Failed contracts reveal cracks in the NHS market model
Health care is understood by most people to be a social good rather than a source of profit. Various changes resulting from a series of health bills (eg 1989/ 2012) have led to healthcare being treated as a commodity - something to be bought and sold ('purchased' and 'provided'). The Health and Social Care Act passed in 2012 has resulted in thousands of NHS contracts being put out to tender. Hundreds of contracts are now advertised and awarded each year. Our research has found that over 60% are won by non-NHS bodies.
The cost of this healthcare market is difficult to calculate and estimates vary widely at between £10 billion and £4.5 billion per year. Part of this expense results from a growing list of contracts that have collapsed, or have been terminated prematurely.
The growing list of contract failures spans all areas of healthcare from acute hospital care, through community care and the ambulance service to primary care and back-office functions of the NHS. And the list of failures is growing as more and more companies realise that the chronic underfunding of the NHS means that little or no profit can be made out of these contracts.
In primary care, the government's enthusiasm for private company involvement led to encouraging groups of GPs to band together to set up their own private limited companies to run large groups of surgeries all in the name of efficiency. 2016 saw two of these federations collapse and go bankrupt - Danum Medical Services in Doncaster and surrounds and Horizon Health Choices Ltd in Bedfordshire. The common thread to the failure of these enterprises was not enough money is available to fund high quality services. In other cases, such as The Practice and Greenbrook Healthcare, private companies have abandoned contracts finding it impossible to make a profit.
Here is a round-up of some of the most high profile contract failures in the last few years.
Coperforma and the Sussex non-emergency transport contract
One of the most controversial contract failures in recent times has been the Coperforma contract in Sussex for non-emergency patient transport. This four year contract worth £63.5 million was awarded in 2015 by seven CCGs, led by the High Weald Lewes Havens CCG. Coperforma replaced the NHS’s South East Coast ambulance service (SECamb) on 1 April 2016; it was then just a matter of days, before problems with the contract hit the headlines. By mid-April local and national press were reporting on a service in chaos, with crews not turning up to pick up patients leading to missed appointments and patients languishing for hours in hospitals awaiting transport home. Patients included those with kidney failure with appointments for dialysis and cancer patients attending chemotherapy sessions. The GMB union representing the ambulance crews said it was an “absolute shambles”. There then began calls to strip Coperforma of its contract.
In mid-April the CCGs that awarded the contract launched an investigation. In June, these Sussex CCGs produced a report criticising Coperforma for “unacceptable levels of performance”, noting patients having problems contacting the service and being collected late or not at all.
Despite this report and continued complaints, Coperforma’s service failed to improve and cracks started to show in the way the contract work was organised through sub-contractors.
Under the contract, Coperforma acted as an intermediary sub-contracting out the ambulance work to private ambulance companies. Many of the staff working for the sub-contractors had transferred from SECamb after this organisation lost the contract. However, by August it was evident that there were issues of payment to sub-contractors. VM Langfords was the first sub-contractor to go bust in June 2016, followed in September 2016 by Docklands Medical Services.
In September 2016, an email leaked to BBC South East from four of the sub-contractors claimed the problems had reached "critical levels". The email was highly critical of Coperforma's management, its staff, its operating system, and warned that the company was struggling financially. The email said Coperforma was withholding and refusing to pay invoices, with the three main providers owed more than £1.2 million. The email warned NHS managers "to act now before the service collapses."
In October a third sub-contractor, Thames Ambulance, reported financial difficulties. The sub-contractors all blamed Coperforma, saying they are owed millions in unpaid invoices by the company. The lack of payment to sub-contractors meant that many of the ambulance crew members had not been paid and were owed thousands in back pay.
Finally in October 2016, Coperforma were forced to give up the contract. Despite promising to transfer money to pay the ambulance crews, High Weald Lewes Havens CCG had to step in and provide the money for the back pay. In November 2016 the CCGs announced a managed transition to the NHS’s South Central Ambulance Foundation Trust beginning immediately and with a final takeover in April 2017.
In December 2016, a report by Brighton & Hove’s Healthwatch based on the experience of dialysis patients listed a litany of failures by Coperforma, including anxiety and stress due to failures of the service, transport failing to turn up and drivers who did not know the area and were inappropriately trained and equipped. In early November it was revealed that the Care Quality Commission had served six improvement notices on the company.
