Consultants working in competition with NHS employers
April 2007
This guidance is for consultants working in England only
This guidance is for consultants who do paid work outside their NHS contract. It explains the extent to which consultants who carry out private practice work in their non-NHS time could be viewed as competing with their main (NHS) employer.
Key points:
- The Consultant Contract does not exclude competition or limit the consultant from undertaking Private Practice (i.e. those services defined as “Private Professional Services”) on behalf of other parties (NHS employers or otherwise) even if this means that the consultant is carrying out Private Practice on behalf of competing organizations.
- The position is less clear where the consultant’s Private Practice work includes managerial or strategic advice for third parties (or for their own businesses). Therefore, all consultants spending even a small proportion of time on strategic management duties are advised to proceed with some caution
- Consultants should provide your NHS employer with a full declaration of outside business interests in accordance with Paragraph 1 of Schedule 12 of the Consultant Contract.
- Where trusts seek to restrict your non-NHS work, you should refer them to this guidance and contact your local IRO who will support you in discussions with your trust. You should also inform your LNC of any difficulties you experience.
Background
In today’s NHS many different organizations now undertake to perform NHS services. One of the most obvious results of the recent Government reforms of the health service has been the ‘opening up’ of the provision of healthcare in England. Increasingly, consultants and health service managers are faced with the question of the nature of the boundaries restricting the type, range, nature and circumstances of private practice work that consultants can carry out in addition to their NHS responsibilities. Whilst it has always been the case that some consultants have carried out private practice work, the new environment encourages non-NHS bodies to compete for NHS work and these non-NHS bodies need consultants for their clinical expertise and leadership. In some cases, consultants may set up their own businesses with a view to supplying work to the NHS. With either option, it is possible that a consultant could find themselves in a position where they are carrying out work for an organization that ‘competes’ with his/her NHS employer for NHS work. As a result of this, there has been a growing confusion over conflict of interest issues and some uncertainty over the extent to which a consultant’s implied ‘duty of fidelity’ to their NHS employer might restrict them. The purpose of this guidance is to answer these questions.
The relevant sections of the Terms and Conditions of Service for Consultants (2003) (“the Consultant Contract”):
The same definition of PPS is included in the pre-2003 contract. Para 41 gives an express right.
Definitions:
“Private Professional Services” are defined in the Consultant Contract as including:
- The diagnosis or treatment of patients by private arrangement (including such diagnosis or treatment under Section 65 (2) of the National Health Service Act 1977), excluding fee paying services as described in Schedule 10 of the Terms and Conditions.
- Work in the General Medical, Dental or Ophthalmic Services under Part 2 of the National Health Service Act 1977 (except in respect of patients for whom a hospital medical officer is allowed a limited “list”, e.g. Members of the hospital staff).”
2. The consultant is responsible for ensuring that the provision of Private Professional Services and Fee Paying Services for other organisations does not:
- result in detriment of NHS patients or services;
- diminish the public resources that are available for the NHS”
Outside Employment and Financial Interests
1. A consultant must declare:
- any financial interest or relationship with an external organisation he or she may have which may conflict with the policies, business activity and decisions of the employing organisation; and/or
- any financial or pecuniary advantage he or she may gain whether directly or indirectly as a result of a privileged position within the employing organization.”
It is important to understand that the Consultant Contract does not exclude competition or limit the consultant from undertaking Private Practice (i.e. those services defined as “Private Professional Services”) on behalf of other parties (NHS employers or otherwise) even if this means that the consultant is carrying out Private Practice on behalf of competing organisations; on the contrary, it expressly contemplates that consultants may engage in Private Practice and includes provisions to deal with this.
If the Consultant Contract had not referred to Private Practice then an implied duty of fidelity would have operated to exclude or limit a consultant from undertaking such activities. The duty of fidelity is implied in all employer-employee relationships and requires employees to serve his/her employer in good faith and fidelity.
