Merger of NHS trusts in doubt as watchdog finds loss of patient choice

A proposed merger between two NHS foundation trusts would reduce choice in a number of clinical specialties for local patients, the Competition Commission has provisionally concluded.

The merger between The Royal Bournemouth and Christchurch Hospitals NHS Foundation Trust and Poole Hospital NHS Foundation Trust was the first such deal to be examined by the Commission.

The inquiry followed the enactment of the Health and Social Care Act 2012 and a referral from the Office of Fair Trading.

The trusts expressed disappointment at the findings and rejected the conclusion that there would be a reduction in patient choice.

In its provisional findings, the CC suggested that the merger would see a loss of choice in “a large number of overlapping elective inpatient (20) and outpatient (36) services provided by both trusts. Maternity services and private cardiology services would also be affected.

The Commission said its survey evidence “has shown that patients—as well as GPs making referrals on their behalf—see the hospitals as the closest alternative to each other”.

It added: “The CC is concerned that if the merger went ahead, not only would patients lose this choice, but the trusts would lose an important incentive to maintain or improve quality in order to attract patients.

“It also notes that recent changes to the way the NHS works will mean that this incentive is likely to increase in the future and that the affected services represent about a quarter of the total clinical revenues of each trust.”

The examination by the CC found that the merger was not likely substantially to reduce competition in supply of non-elective services, community services or in any future tenders by commissioners.

The Commission rejected claims that Poole Hospital NHS Foundation Trust would exit the market, but acknowledged that it would face financial pressure in coming years.

The CC argued that other trusts would face similar pressures and insisted that it was “extremely rare” for any trust to exit the market.

The next stage of the process will see the Commission consider evidence relating to benefits that the merger may give rise to and whether these will outweigh the identified loss of patient choice and incentives to maintain and improve quality.

The CC has also published a notice of possible remedies to address the loss of choice.

A final report is expected to be published on 26 August 2013.

Roger Witcomb, who chaired the inquiry group that considered the merger, said: “This is the first NHS merger which we have looked at and whilst we are conscious that there are important aspects of the NHS that distinguish it from other sectors, health policy has for some time been that patient choice has an important role in incentivising hospitals to maintain and increase quality. The fact that they stand to gain or lose from patients voting with their feet is important.

“Our concern is that this merger would weaken this incentive across a wide range of the hospitals’ activities and remove one important driver of healthcare quality. Given the importance of this merger to the patients involved, we do owe it to them to examine its likely effects closely.”

He added: “We think it is likely that some of these incentives, such as payment systems, will be strengthened in the future and so without the merger, the two trusts are likely to be competing to attract patients more vigorously on factors such as clinical outcomes, waiting times, accessibility, quality of care and location of services.”

The CC chairman said it would have to be convinced that any claimed for benefits were unlikely to be achieved without the trusts merging and might be expected to accrue within a reasonable period.

Both hospitals have more than 600 beds and two sites. If the merger goes ahead, it would combine the only two NHS acute services hospitals in Bournemouth and Poole.

In a joint statement, Tony Spotswood, chief executive at The Royal Bournemouth, and Chris Bown, chief executive at Poole, said the trusts were “bitterly disappointed that the interests of competition are being put before the interests of patients, their care, welfare and safety”.

They added: “The two trusts have emphasised that they provide complementary services, work together collaboratively, do not compete and wish to come together to protect and enhance services for patients and the residents of Poole and Bournemouth.

“The Competition Commission asserts that the merger (with the number of management organisations reducing from two to one) will reduce patient choice. We refute this. We plan to maintain two viable hospitals.”

The chief executives claimed that the likely prohibition of the merger would create uncertainty about the future of services for the residents of east Dorset.

“The merger would have provided a basis to increase consultant delivered care, improve the quality of care and provided local people with new facilities for obstetric care, emergency care and treatment of cancer,” they argued.

Spotswood and Bown added: “The trusts consider that the process is not fit for purpose and will be raising this at the highest level.”