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Safeguard your contract cash

Practices are increasingly facing contract reviews as the NHS tries to save cash, with some even threatened with closure. Solicitor Daphne Robertson advises on how to protect yourself.

Over the past year there has been a significant increase in the number of practices forced to accept sharp cuts in income, or threatened with closure, as part of moves to ‘contract manage’ GPs.

The majority of primary care organisations have now undertaken PMS reviews, resulting in changes to PMS contracts and reduced practice income. But any schadenfreude from GMS practices is misplaced as pressure is likely to grow on them in the future too.

Historically, GP practices have paid very little attention to their GMS or PMS contract, but it is the most important asset in their practice and needs to be properly protected.

Here are eight questions that you should ask yourself in order to do this.

What kind of contract do we have?

Most GMS and PMS practices agree to an NHS contract without understanding the consequences – usually by ticking a box in the appendix to the main contract. But there is a crucial difference between having an NHS and a non-NHS contract.

Any disputes regarding NHS contracts must be resolved via the NHS dispute resolution process, and cannot be heard in a court of law. Disputes taken through the NHS process rarely find in favour of GP practices and the process is not public or subject to normal legal procedures, such as witnesses and document disclosure.

In contrast, non-NHS contract disputes can be heard in a court of law or can be ‘opted in’ to the NHS process at any time.

The most appropriate forum for resolving a contract dispute will depend on the nature of the dispute, but a practice will want to keep open the option of fighting a dispute in a normal court of law by being having a non-NHS contract.

Is the contract a partnership asset?

As a minimum, every GP partnership agreement should make clear that the GMS or PMS contract is a partnership asset. There should also be binding obligations on any departing partner to follow the necessary processes to transfer the contract to the continuing partners.

Far too many practices are still operating without partnership agreements, or with agreements that have been poorly drafted. Problems then arise when a partner joins or leaves. Without the necessary obligations the contract can be ‘frustrated’ by an automatic dissolution of the partnership, or ownership contested in a partnership dispute.

PCO guidelines in these situations are to terminate the contract and put the patient list up for tender.

Do we have a copy of the contract?

I have been surprised by the number of practices that are unable to produce a signed copy of their contract. Similarly, many PCOs have mislaid their signed copies.

It becomes very difficult to litigate a dispute in the absence of a signed agreement, and practices should be wary of thinking they can rely on an implied contract with the PCO because they have been paid by them.

The NHS dispute process will refuse to even consider an appeal against, for example, a contract termination or a contract change in the absence of a signed contract.

Who has signed our contract?

Assuming you can locate the contract, do you know who has signed it? I am frequently surprised by the names on the practice’s most important asset, which often include long-departed partners and exclude more recent joiners.

A failure to correctly update the contract is another common reason for contracts to be challenged.

Do we check our own compliance?

GMS and PMS contracts are rather dull reading, but they specify the services that your practice has undertaken to provide.

If you had signed a contract with a builder who then constructed you a garage instead of a house, you would be understandably annoyed. If you are not delivering the services or the quality that you signed up to in the GMS or PMS contract, you should not be surprised when the PCO wants to talk with you.

I would recommend that all practices appoint a partner responsible for understanding the contractual obligations of the practice and for ensuring that these are met. This partner should also ensure that resources are not wasted by delivering services which have not been contracted.

Do we monitor PCO compliance?

The GMS and PMS contracts are such complex documents that it is hard for anybody to be sure they are fully compliant at all times.

It is worth remembering that there are contractual obligations on both parties, so why not monitor the PCO’s compliance? In the event that you end up in a dispute with the PCO you will then have a list of all their breaches, which might prove very helpful in litigation.

Do we deal with breach and remedial notices promptly?

Recently, breach and remedial notices have become the most common way for PCOs to attempt to terminate contracts.

These can be issued for any breach of your GMS or PMS contract, no matter how trivial. Once you have received two such notices, the PCO can terminate the contract whenever it chooses, so long as the cumulative effect of the breaches is ‘prejudicial to the efficiency of the services’.

Unlike points on a driving licence, breach and remedial notices do not expire. If your practice receives such a notice it should be taken very seriously and contested if possible.

Far too many practices seem to ignore breach and remedial notices until they have collected two or more and the PCO sends a termination notice. By this time it is often too late – particularly if the termination cannot be contested in court because it is an NHS contract.

Have we aligned our partnership agreement with the contract?

There are a variety of events that can give the PCO grounds to terminate the contract. When these are not reflected in the partnership agreement they can give rise to problems.

For example, if a partner is struck off or suspended by the GMC, they will no longer be eligible to hold a PMS or GMS contract. If your partnership agreement does not specify what to do in this circumstance, it is likely that you will be unable to remove the individual from the contract and the PCO could then terminate with immediate effect.

Since the GMS and PMS contracts are both updated quite frequently through statute, it is worth checking every few years that your partnership agreement caters for the most recent changes. It goes without saying that you should use a specialist solicitor who understands the regulations to do this.

Daphne Robertson is a principal at DR Solicitors, a national firm working exclusively with GPs www.drsolicitors.com

Published in Pulse magazine

Posted on July 6th 2010 in DR Solicitors in print, News and Publications


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