Editor's blog Friday 18 February 2011: DH denies U-turn is a U-turn

They are definitely tempting me to swear.

The DH have issued a statement denying the the price competition U-turn is a U-turn.

"There have been reports in the media that the Department of Health has changed its direction on the issue of price competition, based on David Nicholson's letter published yesterday, in which he highlighted that 'there will be no question of introducing price competition'.

No. The DH normally issues clarification annexes when policy has not changed.

That's right.

A Department of Health spokesperson said: "There is no u-turn because we never intended to introduce price competition. There has been incorrect reporting around this and Sir David's letter simply sets that straight.

"There is no change to the policy set out in the 2011-12 Operating Framework and first set out under the previous Government in December 2009.  Given the potential risk to NHS business planning of the incorrect speculation that this policy amounts to price competition, Sir David's letter serves to reaffirm this policy - that we want to see competition on quality, not price. Anyone can see that it is difficult for the government to u-turn on a policy which it inherited from the previous administration and which it has not amended since coming into office.

"The NHS Operating Framework published last December remains unamended."

The DH is right, in so far as that the news of tariff as a maximum is not unduly new.

As we said in our original comments on the 2009-10 Operating Framework published in December 2009, “after 2010-11, the tariff will be a maximum price. However, the transaction costs have, it admits, ‘the potential for increasing contracting and transaction costs in the system’.”

Everything happens in a context – and this happened in the context of Andy Burnham’s NHS preferred provider policy pledge of September 2009.

Competition was not a big driver of the era. Indeed, it had been explicitly downgraded as a policy lever.

But then, as Andrew Lansley told Sarah Montague on BBC News Hardtalk, ”you can't just quote a bit and leave out everything else they said". (7m 13).

Which is quality hypocrisy – maybe The Liberator’s starting to learn how to do this politics lark.

The iridescent Kings Fund chief economist Professor John Appleby also noted in his HPI guest editorial last December, ”The Operating Framework has another surprise on tariffs: they are no longer to be fixed. Trusts, including independent sector providers of NHS care will be free next year to offer their services at below the tariff price. Let me repeat that: there will now be competition on price.

“This may help PCT budgets go further, but, as the Operating Framework notes rather blandly, ‘Commissioners will want to be sure that there is no detrimental impact on quality, choice or competition as a result …’.”

That is, however, as far as the DH are right.

The logic behind having tariff as a maximum price is that in situations where providing a formerly acute-based service in a community setting, the community provider should not profit unduly at the commissioner’s expense – that the taxpayer interest shares the potential benefit.

Which is well and good, but it explicitly opens the door to competition on price.

Which does not have a good history in healthcare.

And competition and choice and commissioning were the ‘three C’ policy drivers behind SOS Lansley’s liberation theology.

The intent to move towards price competition was unambiguous.