With the provision of some community based services being opened up to Any Qualified Provider, Beachcroft LLP partner Robert McGough examines five crucial questions for commissioners to consider.

Can the implementation of Any Qualified Provider begin to open up more NHS services to the private sector?

The only decision patients in England currently have to make about their non-urgent medical treatment is which hospital they want to use. But under the much-heralded introduction of Any Qualified Provider next year, any registered healthcare provider will potentially be able to offer services.

Initially, this change will apply primarily to eight areas: back and neck pain; a range of diagnostic tests; wound healing; talking therapies; adult hearing; continence services; podiatry; and access to wheelchairs for children.

Interestingly, some commissioners have advertised other areas as being opened up to AQP processes, including minor oral surgery services, adult elective and diagnostic services and some mental health services. It is unclear whether these will follow the developing AQP process as set out in the guidance.

How will it work?

Giving a patient the choice of provider is not an entirely new approach – it is already in place for routine elective procedures which are based on national accreditation and local activity plans. The question is whether the AQP model matches the requirements for the community based services it is being targeted at.

It is not clear from the current guidance how these processes will operate in practice. The detail of the qualification process is due to be published in November, and SHAs are currently working on the development of implementation packs. These will be used to develop best practice and hopefully a clearer process. The big questions are:

Integration or fragmentation?

A key concern raised around AQP is that at a time when we are seeing a drive towards closer integration of services, this methodology could fragment them among a wider body of providers.

For example, the IT systems and software chosen by providers to deliver the service may well differ and not be capable of being integrated, or at least make it more complex and costly. To address this, there will be a contractual duty on providers to cooperate to ensure that patient care is safe and any transfers are coordinated properly. How this contractual obligation to “cooperate” is enacted and enforced in practice, as well as Monitor’s role around promoting integration, will be key.

The response to the consultation stated that AQP procurement should be implemented in a way that supports further integration of the services between providers and enables QIPP to be achieved. This will need to be clarified in the implementation materials, along with the economic regulator Monitor’s role to ensure that integration is taken into account in the selection of AQP services.

Employees and TUPE

One of the key legal issues to be addressed relates to the position of the workforce.

If AQP reduces activity to an existing provider, there is clearly a risk that staff working in these services may be made redundant. They could then be unable to transfer to another provider if the service is so fragmented that there is no clear destination for them.

This uncertainty may also prevent providers from employing additional staff to meet extra demand because there is no guarantee that they will be able to transfer staff if demand subsequently falls. 

Setting the tariff for AQP

The setting of fixed tariff prices is key to AQP to ensure that there is no price competition. There is a significant amount of work to be done in order to develop currencies and tariffs for the range of appropriate AQP services. As the development of national prices will take some time, it has been suggested that local pricing should be developed subject to national guidance where possible. However, an Audit Commission review has warned that costing data in the NHS is too poor to establish fixed national prices for new acute and community services.

Procurement rules

The consultation makes it clear that AQP is intended to be introduced in a way that will reduce the cost and time which would otherwise be involved in competitive tenders. But it does not state how AQP avoids the need to have any competitive tendering for the award of substantial contracts for health services. Neither does it explain what resources the PCT clusters and clinical commissioning groups will require to manage the AQP contracts and frameworks.

Interestingly, the consultation stated that any procurement process needs to follow existing principles, including transparency, non-discrimination and equality of treatment. But it is unclear how a procurement process would fit within the model of AQP suggested. Certainly a “rolling framework” of AQP providers coming on (and being dropped) at any point would need to be designed to work within the principles.

The consultation response is clear that tendering will still be appropriate where a significant change is required to existing provider markets to deliver, for example, whole-system service transformation. There may therefore be circumstances where a community service is being reconfigured in a substantive manner and it would not be appropriate to fragment the service into an AQP offering and it should award a contract to one particular provider instead. It is unclear how a PCT cluster would justify making such an exception and the period for which it might apply.

Impact on providers

The Department of Health’s response to the consultation process dismissed concerns over lack of block or income guarantees on the basis that these contractual practices undermine patient choice. From a financial perspective, therefore, the income streams in AQP contracts will reflect the actual activity delivered.

AQP could clearly then leave some providers at risk financially. For many of these services, however, it is conceivable that it will take some time for alternative providers to establish themselves so that the impact of AQP would be more gradual.

The opening out of significant services to AQP, while having a positive effect in creating more choice of provider, may also have a detrimental effect on the willingness of providers to invest.

This is because there will not be a long-term contract or guaranteed income stream to justify investment. Care should then be taken by commissioners around the selection of the services under AQP to ensure that innovation and service development are not restricted.

We are also awaiting further development of the DH’s suggestion that smaller providers will need to be supported within the process. It remains to be seen how such support would work within the procurement principles and in the context of the equal treatment of providers.