Category Archives: NHS Commissioning

In 2009 the internal market was abolished in the Welsh NHS. Seven unified Health Boards (and three trusts – Ambulance, Public Health and Velindre cancer services) took over the responsibility of the former 22 Local Health Boards and most of functions of the seven Trusts to both plan and deliver health care for the population resident in their geographical areas.

In the initial phase following the internal market abolition the acute hospital sector seemed to have “captured” the planning process. But as things have matured the Welsh Government has sought to re-balance matters with the introduction of Integrated Medium Term Plans (IMTP).

All NHS organisations are now expected to operate to three yearly IMTPs as part of their planning cycle. The latest framework covers the period 2018-2021 with yearly iterations providing firm plans for the initial year, indicative plans for Year 2 and outline plans for Year 3. At the heart of the process is the creation of a collaborative approach which will be sufficiently robust not only to withstand the continuing pressures of austerity but to deliver real improvement for patients, service users, carers and wider public health.

The planning framework ( http://gov.wales/docs/dhss/publications/171013nhswales-planning-frameworken.PDF ) and the IMTPs continue to be informed by the principles of “Prudential Healthcare” ( http://www.prudenthealthcare.org.uk/ ) and an emerging distinctive Welsh legislative backdrop including the Mental Health Measure (2010), Social Services and Well-being Act (2014), The Well-being of Future Generations Act (2015),  Nurse Staffing Levels Act (2016) and Public Health Act (2017).

The planning and delivery process needs to achieve the “Triple Aim” of improving outcomes, improving the user experience and achieving best value to money supplemented by the Parliamentary Review’s ( http://gov.wales/docs/dhss/publications/180116reviewen.pdf ) recommendation of enriching the well-being, capability and engagement of the health and social care workforce.

There are five priority delivery priorities outlined which represent a real effort to re-balance the Welsh NHS away from its initial over-focus on acute secondary care covering such areas as:-
Prevention
Tackling health inequalities
Primary & community care
Timely access to care
Mental health.

Each of these priorities are important in their own right. The prevention and tackling inequalities agendas acknowledge the social determinants of health but they also re-emphasise the importance of addressing “the inverse care law” which is about how the health service responds to the unequal health experience of people. Access to care is recognised as being both clinically important and a key quality measure of the patient’s experience. And as well as timely access to services the quality agenda requires that patients receive safe, effective, personal and efficient care in an equitable way.

Health boards and trust IMTPs must be the product of collective working that extends from the clinical experience of patients and NHS staff to engaging with a wider range of bodies outside the NHS family. Particular attention must be paid to the plans being developed by the primary care clusters ( http://www.primarycareone.wales.nhs.uk/primary-care-clusters ) as well input from traditional sources such as Public Health Wales. In addition participation in regional and local service boards, as well as bilateral discussions, must be used to co-ordinate planning and delivery with other public bodies such as local government, social care, education and housing.

The governance within the Health Boards and the wider NHS must improve if the planning process is to effectively identify and respond to local need. To date the record is not great. Health boards are not always adept at either identifying service failures or responding effectively to them. The Welsh Government has a clear pathway of escalating intervention when health organisations are struggling but even then improving performance has proven elusive ( http://gov.wales/topics/health/nhswales/escalation/?lang=en ).

The final report of the Parliamentary Review recommended that the Welsh Government itself needed to more pro-active in promoting innovation, evaluation and implementation of best practice across NHS Wales. The planning framework preceded the publication of the final report and its silence on the Welsh Government’s role in being a catalyst for service transformation is therefore missing. This needs to be rectified.

The abolition of the NHS internal market was widely welcomed in Wales. This in itself it does not provide automatic answers to all of the problems the NHS faces. But it allows for new ways of addressing them based on the principles of partnership, collaboration and public service values which are more clearly reflected in the latest planning framework guidance.

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STPs are loose coalitions of agencies without statutory powers, so they cannot implement change, only encourage it. With little money left in the Transformation Fund, they have to “work around” their local NHS and social care organisations. At the launch of the King’s Fund report ‘Delivering sustainability and transformation plans: from ambitious proposals to credible plans’ (on 21st February) we heard that “with the right leadership” STPs could stabilise the NHS, that STPs mean that “politicians must be brave” (and not impede changes in the NHS in their constituencies), that NHSE and NHSI need to work as one (because they don’t), and that “there is no Plan B”.

