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Examining the terms of an APMS contract

Care UK's contract to run a Dagenham practice is stricter than the GMS contract, say Fiona Barr and Justin Cumberlege.

Since April 2004 when the restrictions on who could provide primary care services were relaxed, private providers have gained a foothold in general practice by successfully bidding for alternative provider medical services (APMS) contracts.

While this has often been in competition with GP-owned practices, very little is known about the terms and conditions successful APMS bidders sign up to. To find out more, GP used the Freedom of Information Act to obtain a copy of the APMS contract signed a year ago between independent hospital and care home group Care UK and Barking and Dagenham PCT to run a GP surgery in Dagenham.

The contract with Care UK sets tougher requirements than the national GMS contract.

Access is a key aspect of the agreement and surgery-opening hours are specified as 8am to 8pm on weekdays and 10am to 2pm on Saturdays.

Other requirements include maximum waits for home visits (from one to six hours depending on urgency); a generic prescribing rate of over 78 per cent; a quality score of at least 950 points; compulsory use of Choose and Book; and compulsory involvement in practice- based commissioning (PBC).

Patient numbers limited
The practice faces some stiff performance criteria. Emergency admissions and sick notes issued must be within 10 per cent of the best-performing practices in the PCT.

Smoking cessation and pregnant smokers' rates must be within 10 per cent of the best performers and there should be a year-on-year decrease in the teenage conception rate.

The contract limits the number of patients the practice can have and registrations from outside the practice's boundary are only allowed in exceptional circumstances.

As this contract illustrates, APMS contracts give PCTs the power to micro-manage the healthcare the contractor provides. There is probably as much micro-management of an APMS contract as a GMS contract, but with APMS there is no mistaking this given it is clearly set out in the contract.

Care UK is required to provide 13 enhanced services including management of patients in nursing homes, drugs misuse and specialised sexual health services.

A GMS practice can opt out of providing additional and enhanced services if unable to cope with the workload. An APMS contractor may not be able to opt out after signing the contract without breaching it and a breach could lead to financial penalties or contract termination.

Care UK does not have an NHS contract with the PCT for the Dagenham practice.

The main implication of an NHS contract is in settling disputes. A dispute over an NHS contract is referred to the secretary of state for health for resolution. Otherwise disputes are resolved initially by mediation and, if that fails, by the courts.

APMS and GMS contracts may specify that they are deemed to be NHS contracts, and the contractor is treated as an NHS body. However, with a GMS contract, a practice can decide that it no longer wants to be treated as an NHS body and its contract ceases to be an NHS contract. Such an opt-out clause is unlikely with an APMS contract.

Care UK's contract bans sub-contracting except with PCT's written permission.

The company has been allowed contracts with four sub-contractors; its IT and pathology services suppliers; an NHS trust for supply of drugs and appliances and a GP-run company to act as clinical advisers.

As with the GMS regulations, the APMS directions prohibit sub-contracting.

So APMS providers are prevented from making thus preventing arrangements that would be quite normal in commercial contracts.

The major advantage of APMS is that, if it is for non-essential services only and not linked to a patient list, contractors can sell the goodwill in the business if they sell on the service.

But an APMS contract for both essential services, non-essential services and non-essential services will almost certainly be caught by the 'goodwill trap', potentially prohibiting the sale of goodwill from attaching to any part of the business.

Because goodwill could be a valuable asset in future, precisely how the legal entities holding APMS contracts are linked is important.

The contract between Care UK and Barking and Dagenham PCT is for five years and states that the PCT may terminate it early by serving at least six months' notice.

With a GMS contract, the PCT must go through a set process before it can terminate it.

This gives the GMS practice an opportunity to remedy any contractual breaches and avoid contract termination, unless the PCT considers patients' safety is at risk. Notice periods for terminating APMS contracts vary but may be negotiable.

Exit strategy
Care UK's contract is for five years and states that the PCT may terminate it early by serving at least six months' notice.

It follows that the PCT does not have to give a reason to terminate it early.

In contrast, all GMS contracts are open-ended and it is only the practice that can terminate the contract at will. GPs with APMS contracts need an exit strategy to cover the costs of contract termination.

If local GPs want to bid for an APMS contract, there is no guarantee they will have an advantage over contenders unless the public consultation on the tender demonstrates a reason to give them one.

Tendering is no small task. Your ability to cost the services and meet the targets demanded, pay for staff and still have something left over for you and your partners is crucial. What size of investment are you prepared to make? Failure to hit the required targets could be expensive.

APMS contracts should provide GPs with the freedom that many want to provide services that are better tailored to the local community's needs.

Because of EU procurement regulations, the scope for modifying contract terms once they have been put out to tender is small. The APMS directions dictate the terms that must be included.

These are based on the PMS regulations. They remove any temptation for a PCT to hand over primary health care provision to a reliable contractor and leave the contractor to find and use the best ways to meet the contract terms.

GPs can enjoy the comfort zone of GMS, but when opportunities arise for practice or service expansion, if they are in England they will have to accept an APMS contract.

Mr Cumberlege is a partner specialising in primary health care issues at the law firm of Carter Lemon Camerons (justincumberlege@ cartercamerons.com)

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