OV Procurement: what it could mean for vets and farmers

Last week, 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 in the next installment 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.

To come
Part 2 - would a network of suppliers work in England?
Part 3 - how the TB procurement system is run in New Zealand
Part 4 - quality or price? what exactly is driving OV procurement and will it be delivered?


Notes about Data
The data referred to above is from a download of VETNET - the database of all TB tests and results in the UK. I have been a bit imprecise with the figures because this is from some work in progress, and there are some problems with the way VETNET stores some of these data.

Am I Suffering From Perturbation?

Im suffering from perturbation! Its true, its not just badgers who get it. The reason Im perturbed is this twitter conversation with Kevin Pearce of the NFU. You can read it now, or just listen to my explanation of how this has disrupted the traditional theories of policy making, which like badger territories have been around for a long time, and give or take a bit, are still relevant.

A week or so ago I suggested that farmers would have been much better off paying for their TB tests rather than paying for a badger cull. It would have been more equitable too: why should farmers in Devon have to stump up thousands of pounds for something that has industry wide benefit? (Perhaps the answer is that there won't be industry wide benefit?). And given that th policy requires all farmers to have the same attitude towards risk, financal reward and wildife (a bit of a long shot) perhaps devolving responsibility of a badger cull to them is a bit risky? (Im not going into the other reasons why this might be the case).

There are two really good reasons for doing this: one financial, the other political. The financial reason is that the costs for the current proposals for the badger cull can only go up. They have been stripped down to the minimum to make them "work" in the cost-benefit analysis. There is doubt over whether the costs in the CBA are accurate to even break even. By contrast, the costs for TB testing can only come down. Down you say? How come? The costs for TB testingare effectively being kept artificially high by the Royal College of Veterinary Surgeons opposition to lay testing - ie using a technician to test. Everyone agrees that TB testing is no job for a vet, and it would be cheaper for technicians to do it. The trouble is that rural practices have come to rely on the income from testing and taking it away from them could cause some problems in the availablity of rural vets. The other problem is that the EU are not too keen on lay technicians, but they are also worried about the quality of testing and there is a powerful argument that by using technicians some of the conflicts of interest currently present in TB testing could be avoided.

So, by owning the testing regime, farmers could exert much greater pressure on the inertia that is preventing these reforms. Or, perhaps they like this status quo: the advantages they get from having their vet come out to do the TB test and a load of other jobs too so they can avoid a call out charge. In a marginal industry like dairy farming I can understand that. But it kind of rubs the wrong way against the modern competitive view of farming.

The other advantage is the political power this would give farmers at the negotiating table. Lets say you really want a badger cull because you believe that is the best way forward. The government has been stalling on it for ages. This has been frustrating you. So you go to the government and say, "look, we'll pay 60% of the costs of TB control but if we do that you'll have to pay 40% and that must include some sort of wildlife control". Effectively, that is what happened in New Zealand.

To be sure those costs arent distributed equally - its not as if the farmers pay for testing and the state for wildlife control. However, it is the case that by owning the means of control that farmers have been able to take advantage of market forces to keep TB testing costs down. And by stumping up money - via a levy so its equitable for all farmers - that they have achieved real negotiating power. And of course that is what a lot of political theory looks out - how policy is the outcome of a negotiating game where resources are used and exchanged.

So this is why  Im perturbed. On one level, the NFU didnt seem to want to play that game - it doesnt even seem to have been put on the table. As I said, for the NFU it seems to be more about the symbolic value of achieving outright a badger cull, whilst for the Government it seems to be about avoiding pulling the trigger.  Not putting it on the table to get what you want seems a bit confusing: if you offer someone millions of pounds, more than what a badger cull might cost, and you still dont get the government to play ball then I might be a bit worried about whether it really would work. What other reason would there be not to deal?

Maybe this is wrong. Surely in the era of cost and responsibilty sharing this must have been spoken about. Its not as if farmers in other countries arent aready paying for their tests (Ireland) or that no-one knows about the New Zealand solution is it?

So Im left feeling perturbed.

