In good health?

You would be hard pushed to find an area that has undergone greater substantial change over the last three years than healthcare. Whether you agree or disagree with the way in which the reforms are being implemented, Lord Darzi's vision that quality of patient care should be at the centre of everything the NHS does is hard to argue with.

As part of these measures, the Department of Health (DoH) has opened up the market for clinical services to competition. The way in which services are being procured by the NHS is radically changing. While provider services were once the domain of PCTs, we're now seeing the private sector waking up to the opportunities here. We are witnessing the birth of new partnerships between private and public sector providers, and the legal issues are becoming more complex as these public-private consortia bid for the provider contracts.

Challenges and rewards

As commercial partners at one of the UK's major healthcare-centric firms, Capsticks, Chris Brophy and Colin Lynch have been at the coalface of the changes. 'There is such a lot happening,' says Brophy, 'we have to continually review the horizon and ensure we've got the right skills and capacity to do the best job we can in quite a challenging environment, where we are tested in a tough way with our competitors'.

Challenging it may be, 'but it's also what makes the job more rewarding', says Lynch.

A traditional NHS firm, Capsticks has gradually been broadening its independent and voluntary sector clientele in response to the increasing interface between the public and private sectors.

It's a similar story at Beachcroft, which has doubled the size of its national commercial health team over the last 12 months. Healthcare partner Jeremy Roper says that 'with much of the work now roughly split between commissioners and providers, we act for both sides, usually involving tender exercises. That just wouldn't have happened a few years ago.'

Roper says that the DoH's Equitable Access programme '“so-called 'Darzi clinics' '“ have created a significant amount of work, while the government's Express LIFT project, designed to bring about new clinical facilities and services in a cheaper and quicker way than ever before, could also generate more work going forwards.

'Five years ago', says Roper, 'most of this work wouldn't have existed. We were still busy in the NHS, procuring IT systems, medical equipment etc, and there were lots of PFI schemes. The general contract work remains, but opening up the clinical services market has changed the profile of the work dramatically.'

Keeping up with the changes can be hard work, he says. 'There is change on a weekly, even a daily basis, so you've got to be flexible and adaptable and keep informed, to be able to give clients the most up-to-date commercial advice.'

Increased partnering

Another firm beefing up its private sector profile in healthcare is Mills & Reeve. 'It's logical for us to have an element of our practice within that market', says head of healthcare Bridget Archibald, 'because of the way the market is going'. While she anticipates that the majority of the firm's work will remain in the public sector, she feels that because there is more partnering taking place between independent sector organisations, PCT provider arms and GPs, 'the distinction will become less marked.'

In fact, Archibald thinks, 'it will be very interesting to see to what extent the public and private sectors go into partnership to bid for and provide services. Rather than there being competition between them, I think they are accepting there can be partnership between them. If there is joint working, this is likely to be more palatable.'

It was a lack of joint working that put a spanner in the works to begin with, but Chris Brophy is seeing things beginning to change: 'Four months ago I would have said there was a problem in that there was a mismatch between provider businesses and the PCT boards' he says, 'but in the last couple of months the PCTs have realised they need to make sure they are as forward- and far-thinking as the providers'.

For his firm, this means looking harder at the legal issues around commissioning; issues of procurement and good contracting. 'You need good processes, good consultation, good documentation, and an understanding of the EU procurement rules. There's quite a lot for clients to get hold of and get to grips with.'

A new energy

Stephenson Harwood is also making the most of new opportunities in the sphere. 'You're not going to suddenly go through the roof with new people in the current environment, but healthcare is definitely becoming an important subset of our commercial and regulatory work', says John Hargreaves, a partner in the firm's healthcare practice.

Hargreaves feels that the Darzi reforms have 'energised' the sector. 'This is exciting for us as a practice', he says. 'The expertise that is needed now in this area has grown significantly '“ you've got to be aware of the goodwill regulations, the pensions regulations, the Cooperation and Competition Panel that just opened its doors in January'¦all this is stimulating stuff.'

However, he is under no illusion that it will be an easy ride. 'The sector is tooling up for a full recognition of what the private sector is doing in a primary care setting, but you've got to stay on top of it, be aware of all aspects and have an ability to think outside the box and see all the angles that apply to it.

'You can never quite predict how things are going to pan out, but it's a question of working with what you've got in front of you.'

The problem, he says, is that 'health law and regulation in the primary care setting is like the Forth Road Bridge '“ it takes so long to get to one end painting, than when it's finished you need to start again at the other end.'

