Many NHS bodies are developing turnaround plans to achieve financial recovery. The implementation of these raises complex legal issues, particularly on patient and public involvement and employment law. Graeme Trigg reports
The Health and Social Care Act 2001 imposes a duty on all NHS bodies to involve the public in their service planning and decision making. There is also a duty to consult formally with local authority overview and scrutiny committees on substantial developments and variations.
Primary care trusts will need advice on the extent of public involvement and consultation required. There is no statutory definition of a substantial variation or development, although there is some case law on the subject arising from the law that applied to community health councils.
In addition to deciding how much consultation is required, PCTs need to ensure any consultation meets basic legal requirements, and that decisions taken give due regard to issues raised by those consulted.
The PCT will need to undertake appropriate consultation on any redundancies and/or transfers of staff and ensure it makes a full assessment of its obligations on redundancy entitlements, premature retirement benefits and NHS pensions.
The European Court has recently confirmed that employers must complete their consultation on proposed redundancies before issuing any notices of dismissal termination, and this will have a bearing on the timetable for achieving financial savings. The same case also clarified the nature of such consultation, and made it
clear that employers should seek staff agreement on issues that arise.
If the PCT is considering divestment of services, one of the most contentious issues will be whether employees will remain on the NHS pension scheme. There are various models for setting up new organisations to provide services on behalf of the PCT, but not all of these will ensure continued membership of the NHS scheme.
Real estate strategy
In tandem with the divestment of provider services will be the disposal of surplus real estate.
An estate audit is the obvious starting point. Once the PCT has all the information available, it can identify any problems with ownership rights and remedy them without delaying any disposal, as well as ensuring maximum income by identifying rent review rights.
The aim of estate rationalisation should be to ensure PCTs only keep what they need, in a way that minimises expenditure, including capital charges. Where the surplus consists of onerous leases, this might best be done by exercising rights to terminate early or by packaging leases with a tender for services.
Coverage provisions can also be useful, enabling the PCT to share in profits on the site after disposal. Claw-back arrangements can also help overcome uncertainty over prospective planning applications, for example in cases where it has not been possible to sell with the benefit of outline planning permission.
The divestment of provider services is likely to require significant legal input on public procurement, and the drafting of contracts with the private and voluntary sectors.
Although the procurement of health services is not subject to the full EU procurement regime, PCTs must ensure the process complies with standing orders and achieves value for money.
As with the approach to public consultation processes, a well-managed and well-documented process will help avoid attack by disgruntled tenderers, as well as helping to procure an experienced and skilled provider of the required services.
Contracts with private sector bodies for the provision of clinical services to NHS patients have several unique requirements, as demonstrated by the independent sector treatment centre contracts. Key contractual issues include patient care pathways, service standards and how indemnity cover can be worked into the contracts to 'cover' the treatment of NHS patients.
PCTs will need to decide whether they wish to assist with the setting up of new bodies to provide the services previously provided by the trust. There are a range of service models available, including companies limited by guarantee, co-operatives and partnerships.
Determining the appropriate model will require consideration of the risk that those providing the service are prepared to take on, and how any surpluses will be applied. Some PCTs are considering social enterprise provider vehicles, which received support in the recent white paper.
It will be important to bear in mind that for certain services, contract models such as alternative provider medical services contracts, and specialist personal medical services contracts, may be appropriate.
Public health and funding decisions
Recovery plans are likely to involve difficult funding decisions on high-cost and discretionary treatments. The recent challenges to decisions not to fund Herceptin have reiterated the legal principles. It remains open to commissioners to have regard to cost considerations when determining purchasing priorities but such decisions must be clearly made (and documented), with all relevant factors identified and taken into account.
To deliver financial recovery in time, PCTs need to appreciate the key legal issues and include sufficient time in their plans to address them. Failure to do so may result in a legal challenge that jeopardises the whole programme.