Monitor has to walk a line between pragmatism and purism

It slipped out late on Friday afternoon, with no press release and seemingly just a sole tweet to announce its presence: Monitor’s “discussion document” on GP services. This followed its much higher profile call for evidence last July.

As an exercise in gaining publicity to encourage further submissions into its inquiry, the launch of the discussion document is unlikely to have been a huge success. But it makes for an interesting lens through which to look at the challenges facing Monitor as it exercises its competition powers, and the tensions between its competition and foundation trust oversight functions.

The document identifies seven areas for further work as Monitor’s review continues. These are grouped around:

• Access and quality: understanding variations in access and quality, and factors that impact on patients’ choice of GP practice.
• Entry and expansion: the ability of GP providers to provide new services or for new practices to set up.
• Integration and collaboration: the ability of GP providers to work together and with others across the provider sector and the use of new contractual models.

Monitor chooses its battles

Much of a long list of potentially controversial subjects was either successfully avoided or played down. There are also prominent references to the work of others (“providers, commissioners and national and representative bodies”), often a signal of someone being told to butt out. The result is a document that ends up in a reasonably non-controversial place, although the late Friday release and burying it deep in the Monitor website meant that few chances were being taken.

‘If the OFT and the Competition Commission think Monitor is being excessively generous to merging NHS trusts, they will not want to rely on its advice’

Monitor clearly decided that discretion was the better part of valour this time around. This is not a criticism. Picking every fight possible on the competition front will undermine support for Monitor having competition powers in the first place and could see them eventually (or quickly for that matter) be taken away.

There is a trade-off here though. Not exercising these powers, or not exercising them appropriately, will also undermine support in the competition community (the competition authorities and related policy makers) for Monitor having these powers. The result of which may not be the loss of the application of competition rules to the NHS, but rather having them applied by someone less sympathetic, such as the new Competition and Markets Authority.

Power tension

This is the same tension that exists around the use of competition powers by the utility regulators. Reluctance to use their Competition Act powers or make references to the Competition Commission has seen pressure to take those powers away and have the Office of Fair Trading play a more active role in overseeing competition in these sectors. The current compromise has the industry regulators on a “use it or lose it” deal in relation to their Competition Act powers.

When it comes to Monitor, this tension has the potential to play out in a different way due to its almost unique role in advising the competition authorities in relation to merger benefits. The credibility of this advice – in the eyes of the competition authorities – is critical for the role it plays in the merger review process.

‘While there are some who work in the private sector who only have contempt for the public sector, and vice versa, this is a minority’

If the OFT and the Competition Commission (or the CMA from 1 April) think Monitor is being excessively generous to merging NHS trusts, they will not want to rely on its advice in their decision making. (Not least due to the legal requirements that they themselves are subject.) This could eventually lead to an embarassing situation in which Monitor’s advice on merger benefits is rejected.

The tension within Monitor that needs to be managed in its provision of advice to the OFT and commission on merger benefits is between Monitor’s role as a competition regulator and its role as the organisation responsible for the financial, governance and performance oversight of foundation trusts.

Two cultures

A recent study by the Centre for Health and the Public Interest looked at the backgrounds of senior staff at Monitor. While I am not sure whether the study came to this conclusion, the discussion I saw of the report seemed to agree that because almost all senior staff had private sector experience the organisation was hopelessly biased against the public sector and the NHS more generally.

While there are some who work in the private sector who only have contempt for the public sector, and vice versa, this is a minority. I think most, like me, are happy working in either: proud to serve the public in the public sector, and when in the private sector willing to do my best to earn a return for the owners that provide the capital that make it possible for private sector businesses to exist.

That doesn’t mean that the background of senior staff at Monitor (and other staff as well for that matter) is not of interest. But the more interesting point is the cultural divide within Monitor that stems from the background of its different staff.

‘There are tensions between the functions that Monitor has to exercise and these tensions are further underpinned by cultural differences’

There are at least two cultures within Monitor. First, a management consultancy oriented culture focused on organisational performance, and stems from the background that many senior staff have at places like McKinsey, KPMG, PwC and so on.

Second, a competition culture, which the competition staff within Monitor share with the competition authorities and the law firms and economic consultancies that work in this area. (This shared culture makes it very easy to pass the public/private sector divide in this area). Rather than being focused on organisational performance, the competition culture is focused on overall market performance, with an interest – but a subsidiary one – in the performance of individual organisations within those markets.

Cultural differences

Management consultancy and competition cultures don’t always fit comfortably together. This is probably something to do with small differences being accentuated rather than anything else. Nevertheless it does exist.

A friend from North America reminded me last week of his experience of the awkward acquisition of management consultancy Arthur D. Little by Charles Rivers Associates, an economic consultancy. I can similarly remember my own experience of the acquisition of London Economics by a French management consultancy, which led many staff to leave and form Frontier Economics.

The point of all this is that there are tensions between the functions that Monitor has to exercise (competition versus performance oversight), and these tensions are further underpinned by cultural differences between the staff responsible for these functions.

Thorny issues

What does all this mean in the context of Monitor’s discussion document on GP services?

‘Monitor has to walk a path between pragmatism and purism’

Monitor seems to have decided to focus its efforts in its review of GP services on those areas where it thinks it can make a positive contribution, and progress can potentially be made as a result of its work. It has put to one side thorny issues where a strong competition focus might generate significant, far reaching recommendations but which would also be highly political, and would run the risk of its final report being written off as a purist competition report leading to no real change.

This is a compromise and there is nothing inherently wrong with that. It may be the result of a sensible weighing up of the competing concerns set out above. Alternatively, it could stem from the competing world views that exist within Monitor, and if this is the case, it bodes less well for its ability to successfully balance the competing demands that have been placed upon it.

Monitor has to walk a path between pragmatism and purism. The trick to getting this balance right though is making sure that long term and short term considerations are understood and taken into account.

Going easy on a competition assessment might make life easy for Monitor in the short term, but I am not sure the NHS will thank it if it eventually leads to its competition powers being taken away and given to someone else.

Andrew Taylor is a partner at Aldwych Partners and was founding director of the Cooperation and Competition Panel. This article also appears on his blog