Would the NFU have been in a better position if they'd offered to pay for #bTB testing rather than a #badgercull? http://t.co/wSXx3lEWed Sep 07 15:19:25 via webDr Gareth Enticott
GarethEnticott

@GarethEnticott It is not the NFU's choice that farmers pay for badger control. Governemnt has said we have to pay for any wildlife controlWed Sep 07 15:58:27 via webKevin Pearce
kevin_pearce

@kevin_pearce what did they say when you offered to pay for TB testing instead?Wed Sep 07 16:21:48 via EchofonDr Gareth Enticott
GarethEnticott

@GarethEnticott we've never offered, because they have never said you pay for TB and we'll allow you full control to eradicate it.Wed Sep 07 16:25:05 via webKevin Pearce
kevin_pearce

@kevin_pearce so, its not about reducing costs, but who pulls the trigger?Wed Sep 07 16:43:28 via EchofonDr Gareth Enticott
GarethEnticott

@kevin_pearce isnt policy making about bargaining and negotiation? Id be worried about effectiveness if I offered £30m and still no cullWed Sep 07 16:45:50 via EchofonDr Gareth Enticott
GarethEnticott

Market Mechanisms for TB Control? Radical thinking.

Is this true? Do we always have to compromise on some aspect of performance? And what is the best compromise?

When it comes to improving public services, reaching for the market is often the default choice. It was therefore interesting to see the Royal Association of British Dairy Farmers (RADBF) calling for the introduction of market mechanisms for aspects of the TB control programme. Specifically, they wanted farmers to have the choice over who removed reactor cattle from their farm - full details are here. It is not just the RADBF who are calling for this type of agenda: in the coming weeks, Animal Health will unleash their Official Veterinarian Procurement programme which could radically change the way TB testing is organised in England (and maybe Wales).

The implication from both these calls for greater market involvement is that the state is inefficient and the market can resolve some of those problems in the cartoon above. This may be true. But the market and disease control may make uneasy bedfellows: I have written about how this neoliberal way of managing disease control has affected the veterinary profession and animal health elsewhere (see here).

Criticism of the government's performance may also be misleading and the idea of efficiencies illusory. This may be the case with the RADBFs proposals.The RADBFs complaint is that the state cannot remove reactor cattle from farms quickly enough, that maybe Animal Health are tied up in bureaucracy to do anything useful. They say that costs the farmer money by isolating cows - presuming that they do this is true and is factored into Defra's calculations of the cost of a breakdown. As a result, the RADBF suggest that by introducing farmer choice, then the market would be more efficient in removing reactors.

Bureaucracy in Animal Health: a bad thing?

But its important to remember a couple of things about reactor removal and look at the evidence of how Animal Health have handled reactor removal:

First, slaughterhouse capacity. The decline in the number of abattoirs means that limited capacity is a key blocking factor when it comes to speeding up the time it takes to remove reactors. As reactors are kept separate from cattle that are definitely headed for the food chain (many reactor cattle end up here too) this further restricts capacity: usually abattoirs will set aside a day to get through a load of reactors. But there is also competition between abattoirs for these contracts.

Secondly, the time it takes to process a reactor (ie. the time taken to remove it from farm once it is diagnosed) is governed by both decisions taken by vets and farmers. Last year I spent a lot of time looking at the data for the time it takes to process a reactor. There are a number of sticking points here: if the vet who conducts the TB test does not return the paper work on time, then that will delay the removal of reactors. Vets have a target for this - 24hrs - but there are no financial penalties if they miss it. In fact, Im not even sure if Animal Health still record this performance. Maybe this is a good performance indicator to have - when vets in Wales were told what it was last year it certainly made them take notice. Financial penalties may also be a good thing to have, but so would decent IT systems that allow electronic submission of TB test charts. That should be coming on line now, but this was one of the main reasons for the delay in returning charts. The data showed however, that where vets had returned their paperwork late, Animal Health were processing these reactors just as quickly as they were the reactors where they had had the paperwork on time. In Wales, that time had been cut significantly - thanks again to a target that focussed people's minds and resources on that problem - and was running at around 10 working days to get animals off the farm. Perhaps "bureaucratic" targets are not that bad after all?

