Report to the Cabinet Member for Adult and Community Services and the
Cabinet Member for Children, Young People and Schools
Report submitted by: Executive Director of Adult Services, Health and
Wellbeing and the Interim Executive Director of Children and Young People
Dates: 12 May and 13 May 2014
Part I
Electoral Divisions affected:
All
Joint Commissioning of Community Equipment Services for Children and
Adults with the Lancashire Clinical Commissioning Groups
(Appendix 'A' refers)
Contacts for further information:
Craig Frost, 07766 803611, Adult Services, Health and Wellbeing Directorate,
[email protected]
Nigel Sanderson, 07796 323271, Children and Young People Directorate,
[email protected]
Executive Summary
On 11 July 2012, the County Council approved the development of a Section 75
agreement between the Council and local NHS commissioning bodies to establish
joint commissioning arrangements for Community Equipment Services (CES).
The Council's Adult Services, Health and Wellbeing and the Children and Young
People Directorates have continued working in partnership with the six Clinical
Commissioning Groups (CCGs) to develop new commissioning and service
delivery arrangements for CES across the county. The intention is that a single
service will be tendered through what is likely to be a complex procurement and the
proposal is that Lancashire North CCG will lead the process under clear
governance arrangements set out in a Section 75 agreement. The aim is to
complete the procurement within eight months of commencement and to begin to
implement the new service during the first or second quarter of 2015/16.
In order to formalise these arrangements, the proposal is to enter into a partnership
agreement between the Council and the six CCGs using the flexibilities contained
in Section 75 of the NHS Act 2006. If agreed, this will result in Lancashire North
CCG hosting and managing the procurement process on behalf of itself, the other
CCGs and the Council. Once a preferred bidder is selected, it will be agreed which
CCG should then host the contract management arrangements. This will reduce
bureaucracy and transaction costs by having the lead CCG undertaking partners'
responsibilities alongside its own, and enable clear governance and accountability
frameworks.
The joint procurement arrangements and recommendations set out in this report
present the Council and its CCG partners with the best opportunity of achieving
consistency of service provision and delivering best value within a suitable legal
framework for managing the local requirements and complexities.
At the same time as making clear the arrangements for the CES, it is proposed that
the Council formalises the governance arrangements in relation to the Retail Model
for the provision of simple equipment through a second Section 75 agreement with
the six CCGs.
This is deemed to be a Key Decision and Standing Order 25 has been complied
with.
Recommendation
The Cabinet Member for Adult and Community Services and the Cabinet Member
for Children, Young People and Schools are recommended to:
(i)
(ii)
(iii)
(iv)
Agree to proceed to procurement of the CES and that Lancashire North CCG
will lead the procurement on behalf of the Council and the other five CCGs;
Approve that the Council enters into a Section 75 agreement under the NHS
Act 2006 with the six CCGs in Lancashire to jointly procure and commission
CES;
Authorise the Executive Director of Adult Services, Health and Wellbeing and
the Interim Executive Director of Children and Young People to agree
completion and arrange sign-off of the Section 75 agreement for
procurement;
Approve that upon successful completion of the procurement and in
readiness for contract award that the Council may become an associate to
the NHS contract for the provision of CES.
In addition, the Cabinet Member for Adult and Community Services is
recommended to:
(i)
(ii)
Approve that the Council enters into a Section 75 agreement under the NHS
Act 2006 with the six CCGs in Lancashire to formalise the governance
arrangements of the Retail Model;
Authorise the Executive Director of Adult Services, Health and Wellbeing to
agree completion and arrange sign-off of the Section 75 agreement for the
Retail Model.
Background and Advice
Context
The provision of community equipment plays a vital role in promoting the
independence of thousands of people with disabilities of all ages in Lancashire. It
enables children and adults who require assistance to perform essential activities of
daily living to maintain their health and autonomy and to live as full a life as possible.
It often enables an individual to manage independently and prevent the need for
other care services. In other cases, it enables the safe and effective delivery of care
usually in a person's home environment often following a stay in hospital.
Community equipment can be categorised into three main areas:
1. Simple aids to daily living are products that support people with day-to-day
tasks e.g. walking frames, raised toilet seats and bath seats. These have the
potential to benefit the whole population, not just those eligible for statutory
support. These items are low value but high volume with most often costing
less than £50.
2. Complex aids to daily living are products that are largely provided by the state
to support care in the home setting e.g. profiling beds, hoists and bath lifts.
These items often have electrical or hydraulic components. They are high cost
and so are provided on a loan basis and are reused as appropriate.
