Outsourcing of NHS services a growing threat


With widespread opposition (plus some common sense) the attempt to drive the privatisation of NHS clinical services appears to be stalling.

But as one threat diminishes, at least for now, a new one arises: there are increasing attempts to privatise non-clinical services. Outsourcing is now the big threat.

Think back to the Thatcher years and the wholesale destabilisation of our local authority services through compulsory competitive tendering. The council’s lost their direct labour teams and private companies got rich pickings from taking contracts.  For local government there is at least an organisation, the Association for Public Service Excellence, which is supported by the local authorities to supply knowledge and advice and apply some rationality around service reorganisation. Nothing of that kind exists for our NHS.

The range of NHS service that are coming under threat range across payroll, finance, IT, through catering and transport, to pathology and sterile service.

It is true that many of these services are already outsourced in some parts of the NHS but we are now seeing a wholesale drive and the Carter Review will make it worse.

We are also seeing the chaotic but determined drive to kill off NHS shared services and to force the Commissioning Support Units into the private sector.

And perhaps worst of all, we are seeing attempts to outsource aspects of commissioning; something that is not supposed to be allowed.

All good organisations keep their services under review and look for improvements. In areas like Information Management there may be no, or very little, NHS provision left so using the private sector becomes like buying a printer or a server. But this new drive is purely ideological.

So what can we do? How can we defend NHS services from being outsourced?

It turns out we can do a lot, building on the experience of the trade unions who have been experiencing and challenging many proposals across the country.

We can refute the bogus claims from management. To be clear there is no requirement to look at outsourcing. The pernicious Section 75 Regulations do not apply to non-clinical services.

If a service is being provided in-house but some change is required then there is nothing in EU or Domestic Law which requires any tender process. This is most clearly set out in article 5 of the directive 2014/24/eu of the European Parliament and of the Council of 26 February 2014:

‘It should be recalled that nothing in this Directive obliges Member States to contract out or externalise the provision of services that they wish to provide themselves or to organise by means other than public contracts within the meaning of this Directive.’

Don’t blame the European Union!

How should a competent management, working in partnership with the recognised trade unions, look to bring change about?

There is much guidance and even some law involved, but essentially the whole ethos of change in the NHS is that it must be open and transparent and proposals for change have to be subject initially to proper engagement and consultation. The public should have the right to some say in the issue as any change in the NHS can potentially impact on the patients.

But in all honesty common sense and the guidance say the same things.

The obvious first step is to be fully open and transparent about the case for change – share the evidence and explain why current services are no longer fit for purpose. That means developing and sharing the definition of the service that is required and why with the necessary quality measures to apply and so on.

That would usually then be formally documented (maybe in an Options Appraisal or Business Case) which should be made public; showing apart from much else that the option to do nothing is not viable. (There are whole libraries of methodologies about how this should be done.)

The next step is to work collectively to understand what would be needed in order to develop the in-house service to the point where it could meet the new requirements.

That may need some modifications to the specification, investment or even a capital programme, take time, and require some negotiation over staffing levels and even terms and conditions. At the end of this stage, if there is a joint agreement then that is always the best outcome.

If there is a ‘gap’ supported by evidence, then management have to look at the other options.

One that should be addressed, if it has not already been examined, (and even if only to be discounted) is to explore sharing the service or some agreement over service provisions with another NHS body.

But the preferred option may be outsourcing. Management will have to develop their business case to reflect what has been found and again publish the results and their proposals which will inevitably be some kind of plan to carry out a competitive tendering process, a process strictly regulated under the Public Contracts Regulations. They will prepare the documentation that will be provided to potential bidders. Again this information should all be made public.

They should then consider, again in partnership, whether there is a possibility of the current in-house team being part of the bidding process. If so, the team will need some proper support and the time to put together a bid, usually with some external partners. If there is any prospect of such a bid then the Regulatory position is one of ‘equal treatment’ so the in-house bid has to be treated in the same way as the bids from other potential providers.

Once the tendering process is launched then it follows its course until the most economically advantageous bid is accepted, or the process fails.

It’s simple enough and wholly reasonable to follow this process and so ensure the minimum risk of any legal or regulatory challenge.

Sadly the reality is very different.

There have already been significant major disagreements and many ill-advised management teams have argued that they cannot share any information or work in partnership because of various aspects of commercial confidentiality. This is rubbish but they appear to believe it.

The requirement to engage with staff, public and patients is set out in the NHS Constitution in an entirely unambiguous way; nowhere does it set out some exemption because some tendering might be needed at some point. In most places it says the opposite – you cannot go out to tender until you have completed proper consultation.

There has been very clear guidance around the Freedom of Information Act for many years which sets out what should be released during a procurement process. This is almost always ignored. The view of all the acknowledged experts is that once a decision is taken to launch a tendering process then all the information used to lead to that decision can and should be made public.

And the procurement legal framework does not protect information other than that supplied by bidders and clearly specified by the bidders as requiring confidentiality – and even then the FOIA and a test of the public interest overrides any requested confidentiality.

There is plenty of guidance around how public procurement has to take place, it is just that NHS organisations decide to ignore it.

What has been found is that if management are confronted robustly then they initially claim the legal high ground, then they put up bogus arguments, they huff and puff and then back down and do things properly.

So there is the hope. Strong early intervention by the trade unions on behalf of the staff can be very effective. In the end nothing should prevent the NHS from having the services it genuinely requires but only vary rarely will be ramshackle gutsy amateur approach followed by under-resourced NHS management teams get the right result.

First published by Left Foot Forward