Thirdly, another aspect of the removal time is whether the farmer accepted the valuation of the animal. Usually where the reactor removal time was not met it was because of a dispute over the valuation. Obviously, this varies between the different compensation regimes in England and Wales. Some farmers are quite happy to accept the valuation they are given, some would like standard rates so there is no need for a valuation, but others will contest them and want a proper valuation. Perhaps what this suggests is a compensation system that is also based on the time it takes to remove reactor cattle? For example, farmers could opt into a tabular valuation scheme if they wanted to, or a valuation involving a visit if they preferred, but the cost of running the scheme would be factored into the amount of compensation they received. It would be interesting to see that kind of farmer choice in action.

Finally, the last of the RADBF's points is that slower removal times may lead to further infection - in wildlife, or in cattle if there is ineffective isolation. This is true - to an extent. We need to remember that the TB test diagnoses a disease - it "medicalises" or "enacts" a condition. That is to say that it allows us to say that a cow has (or may have) TB. That in no way means that it didnt have it before that time. And where you have annual testing, it may have had for 364 days prior to the test, not even accounting for issues surrounding the accuracy of the test. So really, once a disease has been diagnosed how much difference does an extra day or so removing the animal make? It makes a hugely symbolic difference to the farmer, but in terms of disease control its too late. Perhaps that's the reason why in New Zealand there is less emphasis on the time it takes to remove reactors, or the lack of concern in the UK to shave off a day or two from reactor removal times.

I'm not saying that the market couldn't deliver the kind of perfmance Animal Health seemed to be achieving last year. It would be much better if reactor removal time was included in the monthly statistics that Defra produce - that could produce some sort of accountability.

Perhaps, though, the best reason for introducing markets and farmer choice is to enhance farmer ownership of TB policy. If farmers pay, then they should say too. And this means making choices over the contestable parts of TB policy: the parts where there is scientific uncertainty such as in diagnostics. For if we are responsible for things ourselves, then choosing which compromises we want to make and live with is much easier and more acceptable than having them made for us.

What would you choose?

They say that there are 3 types of job: quick, cheap and good, but you can only have any two.

And this from the office wall of the head of Cardiff Business School, so it must be right.

So its interesting to think how this might apply to TB policy, or a badger cull or other aspects of TB control.

Have a think about it, tweet about it. And next week I will give my thoughts.

Predictable problems

Im not gloating, but Anthony Gibson's comments about the badgercull were entirely predictable. So predictable in fact that I predicted it even before the policy was announced. This is what I posted in June when asked what I think would happen:

@EdmogFW Cameron permitting, Paice will deliver, but very tight conditions: how may farmers will bother? Not enough to reduce TB I think.Wed Jun 08 09:11:01 via EchofonDr Gareth Enticott
GarethEnticott

Financial Skewering

With Anthony Gibson's return to the NFU, the first story in Farmers' Weekly is about how Defra need to change their plans for a farmer-led badger cull. Says Mr Gibson: "They need radical or significant improvement. On the face of it, the government seems to be loading far too much risk and far too much cost on to the farming community and not taking enough responsibility itself".

This is interesting: many believe it wont be until the agricultural industry take ownership of TB that the problem will be addressed. Taking financial ownership of TB could give the NFU real power to exert control over TB policy - its the realpolitic of cost and responsibility sharing and its what has delivered the drastic cuts in TB in New Zealand.

But the NFUs choice of getting farmers to pay for badger culling looks like the wrong one. As Anthony Gibson says, it loads all the risks onto farmers. Far better for them to have said to Defra: "we want to fund TB testing from now and we are going to do it via a levy on farmers".

But why do this? Firstly, it makes the costs far more equitable. If a badger cull were to have an effect on national levels of TB (thats a big if, but run with it) then shouldnt all farmers pay for it, rather than just the ones where culls occur? If we agree on that, then the current policy is extremely inequitable.

Secondly, it also makes the costs for farmers look more palatable. Rather than the upfront blank cheque approach associated with the farmer-led badger cull with all its risks of failure, funding TB testing looks far less scary. Calculating on the back of a fag packet (actually I dont smoke, disgusting habit), here's what it might look like. Lets say TB testing costs around £30m pa (quite an accurate figure, although it may lack some of the admin costs). Now choose how you'd like to distribute those costs: via a milk levy? A headage rate? Based on DairyCo's figures from last year: £30m testing cost and 13332000000 litres per year then the levy is £0.00225 per litre. Or lets say there are 11000 dairy farms, well thats about £2700 a year. These figures are very rough and they don't include income from the beef sector, but you get the point.

