The 'ninja' NHS privatisers you've never heard of...

Meet the shadowy team at the heart of many of the most controversial NHS privatisations to date, including the Staffordshire deal leaked last week to openDemocracy.

Tamasin Cave
26 March 2015

Image: Wikipedia

”Despite our warnings about the risks... no one has been held accountable for the consequences.”

That was the fierce criticism last week from watchdog Margaret Hodge MP and her Public Accounts Committee of the failed flagship privatisation of Hinchingbrooke hospital.

No-one can hold Circle Holdings accountable. On the day inspectors gave the hospital they were running, the worst rating for ‘caring’ of any hospital in the country, the firm announced they were giving up and walking away, three years into the ten year contract.

The Committee concluded that the deal was an expensive experiment that left taxpayers to pick up the bill.

But who cooked this deal up in the first place? And have they learnt their lesson?

Step forward, the Strategic Projects Team (SPT), a shadowy organisation initially set up within the NHS to design the Hinchingbrooke deal.

And no, they don’t seem to be in apologetic mood.

”Change is a combat sport.”

So said Strategic Project Team co-founder, Stephen Dunn, at this week’s SPT anniversary celebration. For six years, these ‘change-makers’ have been, in their words, ”supporting the brave” and ”encouraging the timid” to reform health services and hand them over to the private sector.

That’s to say, roaming around England’s health service looking for things to privatise.

‘Change from within’ is SPT’s tag line.

Today, though, SPT is having trouble defending its record, which may explain why they are in fighting mode.

The list of failed projects is growing. On the back of Hinchingbrooke, SPT started open competitions to ‘franchise out’ the running of both George Elliot Hospital in Nuneaton, and the Weston in Weston-super-Mare, with companies like Care UK and Circle throwing their hats into the ring. Both projects resulted in expensive U-turns with the planned sell-offs being abandoned - but only after a million pounds had been spent on administering the process, in George Eliot’s case. The SPT was also behind the beleaguered privatisation of pathology services around the country; and the friends and family test, designed by MacPherson and Dunn, rolled out across the NHS at huge cost, and slammed as ‘inappropriate’, ‘unreliable’ and highly questionable as a measure of patient experience.

When not trying to flog hospitals off - of which more later - SPT has also been ‘intervening’ in hospitals, as in Bedford, which has recently lost services to both Circle and US health giant, UnitedHealth.

SPT appear not to have spent any time reflecting on the aborted privatisations of Hinchingbrooke and elsewhere, their costs, or consequences. As a speaker from SPT’s law firm and last night’s hosts, Wragge & Co, said: ‘Business doesn’t research things to death’. If it doesn’t work, bin it, move on.

SPT is a big fan of the world of business. It talks of creating a ‘customer-centric’ (not ‘patient-centric’) NHS. They call healthcare a ‘distressed purchase’.

But who are SPT, and who are they answerable to? The Team was originally set up by senior NHS officials in the East of England, a pioneer region when it comes to private sector involvement in the NHS (and coincidentally home to Andrew Lansley’s Cambridge constituency). They provided the “air cover” for SPT’s controversial operation.

SPT’s other co-founders are Sir Neil McKay, now with healthcare industry consultants, GE Healthcare Finnamore, although at the same time still advising a ‘local NHS body in the Midlands’; and Andrew MacPherson, current SPT managing director. MacPherson’s background is in customer services in the transport business. His experience of the NHS prior to running SPT was as a non-exec director of his local hospital.

Dunn has since moved on to the Trust Development Authority, where he helped decide the fate of many other small hospitals like Hinchingbrooke. More recently, he was given his own one to run, his local hospital in West Suffolk, where he says he is ‘very keen to see if we can create a Kaiser Permanente-type organisation’, referring to the US health insurer’s model.

Exactly who the Strategic Projects Team answers to today is unclear. In one email released under Freedom of Information (FOI) law, MacPherson casually asks a colleague in NHS HQ for ‘insight as to where we might do the most good during 14/15?’, which suggests perhaps that SPT has little in the way of official remit.

SPT’s intent is clear, however, from a ‘commercial in confidence list’ of its activity. NHS bosses twice tried to block the release of this list under FOI law, but it reveals the extent to which community services around the country have had the SPT treatment: the NHS in Coventry & Warwickshire, Huddersfield, Cheshire, and Cambridge & Peterborough have all employed SPT’s services. The latter spent £220k on SPT in 2013-14 to help it open up older people’s services to the private sector, according to figures released under FOI. Companies that bid for the £800m Cambridge & Peterborough contract included: Circle, Capita, Care UK, UnitedHealth, Interserve and Virgin Care. (Virgin Care’s ‘senior relationship manager’ was at last night’s birthday bash).  

The SPT - which claims to specialise in ‘major change initiatives’ - has also been involved in Staffordshire for several years, the list reveals. Staffordshire faces cuts to hospital beds across the county and the downgrading of one of its hospitals, as recommended by KPMG in its recently leaked review of Staffordshire’s ‘distressed’ health economy.

According to its confidential activity log, SPT has made multiple interventions in the area’s hospitals, its community services - and in the redesign of Staffordshire’s cancer and end-of-life services.

And now, these are big contracts up for grabs, with SPT running the bidding process.

It was SPT who produced the ‘Memorandum of Information’ - leaked to OurNHS this month - which set out some of the details for the £687m cancer care contract. It shows that most of the elements of the contract’s design, such as standards and targets, will unusually be decided after the contract has been awarded. Also, there doesn’t appear to be any provision for a break clause for the NHS to get out of the ten-year contract if it doesn’t work out.