The CQC report showed significant concerns about Coperforma’s oversight of its subcontractors. Areas needing improvement included the timeliness of services, registering a manager with the CQC, and vehicles and equipment being appropriate for safe transport of patients, including those in wheelchairs.
Private Ambulance Service - Bedfordshire and Hertfordshire
In late September 2017, the private ambulance company, Private Ambulance Service contracted to run non-emergency patient transport from hospitals in Bedfordshire and Hertfordshire went into administration, with trading ceasing 9 October 2017. The business, which 126 vehicles and employed 300 people, took over the contract in April 2017. Problems had been reported with the service, including a report in the Herts Advertiser in July 2017 about Herts Valleys CCG issuing an apology after ongoing problems with the performance of the company, including leaving vulnerable patients stuck in their homes or in hospital for hours waiting for transport.
The collapse of Private Ambulance Service also hit the London North West Healthcare Trust (LNWH), which serves a population of more than 700,000 people from three hospital sites in outer London. Private Ambulance Service had been providing non-emergency patient transport to LNWH since February 2016 under a five year contract from a framework set up by the London Procurement Partnership.
ERS and Barts Health Trust
Barts Health Trust was forced to bring its patient transport services back in-house in early December 2017, following the decision by the patient transport company ERS to exit the market. ERS is owned by American firm SRCL and also ran services across the east of England and Yorkshire. However, Barts Health Trust noted that having the service in-house was actually cheaper than outsourced contract.
Arriva and North West Ambulances
In September 2015 the transport company Arriva was found to have wrongly claimed £1.5 million in bonuses on the contract to run non-emergency transport for NHS patients in Manchester. Arriva wrongly reported its performance in order to gain the bonus payments. Arriva was awarded the contract in 2013 after saying it could run the contract cheaper than the North West Ambulance service. In 2014 Arriva received 600 complaints about the service with 80% partially or wholly upheld. Arriva has paid back the bonuses and apologised.
Capita and the Primary Care Support Services contract
Capita took over the coordination of primary care care support services in September 2015. The contract from NHS England was designed to save £40 million per year by bringing together a previously fragmented service to a single national provider for Primary Care Support England (PCSE). Capita's bid hinged on making a £21 million per year saving. The contract is worth £330 million over seven years.
Capita centralised support services to three national hubs and implemented a single online ‘portal’ for practices to order supplies and ‘track’ the movement of patient records. However, since April 2016 when the previous local centres were closed there was a growing number of reports of problems with the services. Problems affected GPs, community pharmacists and optometrists.
Issues with the new service include surgeries running out of prescription pads and syringes and major problems with the secure transfer of patient notes around the country, with notes going missing or delivered to the wrong surgery. GP leaders have been urging practices to report every issue to NHS England.
GPC (General Practice Council) chair Dr Chaand Nagpaul wrote to NHS England demanding practices be compensated for extra workload due to the ‘systematic failure’ of PCSE, and indemnified against any claims as a result of support service issues.
In November 2016 the GPC reported that the support services remain a 'chaotic mess' despite nearly a year since the services were outsourced to Capita.
Dr Nagpaul said Capita “appears to have been considerably underprepared”. The poor service has increased practice workload and cost practices money, he said. He told HSJ: “This is a salutary lesson… it is another example of how the idea of outsourcing appears attractive in offering more for less, but that is based on a very simplistic view of how the NHS functions. The NHS has been very efficient and effective. The NHS functions on organisational memory, and you cannot just take a service over and run it better.”
GP surgery closures
There were a record number of GP surgery closures and mergers in the year from April 2016 to April 2017, according to an investigation by Pulse. The investigation found that more than a quarter of a million patients in England were forced to move GP surgery last year, a 150% increase on 2014 figures, and a 15% increase on 2015. Then NHS Digital figures for the year to June 2017 show that 202 practices in England closed or merged: 64 in the north of England, 54 in the south of England, 46 in the Midlands and east of England and 38 in London.
Of these closures, many were due to GPs handing back contracts due to retirement, but others were due to private companies pulling out of contracts due to financial pressures.
The Practice Group
In Brighton and Hove, The Practice Group announced in January 2016 that it will terminate its contract for five GP surgeries in the city at the end of June, leaving 11,500 patients looking for a new GP. After NHS England intervened, The Practice Group continued to operate the surgeries until September 2016, to allow more time for the local CCG to put new services in place.
