Important note for NHS trust boards

NHS trusts sub-contracting clinical services to third party providers, whether private organisations or NHS bodies themselves must be aware that doing so may not avoid liability for how those services are performed. Typical examples include x-ray and microbiology reporting services.

Ongoing liability for sub-contracting services

Following the recent decision in Razumas -v- Ministry of Justice, it is clear that commissioners do not owe a duty of care in relation to the manner in which a third party performs a contract for the provision of health services. This is because their statutory function is to commission not to provide.

However, for NHS trusts the situation is very different, because they have a statutory duty to provide health services. Therefore, not only could the court find that a trust has a non-delegable duty of care when outsourcing services, under the NHS Standard Contract for NHS healthcare services they will still be liable for the activities of any contractor.

It is therefore imperative that the correct contract is in place when services are outsourced. The terms and conditions upon which the service is provided must be clear and, where appropriate, must flow down responsibilities which the trust owes statutorily and to the commissioner to the sub-contractor.

Practical considerations

Immediate practical considerations for trusts contracting out services to third-party providers include:

  • Ensure there is a written and signed contract in place, and that it is easily locatedWe are dealing with a number of claims where key contractual documentation is unavailable or, unbelievably, has never existed. Trusts must protect themselves with a signed contract to avoid disputes over terms at a later date. The contract must clearly reference any terms and conditions which are in force. Contracts must be stored and easily located, even after the contract period has ended.

In any event, in order to sub-contract services, the consent of the commissioner is required under the NHS Standard Contract and a pre-requisite of obtaining such consent is normally that there is a formal sub-contract in place. There is a NHS Standard Subcontract for healthcare services, which it is advisable to use to protect the trust’s position.

The use of purchase orders alone is not advised. However, where these are used, they should clearly reference the relevant terms and conditions, annex a copy or provide clear guidance as to where a copy can be obtained, and highlight to the subcontractor that these contain material conditions which may impact on their liability. Otherwise, the terms may not be effectively incorporated and may not apply.

  • Limit the Trust’s liability with an indemnity

Contracts must include properly drafted indemnity provisions, detailing how claims in relation to the provision of services will be managed and resolved. This is particularly important when dealing with private sector suppliers. It follows that contracts must incorporate an obligation for the provider to be fully insured, to an appropriate level.

If it is NHS commissioned healthcare, then the NHS Standard Subcontract should be used which flows down the contractual obligations in the main contract between the commissioner and the provider on to the subcontractor, including indemnity arrangements.

  • Perform due diligence on providers before entering into any agreement

There is a further duty to ensure that services are outsourced to an appropriate provider. If the trust was aware, or ought to have been aware, of any concerns about the provider, it may be liable if it did not take appropriate steps to investigate and resolve those concerns.

There must also be a process in place for regularly monitoring or reviewing the suppliers’ service level and activities. There are performance targets in the NHS Standard Subcontract, which flow down the contractual obligations in the main contract between the commissioner and provider on to the sub-contractor. This can be modified where appropriate but it is advisable to use this contract as a starting point.