OV Procurement: My Analysis

The following is all my posts on OV procurement condensed into one...

Procuring Vets to Conduct TB Tests

Recently the Animal Health and Veterinary Laboratories Agency (AHVLA) announced a consultation on its proposals to require vets to compete with each other for TB tests. In other words: they are going to introduce a competitive tendering process into TB testing by dividing the country into geographical lots for which vets can bid for. Until now any qualified vet could test, so long as they had attended AHVLAs 1/2 day training course. You can see the details here.

Of course, the veterinary profession are concerned about these proposals - perhaps rightly. The editorial of their weekly journal - the Veterinary Record - highlighted some of them here, and the podcast produ­­ced by AHVLA alludes to them too. Surprisingly there's been less concern amongst the agricultural industry or press - maybe they have other things to worry about? But what are the likely impacts of this to farming and the veterinary profession? And are the AHVLA's desired outcomes likely to be delivered? Lets look at some of the evidence.

First, what does TB testing mean to the veterinary profession - after all, isnt it just a boring technical job that pretty much anyone could do? Wouldnt vets be better off using their brain to sort out more interesting problems?  This maybe true, but unfortunately vets are required by law to conduct TB tests and that's likely to continue for some time. What this has meant is that practices can draw a nice income stream from TB testing, particularly in areas where TB is endemic.

How much income? Lets look at some of the evidence from one county with a TB problem: in 2010 this county had nearly £3million pounds worth of TB testing shared out among just over 250 vets in nearly 70 practices. on average each practice received around £40k a year - enough to cover one vet perhaps . But its not quite as simple as that because a significant proportion of the tests were conducted by just 5 practices. In fact, of the near £3million spent, 43% went to just 5 practice who also found over half the reactors in the county. They also had about a quarter of the veterinary workforce. Each of these 5 practices were receiving £250k a year from TB testing, or about £20k for everyone of their TB testing vets (one actually got closer to £30k). 

Perhaps you can see the dilemma? In some areas like this one, veterinary practices are financially hooked on TB testing - its like a drug: take it away and there's going to be some serious comedown. But perhaps we shouldnt be too hard on the veterinary profession: it could be that this business is keeping large animal practice alive in rural areas. Here's why: vets have to provide out of hours cover, and the more vets you have, the easier that becomes to handle; who wants to be getting up every other night to go to a calving? The larger the practice, the greater distance between out of hours shifts. If you cant provide that, then you'll find it difficult to attract good staff. Its one of the reasons why practices close down, and other practices get larger. That of course, and the wider economic pressures in agriculture which mean that farm animal practice is not a great business prospect.

So, what does all this have to do with OV procurement? Well, imagine if one of these top 5 practices does not win a contract: there could be some serious damage to the provision of veterinary services in those areas. Alternatively, the procurement process could lead to further amalgamations of practices and smaller ones - the ones who lose out on a contract - closing down. For farmers too, what will this mean. Obviously it could mean that vet services are harder to come by, or are more expensive in those practices that arent subsidised by TB testing than those that are. Concentrating TB testing into a few rather than many practices may also perversely prevent competition. Whatever happens, things are unlikely to stay the same.

And perhaps that is the point: there is nothing inevitable about this process - as coincidentally I pointed out in the same issue of the Veterinary Record where AHVLA unveiled their plans (here (£), contact me for a free copy). Although the process is being driven by EU competition law, there is no requirement to run the process the way AHVLA are doing. Rather than divide up the country into lots, they could licence as many practices as they like, or they could make the farmer pay for their test (but reimburse it) from a list of 'approved' suppliers.

AHVLA may say they have thought of these issues - their podcast says they want a network of practices working together. But below I'll be describing why that may not be a good idea either. Finally, one last point: perhaps this whole process might reopen the debate over why vets conduct tests for TB anyway. Do vets really want to spend most of their time TB testing? Id say no. Perhaps the best thing about the OV procurement issue could be to reopen that debate. Given that TB policy is being framed as an economic issue, it would be remiss not to.

Lots and Networks 

So far then we've learned that vets in some areas rely on income from TB testing and that losing that business would have serious consequences for vets and farmers (if you missed part 1, its here). But what of the OV procurement proposals themselves - do the proposals make sense? Will they prevent these negative consequences? Lets find out. 

Lets start with the map from the AHVLAs consultation notes. It shows how England might be divided up into different "lots" containing a certain amount of TB work that vets can bid for. The areas are based on council boundaries and the colours show how they've been grouped together to form the lots. As a geographer, Im not sure this is the best way of doing it, but then again there are few other alternatives if you want lots to be based on specific areas. You could try to come up with areas based on the reach of existing practices - that would be interesting to see, and you would be able to see where you'd get most overlap and competition between existing practices.

Some of the lots are a lot bigger than the others - look at the size of the lot in Norfolk, Suffolk, Cambridgeshire, and Hertfordshire: its massive. Now look at Torridge in north-west Devon: its tiny in comparison. Of course, the variations in size reflect the differences in demand for testing: but these variations will also throw up different challenges of managing TB testing in each of the lots. Arguably, the level of disease in each lot is going to shape what kind of veterinary organisation wins the tender. Let me explain:

One of the problems with dividing up the lots according to area is the boundary problem: veterinary practices don't just serve district council areas, they cross them. In fact, disease and geography tend not to mix well at the best of times - its why vets like to say "disease knows no boundary" and why devolution of animal health policy has been something of a challenge (something Ive written about here). The solution to this is to encourage veterinary practices to work together to form a network of practices who would collectively bid for the lot. This also has the advantage of not disturbing the practice structure in that particular area, so where you have several big practices in close proximity, they all have a chance of surviving rather than one taking all the work to the detriment of the others. This though is the obvious challenge: will practices be able to work together?