Every care home professional wants to work more constructively with the NHS, with the boundary between health and social care becoming invisible to the elderly. But a bold attempt in Cambridgeshire to move in that direction ended in abject failure, leaving a multi-million pound hole in local finances thanks to schoolboy accounting errors mixed with incomprehensible conflicts of interest.
In November 2014, the Cambridgeshire and Peterborough Clinical Commissioning Group entered into a contract with Uniting Care, a consortium comprising two NHS trusts, Cambridgeshire and Peterborough NHS Foundation Trust and and Cambridge University Hospitals NHS Foundation Trust.
The Uniting Care partnership of NHS Trusts won a £725 million contract to supply adult social care in the East of England region after beating two private operators, Virgin Care and Care UK, which competed for the contract with Uniting Care in a final shortlist of three.
The contract was for five years, with an option to extend for a further two years. The contract was for the provision of all community care for over-18-year-olds, acute emergency care for the over-65s together with older people’s mental health services.
In December 2015, just 13 months after the contract was awarded, Uniting Care walked away from the deal, having failed to make its sums add up.
NHS England was so concerned by the fiasco that it commissioned an investigation into what went wrong, what lessons can be learnt, and how to avoid a project with such good intentions failing so spectacularly again in the future. The investigation was not limited to seeking answers from Uniting Care and the CCG that tried and failed to make the contract work. It also went right back to the beginning and spoke again to all parties to the final negotiations of 2014, including Care UK and Virgin Care, to see whether the bidding process was flawed from the outset.
The NHS England report states up front that: “All parties to the final negotiations, the Clinical Commissioning Group, Uniting Care, Virgin Care and Care UK, agree that the approach to contract in an integrated way for the over 65s was the right approach. There was a great deal of enthusiasm within the CCG and Uniting Care and this enthusiasm was shared by many clinicians within the service.”
Despite the failure, efforts to integrate NHS and adult social care services across the UK are continuing. There are two major initiatives underway in Wales and Manchester this year, for example. Political parties of all stripes agree that integrating health and social care will improve outcomes, and may also save money for taxpayers, which is why a thorough review of what went wrong in Cambridgeshire is so valuable.
Nobody should doubt the complexity of breaking down the barrier between NHS and social care that include entrenched cultural, personal and territorial positions. These more amorphous considerations were set aside in the NHS England investigation, which focused almost entirely on the technical and financial failures. It concludes that the contract collapsed due to financial and contractual failures that it summarises as:
• There were too many information gaps around community services,
• The financial envelope of the CCG for these services could not be reconciled to current expenditure levels,
• There was an additional VAT cost,
• The mobilisation period was not sufficient to make the planned financial savings that were required in the first year,
• The contract value was not absolutely agreed at the date the contract commenced.
• The contract should not have commenced on 1 April 2015. It should have been delayed until these issues were resolved.
These failures feel like incompetent execution of a worthwhile plan, rather than a flawed plan from the outset, and this is broadly what NHS England also concludes.
“All of the parties to the final negotiations agree that the approach to contract in an integrated way for the over 65s is the right approach. However, despite these intentions, the contract collapsed. The health economy will now need to find another way of continuing with the integration of older people services,” the NHS England review, written by David Stout, OBE, states. Mr Stout currently runs a private consultancy that provides mentoring and mediation services to health and social care professionals. He has been finance director for 10 NHS organisations during his 30 year career in the service.
Mr Stout helpfully gives a commentary alongside more technical conclusions in the NHS England report. He begins by suggesting that there should have been a reassessment of the bidder, Uniting Care, but there was not. In the early stage of the procurement process it was not apparent to the CCG that Uniting Care would be a Limited Liability Partnership (LLP). This only became apparent later in the process, at which point there should have been a re-assessment of the bidder for capacity, capability, economic and financial standing, but this was not carried out.
It was assumed that the two NHS Trusts, with all their financial firepower, would stand as guarantors to the solvency of Uniting Care, but this was never enshrined in the contract. “Despite having identified the need for parent guarantees, the signed contract between the CCG and Uniting Care did not ensure that these were put in place. As a consequence, when the contract folded, the LLP was significantly at risk of becoming insolvent,” Mr Stout writes. “Parent guarantees should have been put in place by the Foundation Trusts and the CCG should have required them.”
This failure greatly added to the risk of the entire venture, which from the outset was based on a volume of work for Uniting Care predicted for the five years of the contract. The CCG did build in a bit of wiggle room for rising demand for services, and front-loaded the money to help Uniting Care during the early stages, but most of the risk was pushed onto the provider. Uniting Care, Care UK and Virgin Care almost abandoned their bids for the contract as this risk became clear, but Uniting Care ploughed on.
The cost of delivering the contracted services was based on flawed figures from the start. Mr Stout notes that the financial envelope for the contract was “extremely difficult for the CCG to calculate with a level of precision”. The CCGs starting point was looking at its expenditure, either directly or to subcontractors, for services provided in the 2013/14 financial year.
This process was a mess, not least because figures were provided by Cambridgeshire Community Services, which was a bidder as part of several consortia. There was no suggestion that the Trust provided inaccurate information, but rival bidders were unable to scrutinise the figures properly because they were in competition with them.
Once it took over the services on April 1, 2015, Uniting Care discovered an annual black hole in the figures of around £9 million.
The mistakes did not end there. An additional £5 million per year miscalculation of the VAT bill was discovered because Uniting Care did not get the same tax breaks as the CCG enjoyed. Care UK and Virgin Care spotted the issue, and reflected the cost of VAT in their bids. Uniting Care did not.
Mr Stroud has no doubt that the CCG and Uniting Care rushed into the contract, which should have been delayed when questions came to light early in 2015. This was an option to the CCG, but it was felt that the cost and complexity of delay would be greater than fixing the problems when Uniting Care took over.
Within a month of taking on the services, Uniting Care demanded an extra £34 million in the first year to ensure it could deliver what was contracted. The CCG stumped up only £9 million in August of that year. Three months later, the deal was dead.
The headlines at the time of the collapse screamed that it was a £725 million balls up. Cambridge’s Labour MP Daniel Zeichner told local newspaper Cambridge News that the process leading up to the failure was flawed from the start. “Forcing the NHS into this crazy contract culture has cost a fortune and is failing patients. Every page of this report is littered with examples of confusion and muddle, with conflicts of interest, and fundamental issues like who pays the VAT left unresolved,” he said in reference to the NHS England investigation.
The £725 million was actually the value of the entire five year contract. The real cost to the CCG of procuring and entering into the contract, compared to a ‘do nothing’ position, was estimated by NHS England at £6 million. This does not include the costs to the two Foundation Trusts that created Uniting Care.
Mr Stroud adds, without a trace of irony, that there were some benefits arising from the contract including the production of an ‘outcomes framework’ and ‘service redesign model’ which will be helpful to the CCG in the future.
Lessons certainly need to be learned, not least because there is actually a consensus among political parties, local authorities, NHS England, CCGs and privately run adult social care providers including care homes, that the disabled and elderly citizens of the UK will be better served if health and social care providers cooperate better.
However, there is no easy answer or agreement on how to achieve it. NHS England, at the end of its review into the Cambridgeshire failure does have recommendations for both NHS England and for Clinical Commissioning Groups, although it fails to include recommendations for care operators.
Perhaps, unlike the Foundation Trusts, the likes of Care UK and Virgin Care from the private sector were smart enough to submit bids that would have allowed them to make a profit.