Managed equipment service (MES) contracts have long been used by the NHS as a means to replace medical equipment without capital expenditure. The contract usually involves the MES supplier providing equipment within a package of services including maintenance and provision of consumables, paid for by the customer from operating expenditure. In addition, it is often possible for the customer to recover VAT through the contracted out service rules. However, the two main features of a MES, avoidance of capital expenditure and recovery of VAT, are about to become more challenging to achieve due to the implementation of IFRS 16. This article explores the issues and proposes a solution for some situations.
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This is an edited version of an article first published on LinkedIn Pulse on 8 June 2018. There has been a lot of debate in the health service and national press recently about the increasing number of NHS Trusts setting up wholly owned subsidiaries. To date I have not read anything that accurately describes the commercial model for these companies, as much of the published literature is from a particular political ideology or from NHS Providers communicating the message ‘nothing to see here’. Much of the controversy surrounding wholly owned subsidiaries is the ability to make VAT savings and the potential to remunerate staff on less favorable terms and conditions. There have also been accusations of privatisation via the back door. Having recently supported a NHS Foundation Trust in the south of England to set up a wholly owned subsidiary to deliver fully managed healthcare facilities, in this article I explain from an unbiased perspective the issues to consider and the typical commercial model.
The recent proposal for NHS pathology laboratories in England to consolidate into 29 networks has renewed interest in partnership options for pathology laboratories. This ebook, available for free download, provides guidance and tips on how to proceed, based on experience.
No personal data will be collected and nobody will contact you. Simply pay with a tweet, or LinkedIn share. Below is an interesting article available to download on NHS / private pathology partnerships, with a contribution from Magrath Consulting. The article was written by freelance journalist Ann McGauran and first published in the December 2016 / January 2017 LangBuisson journal, Healthcare Markets. It is reproduced here with permission.
The recent letter from NHS Improvement (NHSI) left Trusts in no doubt about the regulator’s expectations for pathology consolidation as part of a series of measures aimed at restoring financial control. All trusts were asked to send a two-page note for pathology services for their sustainability and transformation (STP) footprint to NHSI by 31 July 2016, setting out:
Many hospitals now outsource the dispensing of outpatient medicines. There are many benefits from doing so, including financial. For a medium sized acute hospital, the financial benefits are typically a few hundred thousand pounds a year. Having recently completed an outsource deal for two hospitals in Essex, here is my summary of the commercial model. Six years on from Lord Carter's second phase review and pathology consolidation is starting to pick up pace in the UK. During 2015 we have seen a growing number of enquiries about how to consolidate pathology and what model offers the greatest potential. My previous blog, available here, gives advice on this. Below is an infographic file available for download that plots the main developments since Lord Carter's second phase review of pathology in England and Wales. I have posted an article on Linkedin that provides commentary on this.
The future of pathology services has been a hot topic since the Carter reviews of 2006 and 2008. Modern pathology technology breaks down the traditional demarcations between laboratory disciplines and allows for automation of pre and post analytical processes, but this kind of modern technology requires large scale pathology operations serving more than one hospital and its local GPs. Pathology consolidation has happened across large parts of Europe and in some other continents, leading to some large pathology organisations with state of the art automation, significant purchasing power and expertise. There are now signs that the UK is starting to follow this path. Having recently set up a pathology joint venture in Essex involving two NHS Foundation Trusts and a private sector pathology provider, here are my top tips and issues to consider for anyone thinking of outsourcing pathology or setting up a joint venture. |
Mark Magrath MBAI am a management consultant with 12 years experience as an executive director in an NHS Foundation Trust, including 10 years as Deputy Chief Executive. I only write blogs on projects and assignments that I have personally led. My aim is to write amazing content that combines real world experience with insightful advice. Categories
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