Contracts are an important business tool and most OH practitioners will need to deal with them as part of their day-to-day practice. Susanna Everton gives an overview of the important points you need to know.
Occupational health practitioners will be exposed to contracts and contracting as part of their normal practice, including contracts of employment, contracts with dry-goods suppliers, with equipment and servicing, with laboratories, with transport and so on. It is necessary to have some understanding of the process and how a contract can support good practice.
An organisation requiring the service of OH professionals can choose whether this is offered “in-house” by its own staff or delivered through an external supplier. The range of suppliers is huge, from the single sole trader to the international behemoth. Multiple specialist providers can even be used. What is common in any provision is a contract that clearly states what is expected between the parties and what the legal redress is if this is not satisfied.
Stages of setting up an OH contract
What is a contract?
A contract can be defined in several ways: to enter into business or legal engagement; to arrange for one’s subjection to, exemption or exclusion from provisions; an agreement between parties; a business agreement for supply of goods or performance of work at a specified price; or an agreement enforceable by law.
A formal definition could be that a contract is a promise, or a set of promises, for the breach of which the law gives a remedy, or the performance of which the law in some way recognises as a duty.
The aim of the contract is to produce an agreement that states exactly what is being offered by one party to the satisfaction of the other, and should be understood by both.
In many situations in the past, this was formally agreed on a handshake. “My word is my bond” was often the statement made in matters of commerce and it remains the motto embedded in the coat of arms of the London Stock Exchange. However, in order for proof of agreement, contracts are usually written, signed by both parties and witnessed, so that if any disputes arise the document can be referred to.
Contracts are usually covered in law by the following areas: contract law; employment law; consumer law; and insurance law.
Procuring a service
Many of the problems with a service are foreseeable, and time spent in planning and preparation is invaluable. What you should expect from a provider are:
- quality and reliability;
- speed and flexibility; and
- value for money.
How you go about selecting the provider will be based on many criteria. But first, it makes good business sense to make sure you know what you want. So, the first step is to analyse what your business looks like and consider:
- the number of employees and their age distribution, gender, ethnicity, likely health problems and disabilities;
- location, sites and access to healthcare;
- work activities, shifts and hazards that may apply;
- if you have a single supplier, multiple suppliers, on-site accommodation, a peripatetic site or a provider’s site; and
- the initial budget and annual budget allowed.
Equally, if you wish to offer a service you need to be clear what type of service you can offer.
If in doubt of your capabilities in the field of preparing specification and procurement, it is worth engaging a contract lawyer or procurement expert to guide you through the process. Most large organisations have a specialist department for this.
Generally, the business case is there to state what this procurement project will involve. It will include a description of the need for the service, the cost and future funding, the legal issues and what and how it is to be delivered.
There are many templates available to assist in the methodical setting down of this information. Some larger organisations will have their own versions.
This is the opportunity to say exactly what is required of the contract, and if fundamental items are not spelled out at this stage they may be difficult to add later on. You should think about the following:
- What is the minimum requirement for the OH service to cover legal compliance?
- What do you want OH to do for the business?
- What standards are to be followed – for example, the Safe Effective Quality Occupational Health Service (SEQOHS) standards or other?
- What is the budget?
- What OH services are to be procured?
- Do you need staff? If so, do you need an OH nurse, OH physician, physiotherapist, counsellor, cognitive therapist, health promotion specialist, OH technician, fitness adviser or someone else? How many do you need and what qualifications should they have?
- What kind of service contracts do you need? Laboratory work, computer programmes, surveillance or screening equipment or providers, transport, equipment maintenance or cleaning?
- What hours will the service be available?
- What facilities, equipment, support services are required, and by whom?
- What environmental protection arrangements do you need to have in place?
- What is the exit strategy?
Over a certain value, public-sector contracts fall into the remit of the EU procurement rules and UK Regulations. The process has to follow strict stages to ensure equality, openness and value for money. These are clear and the principles can also be applied to a complete OH services contract, a private-sector contract or that of a sole trader. The value of the contract determines whether there is a need to simply request for quote, advertise on ProContract or similar, or advertise in the Official Journal of European Union, a periodical published every working day in all official languages of the EU that includes a supplement for public procurement.
Private contracts can be advertised through newspapers, professional bodies, trade press or through networking events.
Application for the tender
Once the specification has been agreed, the standards and point awards for selecting suitable providers will need to be made.