Looking at the specific clauses in the Consultant Contract which relate to Private Practice, the BMA has with expert legal advice interpreted paragraph 2 of schedule 9 as restricting Private Practice work that could diminish overall NHS services, not those of a single employer. Furthermore Schedule 12, Paragraph 1 explicitly anticipates that there may be a conflict with the employer’s business activities but it does not attempt to limit the Private Practice work that the consultant can undertake. Therefore there is no explicit restriction on carrying out Private Practice work even if the work could be perceived as competing with the consultant’s NHS employer
Private Practice and Managerial or Strategic Duties
The position is less clear where the consultant’s Private Practice work includes managerial or strategic advice for third parties (or for their own businesses). The terms of the Consultant Contract which implicitly authorise a consultant to undertake Private Practice are limited to the medical services defined as Private Professional Services. Any work which does not fall within the definition of “Private Professional Services” is not necessarily covered by the interpretation set out above. Whilst it is the view of the CCSC and its legal advisor that managerial duties reasonably incidental to the provision of Private Practice are likely to fall within a broad interpretation of the Consultant Contract as stated in the paragraph above, where the consultant’s Private Practice work consists largely of clinical management duties or providing strategic business development advice for competing organisations, then this is unlikely to be authorised under the Consultant Contract and may instead be caught under the implied duty of fidelity.
Overall it seems reasonable to assume that the greater amount of time spent on clinical management or business development then the greater the chance that the consultant may be found to be in breach of their duty of fidelity. However, time spent may not necessarily be the only factor which would be taken into account and even a small proportion of time spent on business development may mean that the consultant is in breach of the implied duty of fidelity, if such activity is not linked (or incidental) to carrying out medical services for the relevant competing organisation. Therefore, all consultants spending even a small proportion of time on strategic management duties are advised to proceed with some caution.
Where a number of consultants wish to join together to form a collective undertakings (i.e. a limited company, partnership etc) to provide Professional Private Services ('PPS') they would be well advised to consider appointing persons whom do not have a duty of fidelity, to the NHS Trusts with which they wish to compete, to have conduct of the managerial/strategic decisions of the undertaking. So, if it was a limited company, the Consultants may be shareholders, (and salaried consultants providing PPS) but the Directors would be salaried professionals without any duties to the NHS Trust. Of course, in this case, the Consultants will have a financial interest in the undertaking and so Schedule 12 will also apply.
Confidential Information
A further factor to consider is the use of employer’s confidential information. Consultants, particularly those in managerial positions, may learn of business sensitive information belonging to their NHS employer e.g. the details behind a bid or tender. If the consultant provides strategic management advice to third parties then the NHS employer is likely to be concerned that there may be some inadvertent exchange of information. All employment relationships have an implied duty of confidentiality not to disclose to third parties, or to use for their own benefit, the employers confidential information obtained in the course of employment.
Consultants should also note that there is an express duty under Schedule 12, Paragraph 8 of the Consultant Contract “not to disclose any information of a confidential nature concerning patients, employees, contractors or the confidential business of the organization”. A failure to comply with Schedule 12 could mean that the employer is entitled to bring a breach of contract claim.
What you should do if this issue affects you
Firstly, you should provide your NHS employer with a full declaration of outside business interests in accordance with Paragraph 1 of Schedule 12 of the Consultant Contract. The declaration should be in writing and should be updated as appropriate. This will put your employer on notice and if they do not query the contents of the declaration within a reasonable period of time then, in our view, the employer should not be able to subsequently raise disclosed business interests as an issue.
Where trusts seek to restrict your non-NHS work, you should refer them to this guidance and contact your local IRO who will support you in discussions with your trust. You should also inform your LNC of any difficulties you experience.
The CCSC is aware that a small number of trusts have issued statements seeking to address potential conflict of interest issues and some of these have indicated that the trust is under the impression that it can decide what work consultants can carry out in their non-NHS time. This is not acceptable and in these circumstances the Consultant should take advice from their local IRO.