STPs

Much of what was said at the launch was familiar. Plans to shift care into the community and integrate health and social care have surfaced several times in the last decades, leaving little trace. There is little new in the STPs, except perhaps the higher profile of local government.  The NHS is famous for its lack of memory, a point made gently by Chris Ham of the Kings Fund at the end of the launch event. The language used was standard NHS speak – “challenges”, “conversations”, “journeys”, “taking plans forward”, “meaningful engagement” – and the speaker who described how the STPs were “moving fast” surprised those who thought progress was painfully slow.

It was not clear from the discussion that there really are many parts of the NHS or social care where practitioners are straining at the leash to change, are constrained by present structures and rules, and are ready to innovate given permission and leadership. Perhaps the Vanguard sites are such places.

The impression I left with is that transforming social care and health services that are struggling to survive is a David versus Goliath battle, in which STP advocates are hoping for a lucky shot. The Kings Fund launch did say that in a way, suggesting that STP footprints should prioritise two or three changes, in effect abandoning transformation as an objective. The NHS Confederation has since urged ‘patience’ in developing STPs, not the current unrealistic timetable. This may be an opening for Labour to gain some traction within the NHS, and avoid being marginalised into “Slash, Trash and Privatise” rejectionism. We need to look at provision over the whole health and social care system and sort out a governance framework for a single health and social care service. STPs are an attempt to bring together relevant players at a higher organisational level than Joint Planning Boards, so could offer the overview and design the governance. If the STPs were led by local government, with a topped-up Transformation Fund and a ten year remit to bring about change, we might just make haste slowly.

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Wales is the only part of the UK where “deemed consent” to organ donation applies. The means that any deceased who is over 18 years, is mentally competent and who had lived in Wales for  12 months is deemed to have given consent to organ donation unless they have formally registered their objection.

About a decade ago, the UK had a low organ donation rates (13 / million population) compared to countries such countries as Spain, USA and France. As well it had a much lower rate of next of kin refusal. In Wales around three people per month died while waiting for an organ donation with about 300 people on a transplantation list.

The issue was considered by the National Assembly for Wales Health and Well-being Committee in 2008. Though its report did not recommend  “presumed consent”, the Welsh Government felt there was sufficient public support for the proposal and indicated its intention to legislate on the matter. A commitment to do so was included in the Welsh Labour, Plaid Cymru and Liberal Democrat’s manifestos for the 2011 National Assembly election.

The Bill was introduced into the National Assembly in December 2012. Over the next year an extensive debate and consultation took place. There was broad support for its purposes though concern was expressed, by Christian and Islamic faith groups in particular, that “deemed consent” was not real consent and that it undermined the altruistic virtue of the gift of donation.

A key feature of the legislation was its “soft opt-out” option whereby close relatives are involved in the donation decision with particular attention being paid to any evidence that the deceased may not have wished to have their organs donated.

In the run up to the beginning of the legislation in December 2015 there was an major campaign to both explain the new legislation and to raise awareness on the wider organ donation need in Wales. The legislation will require the Welsh Government to maintain a programme of promoting public awareness and to report on progress.

At the end of the first year of the legislation the Welsh Government reported “… the latest figures show that 39 organs from patients whose consent was deemed have been transplanted into people who are in need of replacement organs.

In the two years prior to the introduction of the new system of deemed consent, .. (we) made significant efforts to inform the public of the exact nature of the upcoming changes in respect of transplantation activities. During this period the number of organs transplanted increased each year, from 120 between the 1 December 2013 and 31 October 2014, to 160 between 1 December 2015 and 2016.

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If something can’t go on for ever then eventually it will stop – so says Stein’s Law – attributed to the eponymous American economist.

