The Care Quality Commission (CQC) issued a notice on 5 November 2018 raising concerns about the ability of Allied Healthcare to continue operating after 30 November 2018. Allied Healthcare is a one of the largest home care providers in England and delivers home care services under contract with 84 local authorities across the country.

This alert highlights the implications for authorities in the event that Allied Healthcare enters into a formal insolvency process and the matters authorities should be considering now to ensure continuity of care for service users.

The CQC notice
The CQC has a legal obligation to notify authorities where it considers that business failure is likely in respect of a provider in the CQC's Market Oversight Scheme, and that regulated services are likely to stop as a result. The CQC issued such a notice in respect of Allied Healthcare on 5 November 2018 stating that whilst the provider has been able to confirm funding until 30 November 2018, the CQC has not received adequate assurance that Allied Healthcare has, or will have, the funding necessary to ensure the business can operate beyond that date. Allied Healthcare has responded stating that it considers the notification to be 'premature and unwarranted', and that there is no risk to continuity of care. However, given the credible risk highlighted by the CQC authorities may nevertheless wish to ensure that contingency plans are in place.

Formal insolvency process
In the event that Allied Healthcare is not able to secure suitable funding to continue its operations after 30 November 2018 the provider may enter into a formal insolvency process, including administration or a form of liquidation. Subject to the form that insolvency process takes, it is unlikely that Allied Healthcare will be able to continue performing all or some of the home care services it is currently contracted to undertake. There are accordingly a number of matters that authorities need to consider, including:

  • securing alternative provision of home care services to service users in their locality, either in-house or by procuring an alternative provider;
  • any rights authorities may have under their contracts with Allied Healthcare and/or the Public Contracts Regulations 2015, including step-in rights that may be exercised in the event of insolvency; and
  • any monies owed to or from Allied Healthcare, including payments falling due before 30 November 2018, which will determine authorities' creditor status and their ability to prove in any insolvency of Allied Healthcare.  

Wider considerations
In addition to the direct impact of Allied Healthcare entering into a formal insolvency process, there are a number of wider matters that affected local authorities will need to think about, including:

  • availability of alternative suitable care provision to meet the needs of service users (some of whom may need to be re-assessed as to their needs to ensure that they receive the level of care required, recognising that this may cover learning disabilities, clinical care and other needs, requiring collaboration with health and others and possibly residential or hospice care where support can no longer be provided at home);
  • how to ensure sufficient provision in light of the market shaping duties placed on local authorities under the Care Act 2014;
  • legal mechanisms for accessing and securing ownership and control of service users records in the event of insolvency at Allied Healthcare;
  • the use of 'living wills' in other contracts entered into by authorities, or which may be entered into with alternative providers in the event that Allied Healthcare ceases trading, to put in place contingency plans and ensure continuity of key services upon the failure of a supplier; and
  • the need for swift decision-making in relation to those service users affected.

Bevan Brittan would be happy to assist local authorities with bespoke advice on their contractual arrangements with Allied Healthcare and what steps they can take to ensure compliance with their statutory obligations.

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