• Leaders in Manchester unable to give £6bn contract to consortium of existing providers due to potential VAT charges
  • MCP development in Stockport not progressing as planned after commissioners “pause” procurement process
  • Stockport providers forced to pursue alliance model over plans to create new NHS care trust

NHS leaders across Greater Manchester have had to scale back ambitions to hand new care model contracts to two new accountable care organisations, HSJ has learned.

Commissioners developing two high profile ACO type contracts in the region have had to change plans to give the contracts to a new type of NHS organisation, due to legislation issues.

Leaders in Greater Manchester said initial plans to hand a £6bn multispecialty community provider contract to a consortium of existing providers will not be possible because legislation means the new provider could incur additional VAT charges.

Meanwhile, plans in Stockport to create a new “care trust” capable of holding a multi-speciality community provider contract have been “paused”.

In April, the Greater Manchester Health and Social Care Partnership began the procurement process for the £6bn contract, with the intention that it would be held by a newly created “local care organisation”.

In June, HSJ reported that commissioners had received a single bid for the contract from the Manchester Provider Board – a consortium formed by Manchester City Council, local GP federations, the city’s three acute trusts, community service providers and Greater Manchester Mental Health Trust.

Speaking at an event last week, Tracey Vell, chief executive of the Manchester local medical committee and associate lead for the GMHSC said commissioners’ preferred option of having the consortium hold the contract would not be possible.

This is because guidance says an MCP contract must be let to a single provider, while VAT legislation means additional charges could be incurred if the contract is let to the consortium.

Dr Vell said the local acute trust would “nominally” hold the £6bn contract while governance decisions would be made by an LCO board made up of providers in the consortium.

HSJ understands GPs are expected to “partially integrate” with the LCO, meaning they would sign an “integration agreement” with partners but not give up their GMS or PMS contracts.

Ian Williamson, chief accountable officer for Manchester Health and Care Commissioning, said: “While there are regulatory barriers to developing a single organisation for the LCO, we believe that we can create an arrangement where the LCO can hold a contract with us, as commissioners.”

Last December, commissioners in Stockport approved plans to procure an MCP contract to be held by a new “care trust” formed by Stockport Foundation Trust and Stockport council.

However, earlier this year commissioners paused the procurement process and providers in Stockport have since agreed to pursue an alliance model to progress the integration plans and service developments.

A Stockport Clinical Commissioning Group spokesman said: “The intention remains to create a single local care organisation of an MCP nature…

“An alliance is a step towards that and more importantly provides the ability to make changes and improvements to the delivery of services to the public. That remains the primary focus of our work together.”

It is not clear whether the MCP contract, if procured, would be held by a new care trust or Stockport FT, but under current legislation it is likely the latter would have to hold it.

Christian Dingwall, a partner for Hempsons and a legal expert on NHS transactions, said: “We are dealing with a legislative framework that was in large part designed for a different era when FTs were set up to compete and maximise their activity to drive down waiting lists but which is now antithetical to a new architecture for accountable care.”