The Practice Group gave several reasons for giving up the contract, including the need to relocate two surgeries due to redevelopment projects, rising demand for services, and a difficulty in recruiting and retaining GPs, however a major reason is a reduction in central funding for the surgeries. Local MP Caroline Lucas said: “Once again it looks like patients may end up paying the price for the privatisation of our health service. These surgeries are at risk because a profit-making company couldn’t balance the books, not because they’re not needed.”
In October 2016, Greenbrook Healthcare announced its intention to hand back an APMS contract for five GP surgeries in west London nine months before the end of the contract. This puts around 27,000 patients at risk of losing their GP. Greenbrook Healthcare has been in discussions with NHS England since early 2016, however no additional funding has been offered. The company stated that due to rising demand and problems with GP retention the contracts have become “unfit for purpose”.
Danum Medical Services
The private limited company Danum Medical Services Ltd was set up in Doncaster by 23 local practices and had 63 individual shareholding GPs’. The company held APMS contracts for six practices in the Midlands and Yorkshire. In March 2016 DMSL went into administration leaving individual GP surgeries in debt, with one surgery reported to be facing losses of £20,000.
The company reported that it provided a high quality service but as one GP involved said: "The reason they have failed is they have tried to provide high quality care on a budget where it is impossible to do so."
Horizon Health Choices Ltd
Horizon Health Choices Ltd was a private company set up by 54 GP surgeries in Bedford and the surrounding area. In November 2016 the decision was announced to liquidate the company due to problems with recruiting GPs and internal management issues. The liquidation of the company will lead to the closure of one GP surgery and the loss of thousands of pounds by the surgeries that had invested in the company.
Horizon was launched in response to Government encouragement for GPs to work at a large scale. NHS England has made such working at scale a national priority with the GP Forward View and the new Multispeciality Community Provider contract for groups of practices with at least 30,000 patients.
Out of hours services
Central Nottinghamshire Clinical Services
In May 2016 Central Nottinghamshire Clinical Services, the private company in charge of out of hours services across the East Midlands, announced it was filing for administration. It stopped its services in Leicester, Leicestershire, Rutland and north Nottinghamshire and they were transferred to another provider. The company also ran care home support services and these were transferred to Nottinghamshire Healthcare Trust.
Primecare in Kent
In September 2017, Primecare, which was awarded one of the first integrated NHS 111 and GP out of hours services contracts, announced that it is to hand back the contract to the NHS mid-way through the three year contract in July 2018.
The contract began in January 2017, but after only seven months, Primecare was placed in special measures after its services in East Kent were rated inadequate by the Care Quality Commission. Failings included not assessing risks to patients’ health and not having enough staff to meet patient needs. The CCG has said that a review of the procurement process will also take place.
There were issues at the start of the contract; the 111 service in East Kent was originally meant to transfer to Primecare in September 2016 together with the out-of-hours service. However, the South East Coast Ambulance Service was asked to continue to provide the 111 service first until October 2016 and then until November 2016 with a phased handover to 10 January 2017. The second request for a delay to November was made with just 12 days’ notice. The delay was while the out of hours services, previously run by IC24, transferred to Primecare. The ambulance trust had no option but to continue to provide the 111 service despite it causing a strain on its service across the region.
Serco in Cornwall
In December 2013 Serco announced that its contract to provide out-of-hours care in Cornwall for Kernow CCG would end 18 months early in May 2015. The contract has been dogged with controversy – Serco had to admit that some of its staff had falsified data to make the company’s performance appear better than it was and whistleblowers had raised concerns about poor staffing levels. In 2013 Serco unsuccessfully tried to sub-contract the work to Devon Doctors, the GP consortium that had failed to win the original bid; Serco had won the bid as it was cheaper.
Cambridgeshire and Peterborough Older Peoples Services Contract
This was an extremely high profile contract due to its high value – worth £700 to £800 million over five years – for the provision of older peoples services for Cambridgeshire and Peterborough CCG. The contract was also one of the first outcome-based contracts under which an element of payment was dependent on achieving agreed clinical outcomes. Outcome-based targets would have to be achieved for the provider to receive 15% of its income.