3. Bespoke equipment is uniquely specified by the prescriber and sourced for an
individual service user. This is a relatively small amount of the total equipment
provided, but is more commonly provided to children with complex needs, e.g.
specialist seating.
In Lancashire, there are two distinct supply chains for the provision of community
equipment:
1. Retail Model – the vast majority of simple aids to daily living are provided on
prescription via the retail marketplace. Approximately 62,000 simple aids each
year are supplied through this service in Lancashire.
2. Community Equipment Services – all complex aids, bespoke equipment and a
limited range of simple aids are provided on a loan basis by these services,
supplying about 42,000 items of equipment a year in Lancashire.
The CES are support services which procure, deliver, collect, decontaminate and,
where appropriate, service and recycle equipment, which has been prescribed by
clinicians or social care staff for individuals residing throughout Lancashire.
CES store activity is funded collaboratively between the relevant NHS CCG and the
Council with an agreed local delineation of the funding of different equipment
between organisations. We are aiming as part of this agreement to establish a
common approach across the county to address some variation that exists due to
historical arrangements.
There are currently four operational CES stores in Lancashire, which are jointly
commissioned by the Council and the local CCGs, as set out in the following table:
CES and Location
Community
Equipment and
Resource Service
based in Leyland
NHS Service
Provider
Lancashire Care
NHS Foundation
Trust




Commissioning
Organisations
Chorley and South
Ribble CCG
Greater Preston CCG
West Lancashire CCG
Lancashire County
Council
East Lancashire CCG
Lancashire County
Council
East Lancashire
Community
Equipment Service
based in Altham
East Lancashire
Hospitals NHS
Trust


Community
Equipment Store
based in Lancaster
Blackpool
Teaching Hospitals
NHS Foundation
Trust
Blackpool
Teaching Hospitals
NHS Foundation
Trust
 Lancsahire North CCG
 Lancashire County
Council
Community
Equipment Store
based in Poulton
 Fylde and Wyre CCG
 Lancashire County
Council
Areas Served




Chorley
Preston
South Ribble
West Lancs






Burnley
Hyndburn
Pendle
Ribble Valley
Rossendale
Lancaster
 Fylde
 Wyre
The services in East and Central Lancashire are provided from stores that are
deemed as fit for purpose warehouses. However, the stores in North Lancashire are
housed at two separate sites and, whilst they are fit for purpose at present, they are
not modern and are likely to require upgrades if further changes are made to
requirements nationally. In all areas, the services are managed by NHS providers,
but jointly commissioned by the CCGs and the Council, although there are varying
agreements across the county in terms of governance and funding arrangements.
The Council's Adult Services, Health and Wellbeing and Children and Young People
Directorates have been working in partnership with the CCGs to develop new
commissioning and service delivery arrangements for CES across Lancashire.
Included in this was the development of an options appraisal undertaken by NHS
Shared Business Service (SBS) Commercial Procurement Solutions in April 2011 on
behalf of partners in relation to the reduction of the number of CES stores across
Lancashire.
It was commissioned in anticipation of a significant decrease in activity through the
stores, following the implementation of the Retail Model for the provision of simple
aids to daily living. The expected reduction in CES store activity has since been fully
realised with about 60% of all equipment provided through the Retail Model instead
of through the CES store supply chains. The resulting surplus capacity within CES
stores has offered commissioners the opportunity of consolidating the current matrix
of stores facilities to a single solution able to serve the whole of Lancashire that
delivers consistency, quality and best value.
After careful consideration of various options, the six CCGs and the Council wish to
proceed on the basis that the CES will be tendered through an open procurement
process. The procurement should take approximately eight months from beginning to
end and it is expected that the new service will start to be implemented during the
first or second quarter of 2015/16.
In preparation for this work, there has been significant collaborative effort between
commissioners to:





Agree the principles for an equipment catalogue and funding responsibilities
Develop a detailed service specification setting out the commissioners' shared
expectations in regard to scope of the service
Set out indicative activity levels and service standards
Complete a market scoping exercise, which demonstrated other large scales
providers currently operating in the market place interested in being the
Lancashire service provider
Undertake a cost benchmarking exercise with some other CES in England.
