The Subcontracting Route – A Great Opportunity For Pharma, Med Tech And Device Firms

I recently contributed to an article in looking at the increasing number of hospitals in England who are subcontracting work to general practice.

I’ve set up many of these arrangements over the last decade and it’s very interesting to see they are now being seen as a blueprint for shifting services away from secondary care and into the community.

You can read the article here (requires registration).

The great advantage of this process is the number of general practice appointments it saves. Patients make these appointments to ask their doctor if he or she can speed up their outpatient appointment or diagnostic test.

The problem is, the GP has absolutely no say on that so it’s just a waste of an appointment.

But when that diagnostic test or procedure is subcontracted, that same time is used to get it done in general practice.  The hospital usually pays 70 to 80 per cent of the NHS payment system tariff to general practice and retains the remaining 20 to 30 per cent for themselves.

The key benefit to the hospital is clear – it doesn’t have to do any of the actual work.

There are no losers in this simple concept

It’s a rare example in the NHS of a win-win.  Hospitals like it because they hang onto a portion of the tariff. GP federations like it because they are getting proper reimbursement for the work. They hold the contract and administer it, knowing the extra work is properly paid for.

The areas I’ve been involved in which have been subcontracted in this way include diagnostics, insulin initiation and titration, DVT management and women’s health.

They’ve all been done at place level to keep things simple. A hospital can subcontract the work to one federation rather than have multiple partners to deal with and it’s the federation’s responsibility to filter the work down to individual practices.

Read my blog on hospital subcontracting here.

Looking for a way to engage GP staff? This could be it

Subcontracting has the ability to be a huge game-changer for general practice. If hospitals were required to subcontract even a small percentage of their work, that could be the key to unlocking better community engagement and collaboration.

Federations are the best places to house these contracts as that minimises the risk to individual practices in case of any liabilities or problems. But PCNs set up as limited companies could also very easily be contracted in the same way, provided the hospital was agreeable to that.

Another big advantage of subcontracting is it allows separate practices to provide separate aspects of the service. This means teams are trained to a high level in different disciplines, which can help staff retention as it keeps them engaged.

And then there’s the obvious benefits – practice income gets a boost, there’s a whole new revenue stream and the waiting time for patients is reduced. Plus, they’re not coming back to the practice, perhaps multiple times, chasing their hospital appointment.

Innovation is the best cure for the NHS

There are potential drawbacks to subcontracting. The contracts are almost always time-limited so there’s a chance they may not be renewed once the term is up. That can leave practices out of pocket if they don’t have enough cash to cover themselves if the rug is pulled.

But, as we know, the NHS is drowning in workload, and innovation is the only way it can pull itself out of the mire.

This is another really good route to a conversation between the pharma, med tech and devices industry and the NHS.

If industry has the opportunity to optimise a patient by getting diagnostics delivered faster or easier, then that opens the door to collaboration.

I’m doing a number of industry projects that are working on hospital subcontracts right now. So if you are interested in knowing how I am making them work from an industry side, do get in touch.

Scott McKenzie helps pharmaceutical, medical technology and device firms get their products and services in front of the right NHS decision-makers. In 2023 alone, he helped land 53 new NHS projects. His 12-month mentorship programme – revamped and expanded for 2025 – offers tools, NHS customer insights and direct decision-maker introductions to get your projects over the line. Find out more here.