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NHS Contracts - Secrets of successful tendering

Why practices win more GP-led health centre bids overall than the private sector.

Entrepreneurial GPs emerged as the overall victors in the recent race to win contracts to run new GP-led health centres under the Equitable Access to Primary Medical Care programme.

How did these GPs manage to hold their own against bidders from organisations much bigger than their practices?

As a medical specialist accountant with client practices asking for financial advice when preparing their tenders, I am in a good position to fathom out what gave successful GP bidders their edge.

Typically they were four- or five-partner practices with GMS or PMS contracts, where all the GPs were motivated to improve the quality of care for patients and take a lead in redesigning general practice through alternative provider medical services (APMS).

Here is what GPs need to master to become bid winners.

Assessing the financial viability of the proposed contract is the main area of advice GPs seek from their accountants.

Bidders need to ensure all potential income streams are identified and evaluated. They must not assume that the information provided by the PCT will cover all possible sources of income.

Bear in mind that most income streams are capitation-related and these contracts do not guarantee any patient list size.

Financial modelling
The tender documents include a financial model section with many parts 'pre-populated' with PCT data. The document is inflexible, and a good understanding of the spreadsheet format and underlying assumptions is needed to be able to complete it as required.

Rather than trying to underbid your rivals, it is important to produce sensibly costed-out financial models. For this you will need to understand financial modelling if you are going to set the right price. This includes working out what the key income and expenditure variables will be.

Tender documents
The proposed contract is a complex legal document that has implications for performance, quality, risk and eligibility regarding NHS pensions. Reviewing the contract detail with a specialist solicitor is essential. You do not have to accept all the clauses as presented. There is room for negotiation and agreement with the PCT.

Make sure the legal entity (a company you set up, say) that will take on the contract qualifies as an employing authority for the NHS Pension Scheme.

Your PCT
The tendering process involves considerable dialogue with the PCT through the various formal meetings and presentations. There will be representatives from many PCT departments and it is vital to have a good understanding of local PCT strategy, demographics and patient needs. So do spend time accessing public information provided by the PCT to get to grips with health needs. But do not forego the opportunity to ask questions and understand what the PCT wants the contract to achieve.

Winning Tips

- Bear in mind that most income streams are capitation-related and APMS contracts do not guarantee a patient list size.

- You need to produce your own full budgets and forecasts of profit and cashflow to fully assess the financial risk.

- Evaluate the worst-case scenario. Will the contract will still be financially viable?

- Check that if your bid succeeds the legal entity to hold the contract can offer staff the NHS Pension Scheme.

- In all dialogue with the PCT, maintain an emphasis on quality and innovation.

- Focus on your strengths rather than the potential weaknesses of your rivals.

- Get an outside view or second opinion before finalising your submission.

- Don't underestimate the lead-time needed to recruit and get staff in post.

The nature of the process may mean that you will not always know exactly who else is competing for the bid, but you can build up knowledge of the likely competitors by looking at successful bids elsewhere, information in GP and by seeing who attends initial meetings for potential bidders. So do your homework.

Do not be put off by big private sector organisations that may be in the frame. They do not always have GPs' firsthand knowledge of how general practice functions. Maintain a professional stance and concentrate on the strengths of your presentation rather than the potential weaknesses of your rivals.

New skills
You are unlikely to have in your practice team all the skills necessary to put together a successful bid. Marketing, presentation skills and the art of negotiation may need to be worked at or bought in.

Spend time discussing ideas and agreeing the best way to present them. Get an outside view or second opinion before finalising your submission.

Giving some thought to who are the right people to assist is worthwhile. Being afraid to invest time and money to bring together a successful team could lose you the tender.

  • Ms Wood is medical specialist partner at accountants Moore and Smalley and an executive member of the Association of Independent Specialist Medical Accountants (www.aisma.org.uk)
Case Study

A four-partner PMS practice in the North West of England won a two-phase APMS contract to first provide essential and additional services in an existing PCT-run surgery and to then run a new GP-led health centre in purpose-built premises.

Two GP partners led the bid with the practice manager, a practice nurse and their accountant, supported by their IT and marketing administrators. Phase 1 went live on 1 April 2009 this year while phase 2 is likely to complete in April 2011.

Several factors led to the practice winning the contract. The requirement for GP input was identified in plenty of time; focus was given to unique selling points, for example, training practice accreditation; big profits were not the priority and the practice had a realistic view of the pricing aspects in the contract.


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