Joint Commissioning and Development of a Section 75 Agreements
NHS organisations and Local Authorities are being increasingly encouraged to
commission comprehensive and responsive equipment services that eliminate
unnecessary gaps and duplications for local service users. Locally CES have been
provided in this way for some time, although the commissioning and governance
arrangements have not been sufficiently robust. Agreements made under Section
75 of the National Health Service Act 2006 establish clear mechanisms for delivering
the services and set down the responsibilities of each party. In the past, formal
audits and reviews of partnerships have consistently emphasised the importance
having clear governance and accountability frameworks. This is to ensure that
partners understand their respective responsibilities and any associated risks that
they need to manage. A Section 75 agreement provides this framework.
In 2011, under the auspices of the Collaborative Working Group, NHS Primary Care
Trusts (PCTs) and the Council agreed to establish joint commissioning
arrangements for CES. At that time it was envisaged that the then PCT provided
services would work together to develop a single service with a view to tendering
after 3 years; a commissioning strategy was developed on this basis. Progress was
hampered by NHS reorganisation, particularly the Transfer of Community Services
from PCTs to NHS Provider Trusts, and a change of plan to proceed straight to
procurement, was developed in early 2013. This approach was further endorsed by
the CCGs' Collaborative Arrangements Group once it was established in early 2013.
To address both the governance and the procurement requirements the intention is
to enter into a agreement between the six CCGs and LCC using the flexibilities
contained in Section 75 of the NHS Act 2006. The proposal is that Lancashire North
CCG host and manages the procurement for community equipment service on
behalf of itself, the other CCGs and LCC. Separate budgets will still exist for the
CCGs and the Council denoting respective financial responsibilities for running costs
and equipment. The proposed Section 75 will only cover the procurement phase.
After the preferred bidder is identified the future lead commissioning arrangements
will be agreed depending on the most appropriate lead.
Lancashire North CCG will be assisted by NHS Staffordshire and Lancashire
Commissioning Support Unit to undertake the procurement exercise.
The requirements of a Section 75 agreement are laid out in statutory instrument SI
2000 no 617, which says that the written agreement should specify:








Agreed aims and outcomes of the arrangement
The NHS and Council functions which are subject to the arrangement
The people the service is for and the kinds of services they can expect
The staff, goods, services and accommodation that are also to be provided in
support of the arrangements
The contributions to be made by each of the partners and how these may be
varied
The duration of the arrangement and provision for review of termination of the
arrangement
How the arrangements are to be managed and monitored
Who the host partner will be.
The Section 75 agreement for the procurement is a comprehensive document that
sets out the nature and terms of the partnership and is accompanied by a number of
schedules referred to in the main agreement, which address the specific
requirements of the partnership arrangements. The schedules include, but are not
limited to, the aims and outcomes, the service specification, a project plan and the
governance arrangements.
The document is clear that key decisions such as those related to the agreement of
the service specification, the agreement to proceed with the procurement, and
financial issues remain with each CCG and the Local Authority.
There is also need to have a consistent approach to the funding of equipment and
the development of a Section 75 agreement provides the opportunity for beginning to
formalise such arrangements. Currently, each type of equipment is classified as
either 'health' or 'social care' and is funded on that basis by the relevant CCG or the
Council respectively. Whilst it is proposed that the principles of the current
arrangements are maintained, it is necessary to resolve some historical differences
to ensure uniformity across Lancashire.
Variant Bid for the Procurement
As part of the negotiations to agree the joint procurement arrangements, NHS East
Lancashire CCG asked Partners if potential bidders could be asked to consider a
variant bid that did not include East Lancashire CCG in the arrangements. This was
agreed by Partners. This means there is also an option for the other five CCGs and
the Council to agree to enact a variant bid which excludes East Lancashire CCG
should they feel this option is more advantageous.
The Section 75 in ‘Schedule 9 – Exit Strategy’ provides an option for the enactment
of the variant bid should they decide to enact it. Schedule 9 clearly states that all
CCGs and the Council shall inform the Lead CCG Authorised Officer of their decision
within five working days of the proposal for a preferred bidder being agreed (one to
include all six CCGs and LCC and one for five CCGs and LCC) in accordance with
completed Invitation to Tender evaluation plan criteria.
Retail Model Section 75
The retail model has been hosted and managed by the Council on behalf of itself
and its NHS Partners since its development starting in 2009 and rolling out across
the county between 2010 and 2011. Whilst the operation of it has not been
problematic it is not covered by sufficiently robust governance arrangements.
Therefore, it is proposed that the Council formalises the existing arrangements
through a separate Section 75 agreement with the CCGs led by the Council.
