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What PCT managers need to know about conflict of interest

Mark Johnson, managing director of TPP Law goes over the various issues PCT managers need to work through regarding conflict of interest

Mark Johnson, managing director of TPP Law goes over the various issues PCT managers need to work through regarding conflict of interest

As public servants, PCT managers are often very concerned about perceptions of conflict or financial self-interest. There are many potential situations where a conflict of interest could arise. The PBC board/ sub-committee could include GPs who stand to gain personally, or whose partners or practice stand to gain, from the approval of a business case or the award of a new service contract, the drawing up of a specification or setting of a tariff in a certain way. A GP may refer his patients to a provider company in which he has an interest.

How do PCTs deal with these issues in a balanced and proportionate way, respecting their statutory duties and preserving public trust? The answer is not to put every new service out to tender, regardless of the economics, or to exclude clinicians entirely from decision-making on services. To do so would mean losing some of the inherent benefits of inclusive PBC initiatives. Although now in pursuit of world-class commissioning status, PCTs are no strangers to historic inherent conflicts of interest between their commissioning, public health and service provider functions. Pragmatism has always prevailed. The solution lies in having a clear codified system for managing conflicts of interest as part of the process of governance for the organisation.

The 2007 Department of Health document 'Guidance for the PCT executive committee' states: 'PCTs should ensure clear governance and accountability to manage transparently any potential conflicts of interest of GPs working within a PCT and on the PBC or other decision-making boards. Any arrangements should be proportionate and must be in accordance with the Principles and Rules for Cooperation and Competition'. These written rules are usually contained in the accountability agreement between the PCT and the PBC cluster, and in the standing orders of the PCT and PBC cluster.

Establishing there is a conflict of interest

A conflict can be said to arise if (1) a person owes separate duties to act in the best interests of two or more bodies in relation to the same or related matters, and those duties conflict, or there is a significant risk that those duties may conflict (for example a director of PBC company may also be a PCT board member and an individual GP service provider); or (2) a person's duty to act in the best interests of any patient or public body in relation to a matter conflicts, or there is a significant risk that it may conflict, with his own interests in relation to that or a related matter.

Self-interest is not the only cause of conflicts. It could be a colleague or a family member has an interest in a particular situation, for example if a spouse was a GP holding shares in a provider company which stood to benefit from a new contract. A conflict can occur because an office holder owes duties to more than one organisation or board. For example, we recently advised a PBC cluster on how they would allocate PBC savings to individual practices in need. The office holders had to exclude their practices from receiving any of the savings for the greater good of the local health economy as a whole.

Regulating behaviour

The constitution or terms of reference for the PBC group should set out the core duty to act with integrity and maximum transparency. That normally requires that participants declare their interests – either in a written register or verbally in a meeting. Arrangements should be made to update these declarations regularly. Secondly, the office holder should absent himself or herself from any meeting or decision where there is a material conflict of interest, unless their colleagues or rules of governance permit them to stay on for particular reasons.

Boards need to be sufficiently well-constituted to include independent non-executives who can act as dispassionate guardians of the public interest, where necessary. Board members may benefit from training and guidance on how to deal with these issues. Even companies set up with a non-profit distributing format are not immune from suspicion. In recent dealings with Department of Health officials over a plan to establish a community interest company for a community ventures bid, the official asked me ‘off the record', so where is the catch – how do the GPs find a way to 'trouser the profits'?

Clinical professional rules also play a key part in regulating behaviour. The GMC's Good Medical Practice 2006 cautions, 'Some doctors or members of their immediate family own or have financial interests in ..institutions providing care or treatment. Where this is the case, you should avoid conflicts of interest which may arise, or where this is not possible, ensure that such conflicts do not adversely affect your clinical judgement. You may wish to note on the patients record when an unavoidable conflict of interest occurs.' It goes on to say 'if you have a financial or commercial interest in an organisation to which you plan to refer a must tell the patient about your interest.'

Proportionate measures

Particular problems occur with the development of new services. Some PCTs have taken the view that all newly-commissioned services should be put out to open tender to demonstrate compliance. This is disproportionate and likely to be very costly. A key feature of the ‘any willing provider' (AWP) model is that there is no guarantee of demand or activity levels given to the provider. AWP is simply a licence to carry on the service should patients opt to use it. It is well-suited to services such as dermatology, cardiology or urology, where a nationally-agreed tariff exists and ‘choose and book' applies. As such, there should be no significant financial benefit conferred upon the AWP participants, since they are subject to strict market disciplines.

If, on the other hand, the PCT does intend to provide significant guarantees of minimum activity levels and financial rewards, it will be important to design and implement rigorous procurement procedures which provide comfort that a contract has been awarded fairly, without bias or self-interest. Again these operate at various levels. The process for contract award should be fully documented in advance. The criteria for award should be clear, objective and transparent. It should be clear what the relative weightings and scoring mechanism will be in advance of receipt of bids. These should be published as part of the tender documents, not made up on the hoof. Evaluation scores should be moderated by different board members. The decision to award the contract should always be taken by the appropriate forum and minuted as such. In most PBC services, it will be the PCT Board or a sub-committee of the Board which actually takes the decision. They may act on advice or reports from the PBC cluster but, ultimately, it is their decision.

Conflicts of interest are an inevitable fact of life. The hallmark of a civilised society is that mechanisms can be developed to weigh up the competing interests of different interest groups whilst maintaining public confidence in the integrity of the institutions. Far from being an impossible obstacle to service development, I would argue that with common sense and a set of transparent norms the issues can be navigated without sleepless nights.

Mark Johnson is the managing director of specialist law firm TPP Law. He can be contacted on; 020 7620 0888 or 0161 480 1616.

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