Care Agenda: A Brief Guide to Preferred Provider Lists

Topics covered: Ridouts professional advice

I recently wrote about how exclusive use of framework agreements by PCTs was found to breach NHS competition rules.  PCTs are beginning to wake up to that point.  We were instructed on another similar case recently, and the PCT quickly conceded our submissions when we drew its attention to the relevant decision of the Co-operation and Competition Panel.  In contrast, local authorities often act in a similarly anti-competitive way through preferred provider lists.  Preferred providers may benefit from one or more of the following (depending on the particular scheme) –

  • The list may be published on the local authority’s website and in other materials which provide advice to those seeking care services.  This is particularly useful for securing interest from self-funders;
  • Preferred status by commissioners  without which it may be impossible, or very difficult, to secure local authority placements; and
  • In some cases, the local authority may pay a premium.

Preferred provider schemes are, in essence, accreditation schemes.  When they operate effectively and fairly, they are a useful tool for commissioners, providers and service users.  They help to weed out poorer providers and encourage improvement.  However, where the process is obstructive or over formulaic, the process can be counter-productive.

Sunshine Care, a domiciliary care co-operative provider in Rochdale complained earlier this year that to its knowledge not a single local provider had been included on the local authority’s preferred provider list.  The problem is particularly acute for new or innovative providers which may not have a long track record.   It would be lost opportunity if preferred provider lists restricted market entry and innovation thereby inadvertently increasing prices and decreasing competition for quality.

How should providers approach the lists?  In the first place, they should meet any reasonable requirement to be included on the list.  Providers whose applications are rejected should consider the reasons.   Where no reasons, or inadequate reasons, are provided, providers should write and request written reasons from the decision maker.

If the reasons are flawed, it may in the first instance be possible to resolve the matter informally through dialogue with the decision maker.  If that fails, the disappointed provider should ask for details of the commissioning dispute resolution process.  If no details are provided, the provider can use the local authority’s generic complaints policy.  If the complaint is not handled in a satisfactory way, a complaint can be made to the Local Authority Ombudsman.  In appropriate cases, where none of those options prove successful, a claim may be brought in the High Court either for judicial review or under the Competition Act.

Broadly speaking, judges would be reluctant to interfere with schemes which, on the face of it, are intended to protect vulnerable people by accrediting providers.  However, courts may be persuadable in the following, non-exhaustive, cases:

  • Applications to be included on the list are only accepted during restricted windows which are not reopened for significant periods.  This has the effect of restricting competition in the market;
  • Certain providers are exempt from the requirement to be included on the list without good reason;
  • Certain providers are included on, or excluded from, the list automatically without good reason;

The criteria for inclusion on the list are opaque;

  • Reasons are not provided for any failure to be included on the list;
  • Decisions for inclusion on the list are made arbitrarily;
  • The conditions for inclusion on the list are disproportionately onerous and consequently restrict competition without good reason; or
  • Decisions around the list are made in a way which is, or may appear, biased or are made in an irrational way.

In short, providers should in the first instance accept that preferred lists offer a useful commercial opportunity and should make an effort to be included.  In the unhappy event that providers find they are refused admission to the list, or cannot access the list for procedural reasons such as lapsed deadlines, there are ways to challenge local authorities.

There may be a high hurdle to overcome, but decisions which are plainly unfair will be ripe for challenge.

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