Senior Health service managers are now openly admitting that the NHS cannot continue in its current state. Writing in the Observer recently, Chris Hopson, Chief Executive of NHS Providers commented: ‘It is surely now time for our national health and political leaders to publicly acknowledge that the NHS can no longer deliver what is being asked of it for the funding available. The evidence that there is now an unbridgeable gap between what the NHS is required to deliver and the money to pay for it is both widespread and compelling.’

The much vaunted plan to save £22 billion through ‘efficiency savings’ has been described as ‘virtually impossible’ by former Health Minister Norman Lamb and as being ‘substantially off target’ by the Health Foundation.

Despite the sombre inevitability of Stein’s Law, the NHS shows no sign of going down quietly. As former chancellor Nigel Lawson observed, the NHS is the closest thing the UK has to a national religion. Any politician brave or foolish enough even to suggest that the funding model for the NHS requires amendment or adjustment is instantly attacked by a variety of NHS zealots in a manner verging on the hysterical. Taking on the National idol is a recipe for political suicide, so Mr Hopson’s call for an ‘open, honest, realistic, national debate’ about the future shape of NHS services seems unlikely to be realised.
After 30 years working at the coal face in the NHS I have come to ignore what politicians and managers say and instead watch what they do. Few informed people dispute that the way the NHS does business needs to fundamentally change – the tricky part relates to who can make that case to the public and, more importantly, who is going to be responsible for forcing the change through in the face of personal and political abuse verging on the criminal – just take a look at the behaviour of junior doctors towards the current Health secretary for an example.

Redrawing the boundaries of what the NHS provides is one way by which the NHS reduces the volume of work it has to do. In my own specialty, the boundaries for varicose vein surgery have been changed substantially – it is no longer sufficient for patients to have aching and discomfort from varicose veins to get effective treatment. Instead the definitions have been changed, so that only the most severe cases with established skin damage leading to an ulcer can be put on the operating list. Elective surgery like varicose veins is an easy target for this type of manipulation – by redrawing the boundaries, health service managers simultaneously reduce the number of patients on waiting lists (thereby facilitating attainment of targets) and reduce the number of procedures carried out – thereby reducing cost to the commissioning groups. Similar schemes are in place across most of the country for a variety of other complaints such as hernias, cataract surgery and joint replacements. Initiatives to deny treatment to patients on the grounds of smoking habits or obesity have recently been reported.

Restriction of access to treatment on grounds of ‘insufficient severity’ preserves the ideological purity of the NHS ‘free at the point of use’ by sweeping the problem under the carpet. Unfortunately, pretending that the need has disappeared by a semantic redefinition does not make the problem disappear for the patient who cannot afford to pay for private treatment. This is not an open and honest way of dealing with real world clinical problems.

A serious examination of low cost social insurance systems or co-payment plans similar to those that exist in most developed Western economies is long overdue. Dogmatic adherence to a monopolistic model of centrally funded universal healthcare paid for exclusively via general taxation will not meet the health requirements of our population in the coming years and redefining the definition of severity of varicose veins isn’t going to solve the problem either.

Eddie Chaloner is a consultant vascular surgeon who operates at Lewisham and Greenwich NHS Trust and through his private practice Radiance Vein Clinic. Chaloner pioneered endovenous laser surgery treatment for varicose veins in the UK, which has revolutionised the treatment of this common condition worldwide.

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Last week the Governing Body of Bristol Clinical Commissioning Group agreed a plan to remove from its constitution the clause which prevents it from giving contracts to companies which practice tax avoidance.

We understand that it is likely that other CCGs with similar constitutional clauses will also move to remove them.

Bristol Protect our NHS was founded just over three years ago in response to a 38 Degrees campaign to amend the model constitutions of CCGs then in the process of being created. The inclusion of a clause preventing contracts going to tax-avoiders, and other clauses, was our first success. We know that groups in other parts of the country were also successful.

So this looks like the start of an initiative to counter those successes and make life more comfortable for the tax-avoiders.

This is astonishing timing given the almost daily reports about the immorality of tax-avoidance in the national media and the public distaste for it.

