Competition rules over merger has cost NHS £1.8m, BMJ probe shows

BMJ 2013; 347 doi: (Published 15 October 2013) Cite this as: BMJ 2013;347:f6246
  1. Gareth Iacobucci
  1. 1BMJ

The lengthy battle over the proposed merger of two hospital foundation trusts in England has cost the NHS almost £2m (€2.4m; $3.2m) in legal and consultancy fees, a BMJ investigation has shown.

Plans to merge the Royal Bournemouth and Christchurch Hospitals NHS Foundation Trust and Poole Hospital NHS Foundation Trust, first proposed in 2011, were provisionally blocked by the Competition Commission in July, with a final ruling due by 21 October.

The trusts said that the plans were essential to ensure the sustainability of services in the area, but the commission provisionally ruled that the move would reduce patients’ choice. The plan has been opposed by BMI Healthcare,1 which runs a private hospital in Poole.

In response to a request from the BMJ made under freedom of information legislation, the two NHS trusts disclosed that they had spent a combined sum of £1.8m on legal and consultancy fees related to the merger, as at August 2013.

The finding came after Stephen Thornton, deputy chairman of the health sector regulator Monitor, recently warned that the government’s new competition arrangements for the NHS in England were a “bonanza for lawyers and consultants” and could lead to scandals if money was being diverted from the care of patients.2

The Royal Bournemouth and Christchurch Hospitals NHS Foundation Trust said that costs associated with the planned merger had been met by NHS South of England, the former strategic health authority dissolved on 31 March 2013, and insisted that funding allocated to patient care had not been used to fund legal and consultancy support.

But the disclosure provides evidence of the huge costs associated with the case, which is the first involving two hospital foundation trusts that have tried to merge—and is widely viewed as a test for future cases.

Royal Bournemouth and Christchurch said, “While the cost of merger has been funded through public money, funding allocated for patient care at the Royal Bournemouth, Poole, or Christchurch Hospitals has not been used.

“The legal and consultancy costs for the proposed merger as at August 2013 were £1 880 000.”

Paul Flynn, chairman of the BMA’s Central Consultants and Specialists Committee, said that he was concerned about money being diverted from patient care by the new competition rules, at a time when the NHS was being asked to make huge efficiency savings. “The money has to come from somewhere,” he said. “We’ve not seen convincing evidence that competition is a driver for improved services. If competition means that money is spent on legal fees and consultancy fees, then it’s hard to see that that is going to lead to benefits for patients.”

David Lock, a barrister and expert on NHS contract issues, said that the costs were a “direct and predictable” byproduct of the government’s NHS changes.

He said, “The introduction of transparent competition and procurement obligations on NHS bodies as a result of the 2012 act will inevitably increase the number and complexity of challenges to decisions taken.

“It seems inevitable that NHS bodies will have to increase their degree of legal due diligence in all transactions, and this will divert monies away from patient care.”

The news came in the same week that Monitor announced it was to investigate a complaint by the private provider Spire Healthcare against two clinical commissioning groups in the north west of England. It accused Blackpool CCG and Fylde and Wyre CCG of directing patients away from a Spire hospital to an NHS hospital.3

Amanda Doyle, chief clinical officer for Blackpool CCG, was angry at the complaint. She said, “Although we are happy to work with Monitor to assist their investigation, there is not a shred of evidence to substantiate Spire’s supposition that we have told GPs to direct patients to any particular provider, and I, personally, deeply resent the accusation that either Blackpool CCG or its constituent GPs have acted in any way other than in the best interests of our patients.”


Cite this as: BMJ 2013;347:f6246


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