New Health NHS Contract for Community Health Services
The Department of Health issued a series of new standard NHS contracts for different
services on 8 December 2008, including for community health services, for use from
1 April 2009, as well as associated guidance. The contract is mandatory and should
be used for all NHS commissioned services provided by the NHS, private and third sector providers. It standardises provisions dealing with services, quality, performance
monitoring and payment, as well as other important clauses that allow the parties
to exploit rights that are typical in commercial contracts.
Range of New Standard NHS Contracts
These include standard multilateral and bilateral contracts
for acute services, mental health and disability services, ambulance services and
community health services. There are some exceptions e.g. GMS, PMS, APMS or SPMS
services, but the standard contract will be used across all sectors and for contracts
of all values. The purpose of the range of contracts is to introduce a level of
consistency in terms of content and good practice in place of the fragmented local
arrangements that are currently used. The general structure should allow local NHS
bodies to draft their particular requirements within certain clauses, whilst maintaining
key provisions and procedures that deal with the usual risks in commercial service
contracts within the health sector. The contracts should also reduce legal and administrative
costs significantly as well.
Structure of the Contract
The contracts work in the following way:
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Mandatory and non-variable provisions that must be used; |
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Mandatory provisions, which must be included but which are for local agreement and
definition; and |
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Non-mandatory provisions which are for local agreement and definition. |
What follows is a review of the most important legal and commercial issues that
are dealt with on standard terms under the Standard NHS Contract for Community Services
(bilateral).
A few basics
The definitions are mandatory and are contained in one
of the schedules. This is very important as there is now no ambiguity over the meaning
of typical terms. This will help commissioners and providers alike by adding clarity
to commonly used terms. The contract also assumes both parties have the correct
authority to enter into the contract, and deliver the services required. The contract
is not effective if these conditions are not met.
The standard contracts are for terms of 3 years. Any change
to this needs the agreement of the relevant SHA, although the contract does allow
for extensions of up to 3 months to a maximum of 3 times once the default 3 year
term has expired.
Key provisions affecting the operation
of the contract
Clauses regulating the Services
In terms of the day-to-day operation of the agreements,
the clauses dealing with services are very important. They set the scope and extent
of the obligations of the provider, dealing with quality and performance standards.
The contract places the substantive service ‘detail’ in the schedules. These include
the ‘Service Specification’, as well as any quality and performance standards, summaries
of activity plans and requirements of Patient Booking and Patient Choice. Taken
together, they set out what is expected of the provider in providing the services
under the contract and it is against these that a provider’s compliance with the
contract is judged against. The guidelines issued by the Department of Health make
clear that there are several mandatory areas that must be dealt with by these service
requirements, but that the detail of these can be worked out at the local level
between commissioner and provider. Like any service contract, there are exceptions
to these in certain circumstances.
General quality and performance management are also
dealt with elsewhere in the contract, though ultimately by reference to the service
details in the schedules. The contract allows for regular reviews in respect of
quality and performance, as well as mechanisms to deal with any performance falling
below the contracted levels.
Prices and Payment
There are mandatory provisions dealing with price and payment.
These are particularly helpful to small providers, as the contract sets out different
terms for them than others. These are linked to dispute resolution and variation
procedures located elsewhere in the contract. There is also an emphasis on the delivery
of quality in the service provided by allowing for quality payments to be paid by
the commissioner to the provider that are contingent on meeting locally agreed plans.
Dispute Resolution
There is a 3 stage process to any dispute that arises under
the Dispute Resolution process in the contract, including-
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a formal negotiation period of 15 working days (10 days with a senior person with
direct day-to-day involvement followed by 5 days after the end of the negotiation
period with a Chief Executive or a director if the dispute is not resolved); |
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a mediation stage, with parties able to make various submissions to a mediator who
then follows various procedures to try to resolve the dispute. As part of the standard
contract, the parties both sign a Model Mediation Agreement. The advantage is that
it allows the parties to try and resolve the dispute whilst still maintaining a
good continuing working relationship. The process is also confidential so each party
can be blunt about their position without fear of any damage due to adverse publicity
that may result if litigation was commenced; |
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an independent binding ‘pendulum’ adjudication by an independent panel that determines
the issue wholly one way or the other. The costs are only borne by the losing party
if the matter is not determined after 20 days following the start of the mediation. |
Suspension, Termination and the Consequences
Each party may be entitled to suspend performance, either
in full or in part, in certain circumstances. Other than this, under the contract,
each party can terminate the contract on 12 months’ notice and in certain alternative
circumstances. The provider may also terminate for non-payment, subject to certain
conditions.
The focus of the contract is very much slanted towards
the best interests of service users that are treated by the provider. Both the provider
and commissioner are also subject to mutual duties of co-operation with reference
to Good Clinical and Good Health and Social Care Practice. This is also the case
after termination. The provider must co-operate fully with the commissioner or any
successor for a reasonable period both before and after expiry or termination, as
well as provide all reasonable assistance and information to effect an orderly assumption
of services by another provider. The contract also requires the provider to use
all reasonable endeavours to minimise any inconvenience caused or likely to be caused
to service users, both actual and prospective. .
If any work is carried out after termination, the
commissioner pays a pro rata rate to the provider, though treatment is usually only
for urgent care.
Key
Commerial Issues under the Contracts
Intellectual
Property Rights ("IPR") and NHS Branding
The standard contract also deals with IPR and the extent
that each party could exploit IPR belonging to the other. The contract clearly
states from the outset that no party shall acquire the IPR of the other, but that non-exclusive
licences are granted to each other to use the IPR during the period of the agreement.