The agreement mirrors that of the procurement Section 75, but with the Council as
the lead agency. The main difference between the two agreements are the financial
arrangements for reimbursement to the Council, which is covered by a specific
schedule on the funding principles, and it relates to a commissioned service rather
than a new procurement. Other schedules to the agreement include the aims and
outcomes, retailer accreditation, the equipment catalogue and governance.
Conclusion
When the Retail Model for the provision of simple aids to daily living was
implemented in Lancashire, it was always with the intention that the Council would
support a consolidation of the CES infrastructure, in order to achieve consistency of
service provision and to enable full delivery of efficiency savings across the health
and social care economy. The partnership arrangements described, and the
recommendations being made at the beginning of this report, present the Council
and its CCG partners with the best opportunity of achieving these aims.
Consultations
Healthwatch Lancashire have been consulted regarding the proposed Section 75
and have responded via their Chief Executive stating that they are not opposed to
the Section 75 arrangements given that it is a proposal of intent about procuring a
service, as opposed to a specification describing a service and comparing it with a
previous specification.
Healthwatch Lancashire has indicated that they would wish to be involved in future
engagement and have specified a number of matters that will be of interest to them
and the public regarding the procurement of Community Equipment Services in
Lancashire. These matters will be taken into consideration and Healthwatch will
continue to be consulted throughout the process.
Implications:
This item has the following implications, as indicated:
Risk management
The governance and accountability arrangements in the Section 75 agreement will
ensure that the risks to the delivery of the project, including the procurement and
establishment of the new services, are managed as effectively as possible.
However, it is important to highlight that the process for getting to this stage has
been lengthy and not without challenges. As multiple partners are involved with each
needing to take their own decisions, there is a risk one or more of the partners could
decide not to proceed. If this does occur the impact could be significant depending
on the particular partner.
It should also be noted that all partners have included community equipment in their
Better Care Fund Plans. This may in future alter the need for a separate agreement
depending on the terms of the new Better Care Fund agreement(s).
Financial
The Council's forecast expenditure for 2013/14 CES costs is £2.529m. This consists
of £1.354m for adults equipment, £0.581m for children's equipment and contributions
to operating costs totalling £0.594m.
Although the final costs will not be fully known until the procurement process is
completed, efficiency savings are considered achievable at this stage on the basis of
economies of scale, improved procurement of goods and a higher proportion of
equipment recycling. The financial benchmarking of other local authorities, as
referred to above, also supports this assumption. This matter will be kept under
review.
Value Added Tax
Local authorities, NHS bodies and others are governed by different VAT regimes.
The VAT recovery position in connection with Section 75 agreements depends on
how the arrangements are structured, and HMRC have provided specific guidance in
connection with joint Council and NHS initiatives such as this.
Provided that the contract between the Council and the lead partner is properly
established so that the lead partner acts as the Council's agent, the lead partner will
be able to pass on the VAT on the purchased goods and certain management costs
to the Council, so that it can be recovered by the Council under the special local
authority VAT regime.
This is similar to the structure seen under current arrangements. If the agency
relationship is established in the new contract, it is expected that the VAT position
under the proposals would be broadly similar to the present position.
Legal
Section 75 of the Health Act 2006 was introduced to increase flexibility in working
arrangements between health and social care agencies. It was aimed at streamlining
health and social care services by enabling NHS and local authority bodies to pool
resources and/or staff so that services could be commissioned or provided from a
single source. The service referred to in this report clearly falls within Section 75 and
would lend itself to a formal partnership arrangement.
In addition, where the CCG is to procure a service on behalf of the authority the draft
agreement requires that the procurement exercise be undertaken in compliance with
the relevant regulations. Such an exercise will also comply with the Council's
standing orders relating to procurement and there is thus no necessity to seek a
waiver in this regard.
Equality and Diversity
An equality analysis has been completed by the local NHS Commissioning Support
Unit on behalf of all partners and is set out at Appendix 'A'.
Procurement
The procurement of the new CES will be undertaken by Lancashire North CCG with
support from the local NHS Commissioning Support Unit and will comply with UK law
and European Procurement Directives.
List of Background Papers
Paper
Date
Development of a Section 75
11 July 2012
Partnership Agreement
between the NHS and the
County Council for
Commissioning Community
Equipment Services
http://council.lancashire.gov.uk
/ieDecisionDetails.aspx?ID=20
81
Reason for inclusion in Part II, if appropriate
N/A
Contact/Directorate/Tel
Craig Frost, Adult Services,
Health and Wellbeing
Directorate, 07766 803611