Failures of private provider contracts

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 either collapsed, have been terminated prematurely, or become subject to legal challenges.

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.

These are just a few of the major contract failures that have hit the headlines:

Capita and the primary care support services contract

Capita took over the coordination of primary care support services in September 2015. The contract with 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 immediately began centralising support services to three national hubs and implementing a single online ‘portal’ for practices to order supplies and ‘track’ the movement of patient records.

However, since the contract began there has been an never-ending series of problems – ranging from things as mundane as surgeries running out of prescription pads and syringes to far more serious problems with the secure transfer of patient notes around the country, with notes going missing or delivered to the wrong surgery, and women being dropped from the cervical cancer screening programme. The problems encompassed GPs, dentists, opticians and pharmacists. The most recent issue, which surfaced in mid 2018, was that Capita had failed to send out nearly 50,000 letters as part of the cervical cancer screening programme and although the company discovered this issue in August 2018, it neglected to inform NHS England of the issue for two months.

A campaign by the GPC (General Practice Council) has been ongoing since early 2016; in May 2016 chair of the GPC 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 September 2016, NHS England had to intervene, serving default notices on Capita and increasing the numbers of staff.

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.

Finally, in May 2018 the National Audit Office (NAO)  produced a report on the contract noting that patients had been “put at serious risk of harm” due to Capita’s failures. The report  noted how both parties grossly underestimated the size and complexity of the task and the risks involved. The NAO report was particularly critical of NHS England and its inability to control Capita’s “aggressive” programme of office closures and redundancies, even when it became clear “it was having a harmful impact on service delivery”. In response NHS England highlighted the £60 million the contract had saved; the NAO report noted that the extent of harm to patients will not be known for some time to come.

Mental health service failures across the country

The NHS has a large number of contracts with private providers of mental health services, both residential and in the community. In many cases these private providers have failed to provide the standard of care required under the contracts, instead providing inadequate and often unsafe care.

In November 2017, the Care Quality Commission (CQC) reported that people with drug and alcohol addiction are being put at risk of harm at many independent residential rehabilitation units. The CQC report found that nearly three-quarters of private clinics were failing to hit regulatory standards of care. The report was based on inspections of 68 independent services providing residential detoxification services over the last two years. The CQC required 49 providers (72%) to make improvements because they had breached regulations of the Health and Social Care Act 2012 and failed to meet fundamental standards of care. The CQC took enforcement action against eight providers.

In November 2018, The Times published a damning article exposing the companies and charities that make millions by providing substandard mental health services to NHS patients. The article included one case where the directors of a psychiatric hospital that was found to provide substandard care by the CQC, had paid almost £25 million into a secretive trust in Belize. The article noted that the company had received £26.3 million for services over 18 months in 2016-17 from NHS contracts.

The media has covered stories of unsafe and substandard care provided by many companies within the mental health provider sector, including the leading companies The Priory/Partnerships in Care, The Huntercombe Group and Cygnet Healthcare. These companies have had wards and whole units closed due to failings of care.

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. 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.

Legal challenge by Virgin Care

One of the most high profile legal challenges was by Virgin Care in Surrey. Surrey was the first to embrace a private provider, with 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 National Health Executive puts the overall figure paid to Virgin as approximately £2 million.

Primecare's failure in urgent care

Primecare are a good example of a company that was awarded large contracts, but failed to deliver and was financially unstable; the company has now abandoned contracts, often at short notice. Primecare is a subsidiary of Allied Healthcare, one of the UK’s leading homecare provider. In November 2018, the CQC issued a report on the financial status of Allied Healthcare; Allied Healthcare was due to make a large loan repayment at the end of November 2018 but there appeared to be insufficient funds. The report noted that the company might not continue trading after the end of November 2018. A letter to all councils and CCGs advised them to make contingency arrangements in the event of the company withdrawing from contracts.

The company’s Primecare subsidiary had contracts for out-of-hours (OOH) and urgent care throughout the midlands. CCGs and GPs were sent letters advising them to find new providers of these services by the end of November. In November 2018, GPs at 20 Birmingham practices were given just 10 days’ notice for find new OOH providers. Primecare also provided OOH and urgent care services in Walsall, Sandwell and West Birmingham, Herefordshire, and Nene, and is part of an integrated 111 and OOH contract covering 16 CCGs in the west Midlands.

Primecare has had difficulties delivering services in other areas, even before the financial situation reached a crisis. In January 2017, East Kent CCGs awarded Primecare one of the first integrated NHS 111 and GP out of hours services contracts, but after only seven months the company was placed in special measures. Primecare’s 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. Then in September 2017, Primecare announced that it will hand back the contract to the NHS mid-way through the three year contract in July 2018.