Mukesh Lad has created a federated group of contractors that has won contracts worth £250,000 in its first nine months. He tells Steve Bremer what’s involved and why federations are the way forward

Independent contractors working alone generally lack the resources to put together competitive bids for clinical services. So Mukesh Lad, Chief Executive Officer of Leicestershire independent group Mr Pickford’s Pharmacy, decided to launch one of England’s first federated contractor groups, pooling resources to successfully bid for a number of services.

Around 80 of the 120 independent contractors in Leicestershire, Leicester City and Rutland CCG areas are members of the LIPCO (Leicestershire Independent Pharmacy Company) federation. “With 80 members anything is possible because we’re working together,” says Mr Lad. “The idea is that we compete on dispensing but in terms of providing services you can’t do it alone so you’ve got to work together.”

LIPCO Healthcare came about in December 2013 when the three CCGs put H pylori testing out to tender. Because of the limited amount of money available for this service and its time-consuming bidding process many independents did not want to invest in bidding themselves.

Independents will have no choice but to collaborate

But they agreed that, for a fee of around £20 each, Mr Lad would submit a joint bid on behalf of 65 contractors. Following the success of this application, the group decided that joint bidding was the way forward. “Independents will have no choice but to collaborate. Most aren’t aware how this fits into their world but time will tell. They still retain their independence but when it comes to commissioned services we work together.”

The company is born

The contractors signed a memo in March 2014 creating a legal entity enabling them to work together. All members now belong to a trust which is looked after by its three trustees. This trust owns the limited company and the company has four directors who make sure it is looking after the interests of members. Mr Lad is a director and chairman.

LIPCO’s 55 founding members pay £240 a year and receive a share of any profit. New members have to wait two years to become founding members. Membership allows flexibility, so that contractors only have to take up the local services that interest them.

Last month, LIPCO put in a bid on behalf of 40 Leicester City members for a four-year contract with Leicester City Public Health to provide EHC, chlamydia testing, alcohol harm reduction and health check services. Mr Lad expects to hear in March if the bid has been successful. LIPCO already has experience in this area, with 25 of its members in Leicestershire and Rutland already offering EHC, chlamydia testing and alcohol harm reduction services.

Commissioners “love” the LIPCO model because it saves them a huge amount of work in processing each pharmacy’s documentation separately, says Mr Lad. All service data is entered via an electronic portal and all remuneration is paid to LIPCO. Payment is then made to the contractors, with LIPCO retaining 15 per cent for administration costs.

LIPCO provides training, SOPs, SLAs and service monitoring. If a contractor is failing to meet the required standards LIPCO offers extra training, but as a last resort can ask them to stop providing that service. “We are only as good as our weakest link.” A new website, www.lipcohealthcare.co.uk, gives members a point of contact but also helps the federation to sell itself to commissioners.

Mr Lad has drawn on support and expertise from a number of quarters to start up this federation. Mr Pickfords’ group finance director, for example, helped with the extensive legal work required to set up the company, while others have helped write bids on a goodwill basis. “They’ve all believed with me that we can make this happen. The future looks good for us.”

One reason that LPCs are not involved in this federated model is that they are not legally allowed to hold a contract and have a commercial interest. But changes to their constitution due in April will allow this with the support of two-thirds of their members. Buying groups could also theoretically support federations, but Mr Lad suggests that the amount of local knowledge required makes it difficult for national organisations.

Looking forward

More services are on the horizon for LIPCO members, too. The Leicestershire substance misuse service is hoping to run a pilot ‘pick and mix’ needle exchange service from eight pharmacies, most of which are LIPCO members. The pilot will allow substance misusers to choose their needles in an effort to increase uptake.

LIPCO’s success has been recognised with membership of National Association of Provider Organisations (NAPO), a network for GP provider companies and others focused on the ‘out of hospital’ sector. But it is not the only pharmacy federation in England – Mr Lad discusses ideas with another federated group of around 100 contractors in Kent.

“The NHS can’t sustain everything as it is and it will be saying we want to provide x, y and z and how can we do it. We know GPs can do a lot but can’t do everything, so there will be a time and a place in the future where we will need to work in collaboration. NAPO is a perfect vehicle to share learning and work together on some of these contracts.”