This will allow those making the selection to use measurable criteria and be seen to be fair and open with each applicant. Once this is in place, the tender can be advertised.
Those meeting the requirements can be invited to submit their tender for services. This will include their organisational details, financial probity, evidence of their technical capability, experience and professional record, any civil or criminal history, environmental record, employment and diversity record, health and safety management and performance, and training. Applicants will need to show they understand the specification, how they can deliver it and how much they think it will cost.
There is usually a specified timeframe for these applications, evaluations and selections.
The details of how services are delivered can be confirmed through the service level agreements (SLAs) and key performance indicators (KPIs) set out in the contract. If an individual provider approaches an organisation directly to bid for business, they should have a specification of what they can offer.
You should award the contract to the supplier that offers the best fit to the criteria and best value for money. You can then negotiate terms and conditions and draw up contracts, agree service levels, set KPIs and set the criteria for how to monitor and review the contract.
An SLA defines the agreement between the supplier and the client organisation on service provision and standards.
The terms of the SLA should allow for flexibility so that it can grow with the contract and can be used to measure performance. Suppliers who do not meet the terms of the SLA can be penalised by compensation payments or service charges. It can demonstrate that the supplier and the client both understand the terms of the contract in the same way.
Once the contract has been awarded, the details can be finalised through the contract arrangements and the SLA. The Government’s Business Link website and the Service Level Agreement (Standard) BS.SLA.01 are useful for finding examples of typical SLAs. In an OH setting, the SLA can provide:
- an agreement on core service levels so that it is clear what is extra – for example, health promotion events or attending conferences;
- a definition of client and provider obligations;
- a definition of the clinical governance framework that will help the clinician(s) improve the quality of the service and safeguard patients’ care, as well as the structure in place for monitoring clinical standards and professional development of staff;
- the implementation timeframe for the contract and how the contract is to be managed, as well as the objectives or goals the service is aiming to deliver;
- how management information is shared, strategic guidance and advice on best practice;
- how the service is to be delivered through the roles of different clinical personnel (if appropriate);
- clauses on records management, confidentiality and data protection and intellectual property rights that may apply;
- a definition of the level and frequency of meetings between the supplier and the client as part of performance monitoring, and the submission of regular performance reports;
- the qualifications and experience of staff and any requirement for accreditation with the relevant professional bodies;
- who is responsible for what – staff management, recruitment, absence management, disciplinary action and resources for professional development;
- agreement on computer systems and support, and the provision of data, statistics and reports;
- protocols for business continuity and emergency planning, health and safety, diversity and environmental awareness;
- agreement on policy, procedure and protocols, use and style of forms and other documentation;
- the maintenance of adequate stocks and supplies of goods, to be agreed through client or contractor procurement;
- details of the processes for how appointments and referrals are managed, and how the provider will work with the client’s own line managers, personnel and other relevant staff; and
- an outline of the specific activities or job roles of the client where OH input may be required – for example, pre-placement and recruitment medical examination, ill-health retirement, return-to-work fitness assessments, pregnancy health assessments, reasonable adjustments, health surveillance and so on.
KPIs help define and measure progress towards organisational goals. They should focus on a range of areas and be quantitative, qualitative and measurable, for example:
- the time between referral and consultation;
- the numbers attending health surveillance;
- sickness absence figures or any reasons for lost time;
- rehabilitation for return to work;
- training completed;
- customer satisfaction; and
- service quality.
The contract process only finishes once the contract has ceased or is to be renewed, in which case the process starts again. At this stage, evaluate whether or not the contract has delivered on quality and performance and if you as the user of the service are content with the provision – has it been value for money and did it contribute to the organisation’s strategic aims? If the contract allows for renewal, this is the time to negotiate improvements or more stringent terms.
A contract will only be as good as the clauses within it. These will need to be matched to business needs and be a clear statement of what is to be expected, how it is to be delivered and a definition of the safeguards. Good planning and monitoring of performance throughout the course of the contract is essential. Skills in negotiation and managing the contract relationship are also key.
Susanna Everton RGN OHN CSP MSc CMIOSH is an occupational health and safety practitioner
Faculty of Occupational Medicine. Safe Effective Quality Occupational Health Service. Occupational Health Service Standards for Accreditation.
Business Link. Service level agreements – reviewing suppliers’ performances.