PCN companies – subcontracting restrictions relaxed

We are increasingly being asked by PCNs to advise on whether they can form companies to carry out network activities. This is an attractive option as it means that some or all of the liabilities arising from network activity can be passed on to an entity with limited liability via a subcontracting arrangement.

As the network contract DES (“DES”) is an adjunct to the GMS, PMS or APMS contracts of the network practices, the GMS, PMS and APMS subcontracting rules apply. Previously, while practices could subcontract network activity to a company (subject to commissioner approval), it was not possible for that company, as the subcontractor, to then onward subcontract any clinical work to other providers. However, from 1 October, this restriction has been lifted by amendments to the GMS and PMS contract regulations to permit onward subcontracting of clinical services under the DES with the permission of the commissioner – see NHS England’s letter HERE.

This means that PCN practices may now subcontract delivery of the DES in its entirety to a PCN company or federation and the subcontracted company may then either deliver these services itself or subcontract certain elements of the service to third parties – or even back to the practices themselves, where those practices wish to continue to provide some of the DES services.

This change to practice contracts will make the formation of PCN companies – or utilisation of existing federation companies – a more viable option. However, it is crucial that you ensure that the arrangements are carefully thought through with consideration given to matters such as NHS pensions access, CQC registration requirements and VAT.

We offer the following services for PCNs:

• Advice on governance and regulatory matters
• Review and update of your current network agreement schedules
• Formation of a company and bespoke articles of association which dovetail with your network agreement
• Preparation of sub-contracts of network activity
• Service agreements and employment contracts  for clinical directors and other PCN staff
• Deeds of variation for partnership agreements to reflect PCN and company membership requirements
• Training and ongoing support for clinical directors and managers of PCNs

If you have any questions or would like more information about what Hempsons may be able to offer you, then please contact our dedicated GP team.