The commissioner is afforded a slightly wider use of any IPR that would involve
obtaining the full benefit of the Services or disseminating best practice throughout
the NHS. This is reinforced by the provider being required to disclose all documents
and information about Best Practice IPR to the commissioner at reviews, along with
a perpetual licence to use it for the purpose of teaching, training and research.
On the opposite side, the provider’s ability to use the commissioners’ IPR is restricted
for the sole purposes of providing their services under the contract.
As with any organisation, logos and branding are crucial to the delivery of services.
The NHS logo and branding are very widely recognised by the public and, whenever
displayed, it generates high levels of trust and confidence. As such, it is important
to exert an element of control over the use of the NHS brand during the duration
of the delivery of services on behalf of NHS bodies. This is done by placing the
provider under a duty to comply with the NHS brand policy and guidelines, as issued
by the Department of Health from time-to-time, as well as marketing and promotion
policies.
Confidentiality and Data Protection
Protection is provided for confidential information belonging
to each party. This is not information related to service users but rather commercially
confidential information about e.g. financial and marketing information or development
work. Use of confidential information is only allowed as set out in the contract
e.g. in performing obligations under the contract or perhaps in connection with
any dispute resolution procedure, amongst others. There are indemnities against
direct and indirect losses that are suffered by either party as a result of any
breach of the confidentiality obligations. In signing the contract, the parties
also acknowledge that damages are inadequate as a remedy – this helps to avoid disputes
about ‘degrees’ of confidential information that one side might consider minor.
The confidentiality provisions also apply 5 years after the expiry or termination
of the contract.
Change in control
Given the direct impact on service users under commissioning
arrangements, it is in the commissioner’s interests to ensure that it is dealing
with the same provider, as described when entering into the contract, throughout
the term. The standard contract includes a change of control clause that restricts
any change with regard to any holding companies or subsidiaries of the provider,
as well as in terms of any material sub-contractor, without the consent of the commissioner.
This is to ensure there is continuity of service and to provide confidence that
the provider cannot avoid its obligations by restructuring their organisation. Consent
is also needed for any sale or disposal of any legal, beneficial or equitable interest
in the provider’s premises.
The NHS also promotes health and good practice through this clause by preventing
‘restricted persons’ from holding any more than a 5 per cent share in the provider,
its holding company or its subsidiaries. These persons include those with interests
in tobacco products or alcoholic beverages or any person the commissioner reasonably
believes to be inappropriate for public policy reasons to have a controlling interest.
These restrictions also apply to material subcontractors.
Liability and indemnity
Indemnities are provided by both the commissioner and the
provider for losses under the contract, in terms of damage to property, personal
injuries or death, or direct losses that result from negligence or breach of contract
in performing their various obligations including those of sub-contractors. Providers
are also obliged to ensure they have suitable insurance coverage under the standard
contract. There is no liability cap for either party. The liability and insurance
provisions are mandatory and cannot be amended. Such standardised liability and
indemnity provisions are helpful as each party will be clear on the extent to which
they may be liable for breaches before the contract is entered into. There are also
obvious cost benefits to smaller providers in terms of legal and administrative
costs by allowing them to understand in general terms how the provisions work and
their extent of liability when bidding for work.
Force Majeure
Unexpected events are also covered under
the standard contract. Both the commissioner and provider are obliged to take reasonable
steps to mitigate the consequences of a force majeure event but neither party incurs
liability to the extent that they are unable to perform their obligations. This
avoids it being overlooked at the local level by mistake and ensures all parties
know what happens if something beyond their control takes place.
Equal Opportunities
To ensure parity with NHS policies, the standard
contract places various obligations on the provider relating to equity of access
and non-discrimination on various grounds with regards to service users. In addition,
the provider is required to have due regard to the various discrimination and harassment
provisions in employment law including sex, race and disability, amongst others.
The contract also requires the provider to supply information regarding equity of
access to services and to fulfil their obligations under the law. Once new or smaller
providers are awarded contracts under the standard contract and become familiar
with the requirements, it should be easier for them to bid and be able to competently
handle more and larger commissioning contracts.
Needless to say, there are many private commercial
organisations that take equal opportunities and diversity very seriously, not only
because of the potential for adverse publicity, but also to ensure harmonious working
environments and greater employee satisfaction. Providers, whatever their corporate
structure, are no different and ensuring that best practices are adhered to in this
area may ultimately result in better treatment for the service user. It is in the
interests of both parties to ensure this area is monitored on a regular basis.
Overall
The new standard contracts are helpful in
providing consistency in content, liability and risk, as well as standardising many
of the clauses needed to ensure that contracts for the provision of care services
between a commissioner and a provider works correctly. The main
aim of NHS bodies
continues to be the provision of high quality healthcare to service users; the mechanisms
formalised in the standard contract should ensure all the main areas are covered,
whilst leaving enough flexibility for the commissioner and provider to ‘flesh out
the bones’ at the local level.
However, the standard contract also brings consistency
in dealing with major commercial issues that are of the utmost importance in commercial
contracts, the exploitation of IPR and the protection of confidential commercial
information in particular. The result is a balanced contract that should work well
in practice and provide enough cover so that in the event something does go wrong,
it is either resolved with the relationship between commissioner and provider still
in tact or that, if the worse should happen, that there is a smooth transition to
a new provider that does not impact upon the quality of service provided to service
users.
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For More Information Contact:
Ifti Ahmad
TPP Law Limited
53 Great Suffolk Street
London SE1 ODB
t 020 7620 0888
f 020 7620 0778
e info@tpplaw.co.uk
Email:
Ifti
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