The process for procuring a provider began in 2013 and was time-consuming and costly according to many reports. A number of private companies were initially interested in the contract, including Circle, Virgin Care and Capita, however they withdrew during the process reportedly due to the steep financial efficiencies required by the contract. By August 2014, the CCG had spent around £1.1 million on the process and had had the contract start date delayed twice. Eventually in November 2014 UnitingCare Partnership, a consortium of NHS organisations, was awarded the contract. The contract began in April 2015 a year after its original start date, but just eight months later in December 2015 UnitingCare announced that it was handing back the contract as it was not financially viable.
In November 2016 the Public Accounts Committee published a damning report on the contract. The PAC describes the handling of the contract as a "catalogue of failures."
The termination of the contract after just 8 months meant around £16 million in unfunded costs for UnitingCare Partnership. These costs had to be shared between its two trust partners—Cambridge University Hospitals NHS Foundation Trust and Cambridgeshire and Peterborough NHS Foundation Trust—as well as the CCG. As a result this reduced the amount of money available for patient services in the area.
Meg Hillier MP, Chair of the PAC, said:
"It beggars belief that a contract of such vital importance to patients should be handled with such incompetence."
Hillier also stated:
"The deal went ahead without parties agreeing on what would be provided and at what price—a failure of business acumen that would embarrass a child in a sweet shop, and one with far more serious consequences."
Circle and Hinchingbrooke Hospital
In January 2015, Circle the private company running Hinchingbrooke hospital pulled out of the contract after just two years of a ten year contract. The company announcement came just before the publication of a damning report on the hospital from the Care Quality Commission (CQC): the CQC raised serious concerns about care quality, management and culture at the hospital. The CQC found a catalogue of serious failings at the hospital that put patients in danger and delayed pain relief. The hospital was put in to special measures, the first time the CQC has had to do this. Circle cited financial reasons for pulling out: under the contract the company was allowed to withdraw if it had to invest more than £5 million of its own money in the hospital and it looked extremely likely that it was going to have to invest much more than £5 million.
Serco and Braintree Hospital
In December 2013 Serco announced that it would be pulling out of its contract for running Braintree hospital in Essex before the end of the contract. In March 2014 the contract was handed by to the Mid Essex Hospital Trust nearly a year early. The company’s other major contract with the NHS for community care in Suffolk has not reaped the profits the company was hoping for and by August 2014, the company announced that it was withdrawing from the NHS clinical services market altogether. In September 2015, when Serco handed over the community care contract in Suffolk to new providers, the company noted that the £140 million the company was paid for the contract was "not adequate" for the work. Serco estimates that it had made an £18 million loss on its three NHS contracts.
The marketisation of the NHS has a high cost even if the contract does not go ahead. The process of tendering a contract can be abandoned at many points; obviously the longer it carries on the more money is effectively wasted by the CCG or trust. The Cambridgeshire and Peterborough contract that was abandoned soon after its start, cost the CCGs millions (see above), but the process of tendering can cost hundreds of thousands even if the contract tender is then stopped - money that could have been spent elsewhere by cash-strapped CCGs.
In April 2017, CCGs in Staffordshire finally abandoned the procurement of a ten year contract for cancer and end-of-life services worth £687 million. The whole process began in 2013 and has cost the four CCGs over £840,000. The tender process was paused in 2015 following the collapse of the UnitingCare Partnership contract in Cambridge and Peterborough. However, after restarting several months later in November 2016, a single final bidder emerged. This was a consortium of Interserve and two hospital trusts. Speaking on behalf of the CCGs, Andy Donald, chief officer at Stafford and Cannock Chase CCGs, said: “The remaining bidder couldn’t convince us they could deliver with the resources available.”
The contract allowed a single prime provider to commission services and the services would be measured against outcomes agreed by commissioners, including full recovery, longer life expectancy or pain free dignified deaths.
Another high profile contract abandonment was the West Sussex MSK contract. This £235 million contract for provision of musculoskeletal services in West Sussex with Coastal West Sussex CCG was awarded but never begun once it was determined just how much damage the contract would do to other NHS services in the region.
In September 2014 Coastal West Sussex CCG awarded the contract to BUPA and social enterprise CSH Surrey. However, pressure from the public and Western Sussex Hospitals Trust, forced the CCG to employ an auditor to assess the effect the contract would have on other NHS services in the area. The auditors concluded that the cumulative impact of loss of MSK services would result in the trust falling into deficit over the next five years. Western Sussex Hospitals had also warned that the loss of the contract could destabilise its trauma services. BUPA and CH Surrey withdrew from the process in January 2015 prior to signing the final contract.