Monitor and the Competition and Markets Authority have jointly issued new guidance on the procedural approach to be taken at least by Foundation Trusts in relation to involvement in schemes under the Five Year Forward View for new models of care.  This builds on the Monitor Guidance on Transactions re-issued in March this year and the Risk Assessment Framework guidance re-issued in August.  The approach largely replicates the Monitor guidance on mergers and proposes a three stage process:

  • Early engagement with the Monitor relationship team to the size and scale of the transaction and the key risk issues so that Monitor can effectively categorise the transaction as being either small material or significant.  If the transaction is only small then it drops out of the process.  At this stage Monitor will offer informal advice on strategy, the analysis of relevant patient benefits, and any other competition issues.
  • If the transaction is material or significant the expectation is that there will be an all parties meeting at the preferred bidder/OBC stage.  Monitor will need significant information about the proposed transaction which they anticipate may take up to a month for them to review in order to discuss the transaction in more detail at the meeting.  It should be noted that the meeting  will the commissioners and other parties. It will  consider: 
    • the strategic rationale, 
    • the FT's approach to assessing the patient benefits and how they will be realised, 
    • the proposed legal structure contracting and risk sharing arrangements and
    • where relevant a comparison of the FT's assessment of competition issues with Monitor's.
  • Monitor will then follow up with a written response and a timetable for any further review.  At this stage a further assessment of the classification will take place including risk factors to enable Monitor to decide whether to treat the risks as justifying treating the transaction as significant even if it does not qualify on the pure financial grounds.
  • If the transaction is significant for the foundation trust there will be a final detailed three month review based on the guidance on transactions.

Notwithstanding the proposed "merger" of the TDA and Monitor's role relating to providers the note makes no reference to NHS trusts and the TDA have not issued anything equivalent.  However in our view it will be necessary for NHS trusts to mimic this process and to expect to be involved in certainly the stage two meeting and to face similar robust challenge over the strategic objectives.

Commissioners too need to be aware of Monitor's approach here and their likely involvement in the all parties meeting.  Commissioners will also potentially face questions from Monitor about the commissioning/ procurement approach that they propose to adopt and whether that is consistent with the procurement regime.

There are a number of issues which the paper does not address and which will need to be considered in some detail by parties proposing these arrangements:-

  • Firstly, to what extent is the Monitor assessment purely focused on the strategic impact and financial consequences for the foundation trust as opposed to the wider health economy within which the proposal is put forward. 
  • At what stage will Monitor regard a transaction to give cause for concern in relation to the CMA's merger jurisdiction. Although jointly issued there is no obvious view from the CMA on any of the merger or competition law issues. These will no doubt only emerge on a case by case basis.
  • In particular, how far does Monitor see concerns arising out of vertical integration with primary care or indeed consolidation of primary care to be competition issues which these proposals need to deal with. 
  • Finally, the usual elephant in the room in discussing new commissioning arrangements and contracts for the NHS is the application of the NHS Procurement Patient Choice and Competition (No 2) Regulations 2013 and indeed from April next year the application of the Public Contracts Regulations 2015 on the approach to be adopted. 

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