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.