Perhaps the most concerning thing about the plans as drafted, though, is their lack of accountability. The Kings Fund described such plans as "a risk to take with taxpayers’ money”, which has a certain resonance in light of the Hinchingbrooke debacle.

Companies shortlisted for the huge cancer contract are UnitedHealth, Interserve and CSC Computer Sciences (which also appears to be a ‘supply chain partner’ of UnitedHealth). The same three companies have also thrown their hat into the ring for the £535m palliative care contract, along with Health Management Ltd (a subsidiary of US outsourcing firm, Maximus) and Virgin Care.

SPT’s role in pushing through such radical reforms is not only in advising its NHS colleagues. It also ‘works closely’ with the healthcare marketplace.

This week’s birthday bash, for example, was aimed at ‘senior NHS and independent sector healthcare leaders’. SPT says it has provided a ‘forum’ for private healthcare companies to influence the direction of the NHS. This includes discussions on making it easier for them to enter the NHS market.

Two groups appear to have driven SPT’s ‘commercial engagement’: a cooperation and competition panel, and a commercial advisory board. The latter is referred to as a ‘unique interface’ between NHS executives and the independent sector, and in typical MacPherson management-speak, as ‘a catalyst for shared learning in healthcare strategy’.

A publication by SPT’s parent body provides more detail. The 15-20-strong commercial advisory board, it says, regularly brings together ‘existing and potential future providers’ of healthcare from all sectors (public, private and voluntary) to discuss NHS reform and ‘market issues’. Topics include the NHS’s approach to procurement, ‘lowering barriers to market entry’ and introducing more ‘innovative’ ways of commissioning care.

It is not known whether the groups are still active: opportunities for continuing the advisory board were under discussion in 2013.

But SPT has a new set of associations these days. Since early 2013, when the NHS organisation that established SPT was dissolved, SPT has been ‘hosted’ by another NHS organisation -the equally ‘commercially-minded’ Greater East Midlands commissioning support unit (GEM) (though SPT maintains its offices in Cambridge and inside NHS England’s London HQ).

The East Midland organisation certainly talks SPT’s language. According to GEM’s chief executive, John Parkes, organisations like his can ‘provide access to... a £70bn market’. They ‘know local decision makers’ and can ‘create opportunities’, he says (writing in a publication for outsourcing giant Sodexo, which now runs many English pathology services).

But who are GEM? They are one of a number of organisations, both private and public, which provide services to the GP groups that hold most of the NHS budget. From HR, PR and IT support, to analysing population data, negotiating contracts and redesigning services, in many places these ‘commissioning support providers’ appear to be essentially taking over the process of planning health services in the NHS, and so determining how and where the NHS budget goes.

The government’s recent NHS reforms created a market in these ‘commissioning support’ services. Organisations like GEM compete with commercial operators such as Capita, and a consortium led by UnitedHealth (that includes KPMG, CSC Computer Sciences, BT and others).

But the relationships are entangled. UnitedHealth, KPMG, Capita, and GE Healthcare Finnamore (where SPT founder Neil McKay now works) are also ‘strategic partners’ of GEM, providing a range of commissioning services to GEM’s GP clients. KPMG, for example, was being paid over a quarter of a million pounds a month through GEM for services, including the development of a ‘commercial strategy’, and the provision of an interim chief operating officer, according to figures the NHS recently reluctantly released.Payments by GEM were also indirectly made to UnitedHealth, via a company sub-contracted by KPMG, although it’s not known what for.  

SPT CEO, MacPherson sees GEM as providing a ‘fertile environment’ for his team to build new partnerships.

It perhaps wants to keep its distance from some of GEM’s other partners, though. With UnitedHealth bidding to run Staffordshire’s cancer and end-of-life services, and SPT running the bidding process (not to mention KPMG helping to reconfigure Staffordshire’s health services), the situation looks pretty cosy.

The Strategic Project Team insists that it is ”committed to the ethos and values of the NHS”. Its work, though, betrays a prejudice towards market solutions and the private sector.

It prides itself on ”breaking new ground”, on ”meeting difficult challenges head on” and on delivering a series of ‘firsts’ in the NHS. Yet, little of what it does appears driven by evidence of what works.

One innovative way of commissioning care currently being championed by SPT is the ‘integration’ of services. In very simple terms, ‘integration’ is sold as a way of improving standards and reducing costs by changing the way healthcare is planned and purchased (or commissioned), so that services are more joined up. (Which sounds like common sense, but treat with caution: The National Audit Office described plans to save money through better integration as being based more on ‘optimism rather than evidence).

Both the Cambridge & Peterborough, and Staffordshire contracts are so-called ‘integration’ projects.

In 2014 SPT’s commercial director, Martin Peat, outlined what SPT saw as the main drivers of this innovative approach to commissioning. ‘Improved services for patients’ comes in at number two on his list. Reduced costs is fifth. Number 1 on his list of what’s fueling integration, though, is: ‘The market’.

Which begs the question: is SPT’s focus on the ‘integration’ experiment, the result of discussions with private sector companies that stand to benefit?

The truth is SPT is itself a failed experiment.

Yet if this week’s event is anything to go by, the team fully intends to continue to push its ‘change strategies’ in the NHS and provide the private sector with bigger entry points, all seemingly without any oversight.

MacPherson’s aim, he told a ‘Nudge’ conference in 2013, is to ‘revolutionise aggressively the world’s fifth largest employer.’

Unfortunately, at the moment nothing except perhaps confusion is standing in their way.

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