Paying out this amount of money has two advantages: first it puts the agricultural industry in position to develop efficiencies, lower costs and better quality TB tests. It would be more effective in pushing for using technicians to test rather than vets in order to save a lot of money on TB testing - if farmers are paying for them then they will be much more insistent on them.Secondly, paying out this amount of money though gives the NFU a much bigger bargaining chip than it currently has to get what it really wants - a badger cull. And if it didnt get that, then it could cause all sorts of problems. Thats the political game.

I'm not saying this is 'right', just that in other circumstances thats what happens. In that respect, the NFU dont seem to have picked the best hand or played the political game as well as it could have.

Of course, maybe the NFU reckoned that even if they stumped up for TB testing, the government would still not go for a badger cull. Thats a good point. But in that case, why would the NFU want one so badly?

How much did MPs understand about the RBCT?

MPs have to make tough decisions, so would expect them to fully understand the evidence for any particular problem, right? In reality, due to what political scientists call bounded rationality, this is never the case - decision makers always lack complete information, for financial, technical or political reasons. Often this means that decisions are incremental rather than wholly rational or radical step changes.

Nevertheless, there are some things that the civil service - themselves subject to the problems of bounded rationality - can do. For example, they can organise meetings, briefings and seminars for MPs to help them understand the issues for any given policy. In 2004, Defra did just that for bovine TB. Back then, the Randomised Badger Culling Trial (RBCT) was in full swing, although the reactive cull had been stopped.

A transcript for the seminar - imaginatively entitled 'Bovine TB Seminar for MPs' used to be available on the web here and I made use of it in my paper on farmers' understandings of TB (available for free here). It seems Defra have done some tidying and it has disappeared both from their new website and their archived site, although I expect the National Archives might have a link to it somewhere, but you can view a copy here.

The transcript makes for fascinating reading, revealing the extent to which those MPs fully understood the RBCT and the way they approach their work. Whilst John Bourne and Defra staff received some tough and intelligent questioning from MPs like Owen Patterson and Andrew George, there are also some comedy gold moments from Bill Wiggin where the seminar drifts off into misunderstandings around BSE and the over 30 month scheme, and then with Sir Nicholas Winterton - the latter who arrives late and procedes to lambast John Bourne over his work. Perhaps, however, this reveals something more interesting about John Bourne's views on the restrictions on the RBCT. Given all the criticism that was thrown at the RBCT, its interesting that this wasnt remarked more on at the time.

You can read the full transcript here, but here's the excerpt where Nicholas Winterton takes on John Bourne:

Sir Nicholas Winterton MP (Macclesfield): I apologise to our panellists for arriving late. I have growing concern about what I have heard. I come from Cheshire and my dairy farmers are deeply worried about the spread of TB in cattle and the apparent failure of the authorities, most of whom are here, to do anything about it...I ask our distinguished panellists why are we prepared to slaughter cattle at huge expense in very large numbers, yet are apparently not prepared to slaughter the source of TB in cattle in larger numbers? I understand people’s emotional connection to badgers and even to fallow and red deer, but if the animals are spreading it according to the maps we have been given with the brief, we are talking about a crisis situation. When will we get on top of it?...I am sorry, but I come from a rural background and clearly the disease is closely associated with badgers. Is it that they are cuddly little beasts and we do not really want to slaughter them? It is costing us, Professor Bourne, millions of pounds.

Professor John Bourne: I am slaughtering badgers. We are doing it in the way that the Government have indicated that we can do it. We are trying to answer the question whether proactive culling will contribute to the control of cattle TB. I am not having you criticising me for doing the job that we are doing, in what I believe to be a most effective way.

Sir Nicholas Winterton MP: You have not said whether you believe the restrictions imposed on you are limiting what you can do.

Professor John Bourne: We would prefer to have worked without those restrictions.

Sir Nicholas Winterton MP: Thank you very much. That is a very good answer.