Bedding in

Bruce Potter, a partner in Morgan Cole's health and social care practice, also feels that the increasing overlap between the public and private sectors has heightened the need for commercial and procurement-related legal skills. This, he says, presents big opportunities, but also big challenges.

Potter is currently on secondment to DoH, which has of course given him an insight into how the department is going about meeting needs in terms of the reforms being implemented. 'Bedding in these reforms is an enormous challenge in terms of the culture and mindset of the NHS. It's a challenge in terms of the skills that the NHS needs to develop and to recruit to make the reforms a reality.

'The department feels that it has put out a lot of new policy and reform, and it wants to drive those reforms forward by actually doing something about them. We've got enough new policy; it is making the policy work that is the priority now.'

The key way in which these policies will work, he says, is by PCTs having the skills and taking the right advice and support. 'Legal skills are an important part of what they need without a doubt. Even more important then they were five or ten years ago.'

No easy fees

So are there opportunities for smaller firms, or those without a traditional NHS background, to seek out their share of this market and provide healthcare clients with some of this much-needed legal advice?

'New entrants,' says John Hargreaves, 'are looking at coming in more on the outside of it, in terms of private sector commercial involvement. With the credit crunch, of course, other areas of commercial activity are reducing and, quite rightly, law firms are looking around to fill the gaps.'

Bridget Archibald agrees that it's inevitable more firms will try and get a share of the work, and that this is credit crunch related. However, she warns, 'pure commercial know-how is not enough; it is crucial to have relevant background and policy knowledge'.

Potter meanwhile is wary of firms who think it's going to be an easy fee ('there is no such thing in health'), and of 'those who think they can do it without people who have an understanding of the NHS culture '“ you can't just transport in your corporate lawyers.'

This in mind, says Potter, there is a place for smaller niche firms who can offer specialist advice 'especially in areas such as community services '“ anything from managing long-term conditions like diabetes to third sector or social enterprises providing district nursing, community health facilities, sexual health services, mental health services etc.' Those firms with an ability to deliver this type of work will have more opportunities in the next few years, he says.

One firm that has managed to secure a niche in the market relatively recently is Manchester-based Cobbetts '“ this off the back of its traditional work with the major retail cooperatives and other big players in the mutual sector, which, according to Ross Griffiths, a partner in the firm's public sector team, 'have a form of constitutional governance that is rather similar to foundation trusts.' This has enabled the firm to hit the ground running in establishing relationships with those trusts.

The firm also did some work in 2004 for government in establishing a model by which GP's out-of-hours cooperatives could be formed. 'Those two things together gave us a position from which to expand our interest', says Griffiths, whose former role as a public sector manager was a further factor in helping him build relationships in the field.

For Griffiths, the most exciting part of all of this is 'getting different types of organisations to come together into joint ventures.

It could be a group of GPs, a hospital trust, an out-of-hours co-op '“ all with different statutory or constitutional backgrounds and with different motivations '“ to form joint ventures to carry out work together.'

'It's like having a picnic', he says,'someone brings the ginger beer, someone brings the pies and someone brings the sandwiches.'

There may be trouble ahead

Looking ahead, there will almost certainly be problems in getting some of the larger projects off the ground, and these lie fundamentally in the availability of funding. 'This is to a significant degree related to the economic situation', says Potter. 'The banks are becoming more circumspect about supporting major projects, which means it is going to be more difficult to find funders, and the biggest impact will be on large-scale capital schemes.'

The challenge, he says, is to keep activity going with smaller schemes 'which is where Darzi comes in; he says that care should move from the classic acute setting to smaller community-based schemes. It will be easier to get those schemes funded.'

Potter feels we have to be realistic: there will be changes to health spending. 'There isn't a figure at the moment and we won't know that figure until well after the budget', he says. 'But everybody recognises that the major increases in spending that have gone on under the Labour party to date won't be repeated over the next couple of years.'

Capsticks' Colin Lynch also has concerns about the funding of health projects. Although he feels the direction of travel with the reforms is very positive, 'there are still some question marks as to the funding of these initiatives, particularly within the current economic climate and what might happen with the squeeze on public sector financing in this area over the next couple of years, and especially if the private sector and their funders aren't opening up their wallets.'

So while the principles behind Darzi's swathe of reforms in the healthcare sector have largely been welcomed, there are question marks over how, and the extent to which, these reforms will be delivered.

What is certain, however, is that those practices with a firm foothold in sector will be kept busy for years to come.