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Outsourcing of elderly care services to NHS Trust consortium was a £725m fiasco

NHS funding

A £725 million NHS England pilot project, which outsourced community healthcare to a consortium made up of NHS Trusts, has come under heavy criticism in an investigation published this week.

The consortium, Uniting Care Partnership, comprised of Cambridgeshire and Peterborough NHS Foundation Trust and Cambridge University Hospitals NHS Foundation Trust, walked away from the project in December last year under financial strain.

The consortium was awarded the contract in 2014 to supply adult social care by the Cambridgeshire and Peterborough Clinical Commission Group, after beating two private operators, Virgin Care and Care UK, which competed for the contract with Uniting Care in a final shortlist of three.

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Awarding the contract to Uniting Care was reported at the time by the National Health Executive as victory for campaigners who want to block the NHS outsourcing services to private operators.

“The selection will calm fears that the bidding process could lead to the single largest privatisation of NHS services. When the £800m, five year contract was announced the first bids came from private companies and it caused outrage among unions and campaign groups,” a National Health Executive article from October 2014 said.

An NHS England report into the failure of the project notes that all parties to the final negotiations [the CCG, Uniting Care, Virgin Care and Care UK] agree that the approach to contract in an integrated way for the over 65s is the right approach.

However, both the private bidders and Uniting Care had concerns from the beginning. “The contract was big, novel, with many information gaps and it was difficult for organisations to accept the proposed level of risk. All three final bidders seriously considered at some point walking away from the negotiations,” the report notes.

The main reason for that concern was the difficulty in calculating how much it would cost to provide the services for the CCG. “The financial envelope for this contract was extremely difficult for the CCG to calculate with a level of precision,” the report finds.

It transpired that the CCG could not even rely on its own historic figures, because it was paying for different elements of the services from different budgets. Not knowing what it was spending in the past made it close to impossible to calculate what future costs would be.

In addition, some data could not be shared. For example, Cambridgeshire Community Services, which provided services to the Cambridgeshire and Peterborough CCG, was also part of the Uniting Care consortium. To provide data on its historic service provision would have been providing information that its competitors could use.

“As a consequence, Uniting Care and other bidders had to make their own assumptions for inclusion in their bids. After the service had transferred on 1 April 2015, Uniting Care was of the opinion that the transferred cost was materially in excess of its assumptions [circa £9m] which had been based on the information available to it,” according to the report.

This was a major element in the ‘financial gap’ between Uniting Care and the CCG and the eventual collapse of the contract, it concludes.

This financial gap, which Uniting Care and the CCG believes was £9m per year, but NHS England believes was as high as £14m, because of an accounting error over VAT.

NHS England concludes that, while the outsourcing exercise failed, all involved parties believed that the model should be explored further, and that valuable lessons had been learnt from this initial fiasco.

Tags : Care UKCCGsNHS EnglandOutsourcingVirgin Care
Rob Corder

The author Rob Corder

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