Learn to love the tender: how to bid for a practice

Valerie Martin

Valerie is a partner and national director of medical services at chartered accountants PKF

T 01483 564646

Over the last year, there has been a considerable increase in the number of practices being put up for Alternative Provider Medical Services (APMS) tender by the primary care trust. These can be new start-up practices in development areas, existing practices where the list is available on the retirement of a sole practitioner, or existing PCT-managed practices where the PCT wants to return PCT-managed services back to independent status.

Under the old General Medical Services (GMS) contract, an initial practice allowance was available for start-up practices in areas of major housing development where there would be a significant and rapid growth in the population. That allowance has now ceased, and such practices are put out to tender.

Historically, singlehanded GPs coming up to retirement would either take on a partner or merge with another practice a few months before the GP retired, so that the practice would be passed on to a new singlehanded GP or be amalgamated into another local practice. Now, however, the PCT will very often intervene and determine the future of such practices by making them available as an APMS bid.

Similarly, practices that had come under PCT management as a result of GP partners not being available were very often revived by the PCT, which would introduce salaried doctors who would be given first refusal on taking over the practice. Now such practices are often put up for competitive tender.

The background to the type of practice and the rationale behind the APMS tender process is important in putting together a bid – bidding for an existing practice list is a very different situation to bidding for a practice where the patient numbers are uncertain and will be rapidly changing.

PCT service outline and specification for the provision of GMS
The background to the practice, the reason why it is available for tender and the requirements of the PCT are all set out in the PCT’s “Service Outline and Specification for the Provision of General Medical Services” document.

If any practice becomes available in your area, it is worthwhile expressing an interest and obtaining this document, as it provides a useful insight into the strategy of the PCT. Also, it can sometimes be necessary to bid for a practice as a measure to protect your existing business from competition, as much as due to a desire to expand and roll out new services.

The APMS bidding process involves the following steps:

• Expression of interest.
• Submission of prequalification questionnaire.
• Tender response.
• Presentation of proposal.
• Formal business plan and detailed costings.

Rather like an exam question, you need to keep going back to the service outline and specification to be sure that you are fulfilling the PCT’s requirements and strategy in your tender documents at every stage.

The service outline will give information regarding the background to the availability of the practice, its list size, the premises, staffing and services to be provided. It should detail the key considerations to be addressed in the prequalification questionnaire and, most importantly, the timetable for the bidding process.

Prequalification Questionnaire (PQQ)
This is the first stage, and is generally designed for completion electronically. The shortlist for the next stage is drawn up from the completed questionnaires, so it is important to address the core requirements as clearly and as fully as possible at this stage, and to provide a clear outline of projected costs. This is a competitive process, so it is useful to gauge the competition, whether it be from other GP practices or from private companies, and to emphasise criteria where you have a competitive advantage.

Section 1 of the PQQ requires details of the applicant. Section 2 should set out headings for the key considerations, which you will need to complete with the details of how you propose to provide or meet the requirements set out in the service outline, and any constraints or risks that may prevent you from fully meeting any of the requirements.

Typical headings are:

• Environmental considerations – this would cover how health and safety requirements will be met, as well as issues relating to recycling, heating, the use of hazardous or nondegradable chemicals, and so on.
• Information technology – the National Programme for IT is considered to be an essential element in delivering the NHS Plan, so interested parties have to be able to show that they will use a compliant GP system with proven ability to support the required standards in aspects such as security, Choose and Book, the Electronic Transfer of Prescriptions and GP2GP functionality. Any additional information management and technology (IM&T) requirements should also be specified.
• Access – APMS is being used as a way of competitively increasing access in all GP surgeries. By requiring that APMS practices ensure 100% of patients can see a primary healthcare professional within one day, a GP within two working days, and have evening surgeries and a Saturday surgery, this sets a standard for other local practices. There is always a danger of losing patients to a nearby APMS practice if this service is not available elsewhere.
• Essential services.
• Additional services.
• Directed enhanced services.
• National enhanced services – the specification should clearly set out all the services that are obligatory and those that are desirable, and detail should be given in the PQQ of how these services will be delivered. An open list is also generally a specified requirement.
• Local enhanced services (LES) – similarly, the LES required by the PCT will be detailed in the specification, together with any innovative services requiring GPs with Special Interests’ (GPwSI) input. These services need to be carefully costed when it comes to the cost projections.
• In-hours home visiting – this requires information on aspects such as the criteria for home visits, how the service will be provided and how the practice would work with new initiatives, such as community matron teams.
• Out-of-hours service and nonregistered patients – detail is required of how these services will be provided.
• Non-NHS work – some specifications require certain items of non-NHS paid work – such as road traffic accident (RTA) reports, insurance medicals and other medical reports – in which case, the proposed services to be provided need to be included in the PQQ.
• Quality and Outcomes Framework (QOF) – the bidding practice will generally need evidence of having very high QOF points in their present practice and would need to show their aspirations and how the aspirations will be achieved for the target practice.
• Workforce – where a target practice has existing staff, these will be protected by Transfer of Undertakings (Protection of Employment) regulations (TUPE) so that their employment history with the previous practice is transferred to the new practice. It will therefore be necessary to show how such staff will be integrated into the new contract. This will not apply in the case of a start-up practice, where consideration will need to be given to required staffing levels as patient numbers grow.
• Premises – very often, a new, purpose-built surgery comes with the APMS contract. This will generally be leased and it is ideal if the term of the lease can match the period of the contract. An APMS contract is often a five-year contract, and you cannot be sure that you would get a renewal of the contract at the end of the period. It is therefore essential to have an exit strategy for the premises. In some cases, you have to buy the existing surgery from the retiring GP, in which case the ownership of the premises and particularly the price paid for the premises need to be the subject of a viability review. This would only be covered briefly in the PQQ, but would need to be carefully considered in the business-plan stage.
• Practice-based commissioning (PbC) – it will generally be obligatory that providers are compliant with the PCT’s model of PbC, including fully undertaking Choose and Book.
• Constraints – any likely constraints to the implementation of the contract should be set out in the PQQ, with further details included in the tender document. Consideration should be given to aspects such as premises availability – particularly in the case of a surgery under construction, which might not be completed by the start date of the contract. TUPE requirements can also constrain the optimum staffing of the practice, and the interaction with other business activities should be mentioned. Timescale is always a factor to consider, as slippage at any stage of the procedure can have an adverse effect. In this regard it is sensible to outline where any such risk should rest with the PCT or whether it is a risk of the new provider.
• Projected costs – this needs to be covered briefly in the PQQ, then with more detail in the tender document, with further supporting evidence in the final business plan stage. Items that are directly reimbursed – such as rent, rates and clinical waste – do not need to be costed, but start-up capital investment and staffing costs need to be carefully considered. Where the practice is a new start-up practice, costings need to be dependent on patient numbers, with bandings for the costs of administrative staff and clinical staff for certain levels of list size.

Under the old Type 2 Allowance, new practices were risk-free for GPs in the start-up years, as all costs were reimbursed together with a minimum level of profit for the GPs. APMS start-ups are not so risk-free, so great care needs to be taken in estimating the costs and the price per patient in the budget.

It is therefore crucial to review the financial projections at each stage of the tendering process, particularly as more information about the target practice is made available. Although the financial overview in the PQQ is often not reviewed by an accountant in order to minimise costs at the initial tendering stage, it is important to have the budget reviewed fully at the business-plan stage, and to be able to answer questions on the budgeting process at the presentation stage.

The PCT is looking for value for money, but the successful bidder needs to be careful that the APMS budget is realistically priced to give a fair return.