons for excluding a provider could include that the provider does not have the necessary professional qualifications or registrations (such as Care Quality Commission registration) or is not willing to abide by the terms of the arrangement. It is not likely to be in the interests of patients to refuse to allow a new provider to join because the existing members do not think that an extra provider is necessary or might hurt their business.

7. Arrangements between GPs and hospitals

Scenario:

In 2009, City Hospitals Sunderland NHS Foundation Trust proposed to merge with Church View Medical Practice, a provider of GP services. The merger was one of 16 integrated care organisation pilot projects commissioned by the Department of Health. It was proposed that City Hospitals would become the employer of all Church View staff and take over Church View’s patient list as the holder of Church View’s personal medical services contract.

7.1 How could this cause a problem?

There are several ways in which the distinction between primary and secondary care is being broken down. One type of model described in the Five Year Forward View is the primary and acute care systems (PACS) model. PACS models involve combining general practice and hospital services in a similar way to the accountable care organisations developing in other countries. We have also seen instances where NHS foundation trusts have taken over GP practices or are thinking of doing so.^{[footnote 4]}

If properly designed and implemented, arrangements between primary care providers and secondary care providers could help to ensure that transition between primary and secondary care is as seamless as possible for patients. However, in thinking about these kinds of arrangements^{[footnote 5]} (sometimes called vertical arrangements) commissioners and providers should remember that any arrangement:

• must ensure that patients’ right to choose their provider of elective services is preserved
• could affect how referrals are made to secondary care and weaken incentives to improve quality to attract patient referrals^{[footnote 6]}
• could limit commissioners’ choice of provider or weaken incentives to improve services to attract patients if the primary and secondary care providers provide any of the same services

7.2 Areas for consideration

Does the arrangement preserve patients’ right to choose their provider of elective services?

Under the NHS Constitution patients have the right to choose any clinically appropriate provider in England for their first outpatient appointment with a consultant or member of a consultant’s team. To ensure this right is protected, commissioners are obliged to ensure patients are offered the choices they are entitled to and providers are obliged to make patients aware of the choices they have.^{[footnote 7]}

This means a GP cannot require their patients to attend a particular hospital for elective care regardless of any arrangement between the GP and the hospital. Even where a hospital is providing primary care services itself it must offer a choice of provider to patients requiring a first outpatient appointment with a consultant or member of a consultant’s team.

If we received a complaint that an arrangement was infringing patients’ right to choose their provider of elective care, we would examine what safeguards the arrangement had to protect choice was properly offered. This would depend on the nature of the arrangement.^{[footnote 8]}

Does the arrangement affect how referrals are made?

Even if patients’ right to choose their provider of elective care is preserved, an arrangement between a GP and a hospital could still have adverse effects. This is particularly the case for referrals to which the right to choose a provider of elective services does not apply (eg referrals made to services not led by a consultant or tertiary services).

For example, a hospital operates a physiotherapy service that receives half its referrals from a particular GP. If the hospital and that GP form an arrangement that involves physiotherapy referrals, the hospital no longer has to worry about those referrals going elsewhere, so its incentive to keep quality high is weakened. It could also weaken the incentive for other physiotherapy service providers to improve their services to attract those patients away from the hospital. This may or may not be a problem depending on the presence of other physiotherapy providers and the availability of referrals from other GPs.

Does the arrangement affect overlapping services?

In some cases an arrangement between a GP and hospital provider could affect a service that both parties provide. For example, if a GP practice provides an outpatient dermatology service and the only other provider of outpatient dermatology in the area is the local hospital, then an arrangement to combine their dermatology services would reduce the choice available to patients. This could be a problem because it might weaken the incentives each provider has to improve the quality of its service to attract patients or to continue to be commissioned to provide the service.

8. How to contact us

Our aim is to give GPs confidence in thinking about ways of working together to deliver better and more efficient services.

If you are a GP considering arrangements for working together and have particular questions about patient choice and competition rules, contact us at cooperationandcompetition@monitor.gov.uk. We are happy to help providers ensure they are using the framework of the rules to achieve the best outcomes for their local populations.

1. Which set of rules apply will depend on the circumstances but it is important to note that any arrangement between providers is subject to the rules even if it is a pilot or another form of temporary arrangement. ↩

2. In these scenarios we use the term GP to include any provider of GP services, whether they are practicing individually, in partnership, as part of an NHS trust or foundation trust, as a corporation or in any other form. ↩

3. The legal form of the arrangement (ie whether the GPs working together form some sort of corporate vehicle or rely on agreements) is unlikely to affect the matters described in these scenarios so we refer to all forms of working together as ‘arrangements’. ↩

4. For example, The Newcastle upon Tyne Hospitals NHS Foundation Trust established a joint venture company with local GPs; University Hospitals Birmingham NHS Foundation Trust has indicated they are in merger talks with ‘a couple of large practices’ (no details disclosed at this stage). ↩

5. This scenario describes an arrangement between GPs and a hospital. Many of the same considerations would apply to a decision by a hospital to begin providing GP services without forming an arrangement with an existing practice. ↩

6. Arrangements between primary and secondary care providers may also reduce the scope for clinical triage of referrals to ensure patients are being treated in an appropriate setting. ↩

7. Condition C1 of the NHS Provider Licence. ↩

8. For example the Co-operation and Competition Panel considered safeguards in its review of the proposed integrated care pilot scheme between City Hospitals Sunderland NHS Foundation Trust and Church View Medical Practice. Details of the case are available here. ↩