Biggest NHS 'market' deal to date collapses - what now?

A highly controversial new style of contract for nearly a billion pounds worth of older people's healthcare in the East of England has collapsed - but will anyone learn the right lessons? 

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Caroline Molloy
17 December 2015
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One of the largest NHS ‘market’ contracts to date collapsed this month. The £800million (originally £1 billion) deal to provide NHS care for older people in Cambridgeshire and Peterborough failed after only 8 months, deemed “financially unsustainable”.

So what does this mean for the future of health care in the region? And for the government’s preferred – and expensive – approach to offering up NHS contracts?

Back in 2013 Cambridgeshire NHS bosses created the largest potential privatisation to date. They claimed that only by offering all older people’s healthcare to private sector bidders, could they deliver the ‘innovative’ services needed, 'joined up' with social care.

The controversial contract - delivered through the largely untested model of ‘outcome based contracting’ – included bold promises to reduce nearby hospital admissions by 20%.

As private firms like Virgin, Care UK and UnitedHealth submitted bids, a huge public backlash followed – including a successful legal challenge by local campaigners to find out more detail on the plans. Several private bidders including Capita, Circle, Serco and Interserve pulled out, citing ‘affordability concerns’.

A new NHS ‘Uniting Care Partnership’ (the local acute and mental health trusts) eventually took over, after a bidding process that cost the CCG over a million pounds (and cost the NHS hospitals that had to fight off the private health firms, considerably more).

Predictably perhaps, the ‘Partnership’ has now found they couldn’t deliver the promised outcomes for the money on offer, either.

There were problems from the start. Disputes with neighbouring hospitals including Peterborough and Addenbrookes over the promised service levels. Complaints from GPs that the new service was worse than the old, award-winning NHS provider, Cambridge Community Services. Patients unimpressed when the boasted-about ‘integrated one phone call’ service turned out to be run by an ambulance trust based in a completely different part of the country.

The whole sorry story shows how, far from magicking up ‘efficiencies’, elaborate outsourcing schemes and grand ‘integration plans’ are achieving little and wasting huge sums.

Will the government heed the disaster and stop pushing such models on local NHS trusts? The runes aren’t promising.

Similar ‘outcomes based’ ‘lead provider’ contracts are being implemented in Staffordshire (given its history, a soft target for experimentation) and more recently pushed in Warwickshire.

NHS boss Simon Stevens (formerly adviser to Tony Blair and then Vice President of United Health) is a fan – in his first post-election speech this year, he praised ‘outcomes based’ measures of success. In the same speech he scrapped key old-style success measures - what he called “too mechanistic” targets for safe numbers of nurses – prompting both howls of outrage from campaigners Cure the NHS who saw that government promises post Mid Staffs had been betrayed – and widespread concern from experts including Sir Robert Francis, author of the report into that tragedy.  

‘Outcomes based commissioning’ sounds great – who doesn't love a good outcome? We are told this is a more ‘patient-focused’ approach than the current system where hospitals are paid per procedure and set targets for things like waiting times.

But ‘outcomes based commissioning’ is no solution to the marketised mess in the NHS.

Earlier this year OurNHS exclusively exposed how outcome-based contracts gave the successful private bidders (like Virgin, in East Staffordshire), a blank cheque to write their own outcomes – and how they made it difficult if not impossible for the public to hold those providers to account.

The contracts are also likely to favour private providers with deep pockets, who can go into debt whilst the ‘outcomes’ are awaited.

There are many questions on how the 'outcomes' are set, and how they are evaluated.

More traditional targets for nurses and beds – used as a measure of the adequacy of healthcare provision - are slightly ‘clunky’ proxy measures, it’s true. But these old-style, concrete, easily quantifiable measures are also easier for patients and communities to fight to defend, and a lot harder to ‘game’, than subjective 'outcome' measures like ‘I had good care for my dementia two years ago’ (as used in early ‘integrated care’ pilots like Torbay) or ‘my relative had a good death’ (as used in the big cancer contracts).

Anna Pollert of Warwickshire KONP also raises concerns that outcome-based contracts will “lead to perverse processes, and actually distort proper planning.”

Keeping people out of hospital, for example, may be desirable – but incentivising profit-making providers to keep patients out, may lead to a US-style situation where patients with ‘Accountable Care Organisation’ plans (ACOs) struggle to get admitted to hospital when they desperately need it. US-style ACOs are approvingly cited in Simon Stevens’ plan for the NHS.

In fact, outcome-based measures are just yet another market-based approach, put forward by people who can’t – or won’t - envisage returning to a system where something other than financial incentives drives activity and outcomes.

People who simply don’t get the idea that professional integrity and a public service ethos in the NHS has generally ensured that patients are neither under- nor over-treated, without the need for complicated financial carrots and sticks.

People like the shadowy Strategic Projects Team – a nominally NHS organisation made up largely of management consultants on secondment from the big 4 accountancy firms – who are busy pushing this same model in Warwickshire, despite opposition from the local County Council and campaigners.

This is the same team responsible for the disastrous ‘franchise’ privatisation experiment at Hinchingbrooke, which collapsed with devastating failures in patient care - and the expensive abandoned procurements for George Eliot Hospital and Weston Area Health Trust.

“Outcomes based contracting” is also pushed by the even more shadowy COBIC consultancy (a consortium of private firms including PWC, ‘Social Finance’ and others) who’ve been developing the system and trialling it in their own backyard in Oxfordshire, as well as in Croydon and elsewhere, despite concerns from local health bosses, campaigners, and even experts in the Department of Health itself, who criticised its ‘major risks’. The system has already had to be ditched for maternity services.

But 'outcomes-based' contracting has had influential political backing from Paul Corrigan. The name may be unfamiliar but the NHS trade magazine Health Services Journal votes Corrigan 'one of the top 100 most influential people in healthcare'. The consultant is a former advisor to Health Secretary Alan Milburn, and to Tony Blair himself (a role he inherited from none other than Simon Stevens).

Amongst other activities, last year Corrigan co-authored a paper with COBIC boss Nick Hicks, where they admitted that a shift to ‘outcome based’ contracting would cause “some turbulence in the system” but went on to dismiss concerns as “reaction from conservative staff more interested in preserving the present form of their institution rather than improving the service to the public”.

There’s little sign of contrition about the collapse amongst the local Clinical Commissioning Group either. They said in a statement “Patients and frontline staff will see services remain despite a contractual arrangement between Cambridgeshire and Peterborough Clinical Commissioning Group and UnitingCare Partnership LLP ending. Unfortunately both parties have concluded that the current arrangement is no longer financially sustainable. We are clear that the innovative model of care for older people and people with long term conditions brings benefits for patients and the whole health and care system and we are all agreed that we wish to keep this model of integrated service delivery.”

But as Margaret Ridley of Keep Our NHS Public Cambridgeshire should have the last word on the expensive collapse. She comments, “This appalling situation is yet more dramatic proof that the policy of opening up health care to competitive tendering is a scandalous waste of time and money, creating huge uncertainty for staff and patients. Whilst campaigners do, of course, feel vindicated following the years of warnings about the outcome of this unnecessary and politically driven process, it does raise two major questions: What is going to happen now? And is anyone going to be held accountable for this shambolic mess?”

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