Contracts in the area of community healthcare can be very complicated, involving many different organisations and different areas of care. The contracts can fail on many levels, including failure of organisations to work together and failure to actually deliver the contracted services. Contracts for community care have been particularly prone to disputes and legal action: such actions costs the NHS money and distracts from the real job of the provider organisations.
Virgin Care legal challenge in Surrey
Surrey was the first to embrace a private provider – Virgin Care – taking over its community care in 2012. The contract came to an end in 2016 and was not renewed, instead the CCGs in Surrey split the contract into smaller contracts. Virgin Care bid for but did not get an £82 million children’s services contract. The contract was awarded to an alliance between Surrey and Borders Partnership Foundation Trust and two social enterprises, CSH Surrey and First Community Health.
As a result of losing the tender bidding process, in November 2016 Virgin Care launched legal proceedings against all eight commissioning organisations involved in the contract. A spokesperson for Virgin Care told HSJ that concerns about “serious flaws in the procurement process” prompted the company to launch proceedings. Speaking about the contract when it was run by Virgin and the two social enterprises, Guildford and Waverley CCG’s Wellbeing and Health Scrutiny board said that children and young people had experienced “service variation with differing access for families…a well as gaps in service provision and variation in waiting times.”
In October 2017, the legal case was settled with a payout to Virgin Care. The full amount of the payout was undisclosed, however the Surrey Downs CCG noted in governing board papers that it had paid Virgin Care £328,000. Payment was made by the six CCGs and one council involved and an August 2018 article in the Guardian puts the overall figure paid to Virgin as approximately £2 million.
Central Surrey Health legal challenge in Surrey
Central Surrey Health (CSH), a social enterprise providing community services in the county, was awarded a £100 million contract in February 2018 as one of five members of the Integrated Dorking, Epsom and East Elmbridge Alliance, which comprised CSH, three GP federations and Epsom and St Helier University Hospitals Trust. Since being awarded the contract the parties in the alliance have fallen out: the hospital trust is the formal holder of the contract, but CSH has since said that it has been “marginalised” out of the agreement.
CSH is now taking Surrey Downs CCG (the contract commissioners) to court, claiming it breached a contract by continuing with an integration project in which the partners had fallen out. As a result the new contract has been delayed by four months.
Elderly care in East Staffordshire
Virgin Care won a £280 million contract in March 2015 to provide services for the frail and elderly in East Staffordshire. Virgin Care was to be the prime provider under this seven-year contract and could sub-contract the work to other organisations. This is a fixed-price contract.
In March 2016, it was reported that the start of this contract had been delayed by a month and began 1 May 2016; this was due to the need to finalize some arrangements, according to the CCG and Virgin Care.
The contract is expected to cover 38,000 people with long term conditions, as well as an estimated 6,000 elderly people. It will measure performance against patient outcomes such as rate of falls, admissions into hospital, diabetes blood test management and patient mortality.
The contract has been dogged by contractual and financial issues. In March 2017, CCG board papers seen by the HSJ revealed that Virgin Care and East Staffordshire CCG were in dispute over contractual arrangements. This dispute has impacted on Burton Hospitals Foundation Trust; the trust is unable to agree a contract with Virgin Care under the prime provider model due to the CCG dispute.
HSJ reported that minutes from the Burton Hospitals’ board meeting on 12 January said: “The trust would have been in a position to sign the contract had it been able to reach an agreement with Virgin Care, however, this had not been possible…Virgin Care were discussing their contract issues with the CCG and a meeting had been scheduled between NHS England, NHS Improvement, Virgin Care and the CCG…Virgin Care was clear that its issues with the CCG would need to be resolved prior to entering into a contract agreement with the trust.” This could have a major impact on the Burton Hospitals Foundation Trust’s finances.
In October 2017, HSJ reported that Virgin Care was demanding more money from the CCGs. No amount has been officially confirmed, but HSJ noted “that sources have told HSJ the private provider has asked for nearly £5m extra.” According to HSJ in October 2018, the CCGs did not provide an extra £5 million to Virgin Care and as a result Virgin Care has terminated parts of the contract; the company will no longer act as a prime provider commissioning services such as hospital-based services, 111 and out-of-hours services. Virgin Care will, however, continue to provide the community services, which it has direct responsibility for, including specialist nursing, community nursing, care coordination and care navigation. The CCGs involved told HSJ that they will contract directly with the services beginning May/June 2019, instead of Virgin sub-contracting.
Then in April 2019, Virgin announced that it is to leave the contract entirely in April 2020, three years early. The reason given is that Virgin and the CCG were unable to come to a new financial agreement. Virgin stated that it is not able to run the service on the money provided by the CCG and it is not prepared to make up the shortfall.
Cambridgeshire and Peterborough older peoples services contract
One of the best examples of a contract failure in community services is the five year contract for the provision of older peoples services for Cambridgeshire and Peterborough CCG; this contract proved to be costly, time-consuming and it lasted just eight months before being abandoned.
The contract was high profile due to its high value – worth £700 to £800 million over five years – and the fact that it was one of the first outcome-based contracts. Under an outcome-based contract an element of payment was dependent on achieving agreed clinical outcomes. In this case, the targets would have to be achieved for the provider to receive 15% of its income.
The process for procuring a provider began in 2013. 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.”
See further reading below for more examples of contract failures.