NHS centralisation will narrow mental health services

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NHS centralisation and increasing transparency on prices and services will significantly narrow the range of mental health services available, Laing and Buisson has warned.

The NHS reforms implemented on 1 April have moved towards a centralisation of procurement of health hospital services in England; it is now a task of the new NHS Commissioning Board under the expected highly centralised commissioning regime.

The new centrally-based NHS Commissioning Board has taken over all secure commissioning that used to be formerly undertaken on a regional basis.

The Board will also hold commissioning responsibility for an expanded range of so-called prescribed mental health services that had previously been commissioned on a local basis through the now-defunct Primary Care Trusts.

Laing & Buisson's new research, Mental Health Hospitals & Community Mental Health Services UK Market Report 2013, states that the centralisation will mean NHS and independent sector providers will face rising pressure on prices and operating margins, as variations in pricing become transparent.

William Laing, chief executive of the healthcare intelligence provider, said the single agency of the NHS Commissioning Board will for the first time have an England-wide picture of pricing and service standards.

He said: "With this information at its fingertips providers can expect to see a much greater scrutiny of prices, performance and value for money, undertaken by experienced former regional commissioners who have been recruited by the Board.

"This process clearly represents a threat to those independent sector providers with outlying prices, though the quid pro quo is that NHS providers will - according to the assurances of the NHS Commissioning Board - be subject to the same financial disciplines, meaning that independent sector providers stand to gain volume as long as they are able to operate more efficiently than the NHS."

Other non-specialised mental health services, including non-secure and community-based mental health care, will be commissioned by the new Clinical Commissioning Groups.

Providers will typically have to form new relationships with the CCGs and whatever commissioning support agencies they take on.

Laing & Buisson said few predictions could be made about how CCGs will step up to their task.

The new report also showed that the independent mental health hospital sector - an area of growth until recently - has ground to a halt as NHS funding has plateaued.

In 2012 it generated revenues of £1.14bn compared to £1.13bn the previous year. The report claims the figures for secure treatment stood at £500m last year, with a portfolio of 9,916 beds as of January 2013 and have remained consistent for the past three years.

According to the document, the £1.14bn generated by the independent sector represents 30% of the £3.8 total UK expenditure on mental health hospitals - nearly all of it funded by the NHS.

It showed 87% of all independent mental health hospital revenue was generated via contracts with the NHS. A further 6% is paid through PMI and 7% comes from self-payers.

"These operators are therefore highly dependent on continued NHS outsourcing, to the tune of £989m in 2012," Laing & Buisson said.

The report also raises the prospect of much greater involvement of the independent sector in community based mental health services.

It estimates that independent providers currently generate revenues of about £100m a year from community mental health services, being just 3% of total NHS spending.

Laing & Buisson stated: "Independent providers have focused almost exclusively on hospital treatment, especially for ‘difficult to place' patients. But government moves to promote ‘parity of esteem' and greater choice in mental healthcare mean that they - and other healthcare providers, could diversify into community mental health in the medium term future."

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