The paper agreed at yesterday’s Bristol CCG Governing Body is here:
https://www.bristolccg.nhs.uk/media/medialibrary/2016/01/govbody__26jan2016_item23.pdf

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Speech delivered in the House of Commons – 28/01/2016

Many Hon. Members have raised the seriousness of the financial challenge facing our health and care system. They are right to do so. Many Hon. Members have also been right to say that we need a big, honest national debate about what excellent care services look like and how we might pay for them.

I’ve been the Shadow Secretary of State for Health now for just over 4 months. In that time, it has become blindingly obvious to me – if it wasn’t at the outset – that the NHS and care system in our country is on the verge of collapse. Huge hospital deficits, care home providers on the brink of failure, older people in hospital because they can’t get the support they need at home, more critically ill people than ever before waiting too long for ambulances and large chunks of the workforce so demoralised that they want to up sticks and head for the Southern hemisphere.

For many people who use the NHS, this picture may sound unfamiliar. For the majority, it still provides excellent care – and it is important to recognise that and to thank the thousands of dedicated staff who ensure that happens. But for many others, the system fails them and the risk is that it starts to fail more and more people as time goes on.

When I was asked to do this job, I knew that the NHS and care system was under pressure. I knew that demographic change and the march of technology – both in and of themselves, good things – were placing demands on a system designed for a different century. As a constituency MP, I had visited isolated older people, many feeling like prisoners in their own homes, surviving with the help of a meagre care package or the support of family and friends if they were lucky. As a councillor before that, I had seen the soaring demand for adult social care and the woefully inadequate budget to deal with it. Demand which is growing because of our ageing population – but also because of advances in medicine which enable babies who may not previously have survived at all, to not only survive into childhood but adulthood too.

On a personal level, I knew that in my own family, my grandmother had spent the last few years of her life in and out of hospital on an almost weekly basis – driven as much by crises of loneliness as by a deterioration of her COPD.

And I knew that my other nan was forced to sell her own home to pay for her own care when she developed vascular dementia, meaning that all but £23,000 of her £140,000 estate disappeared.

All of these things I knew before I became the Shadow Secretary of State but it was only when I visited hospital after hospital, up and down the country, that my eyes were really opened. The image of frail, elderly people, perched alone on beds in emergency admissions units or in rehabilitation wards is THE abiding picture which stays with me following my first 4 months in this job. It made me feel uncomfortable. As a childless 40 year old woman, would that be me in 40 years’ time? Was it the best place to be? Was it the best we as a country could do? The image may have been uncomfortable, but the numbers say it all: 1 in 4 hospital beds occupied by people with dementia, half of all people admitted to hospital aged over 65, 300,000 people aged over 90 arriving at A&E by ambulance every year.

When we get older – and it will come to all of us, hopefully – hospital will sometimes be necessary but it shouldn’t become the norm. I know that we have to address this problem. The system needs to be redesigned so it gets the right sort of support to people at the right time and in the right place to prevent problems from escalating. But we have to be honest and say that there is a price tag attached to this.

Yes, there are still savings that can be made, ways to make the system more efficient and less wasteful but there are simple underlying pressure that can’t be wished away. Every day that goes by there are more and more, older people living with more and more complex, often multiple, conditions. Some say family members need to step up to care for elderly relatives. Others say that’s unrealistic. Every day that goes by, new drugs and treatments become available at not insignificant cost. It may be tempting to brush these uncomfortable truths under the carpet but we can’t and we would be failing generations to come were we to.

So, that brings us to the proposal we are discussing today to establish an independent, nonpartisan commission to establish what a long term financial settlement for the NHS and social care might look like. I understand the superficial attraction of this idea. I’ve been stopped on the street and in the gym by people I’ve never met before saying “why can’t the politics be put to one side when it comes to the NHS?” I understand that sentiment. Politicians aren’t the most popular bunch of people out there and too often we are seen to be advancing our own party’s interests and not those of the public. But for me, I think the question of how we fund elderly care going forward is THE most deeply political question our country faces over the next decade.

It’s political because it’s about who pays and who benefits.

Whilst the NHS is a universal, taxpayer funded system, free at the point of use, social care provision is a mixed bag – those with money, pay for it themselves, those without rely upon councils to provide what support they can. It’s been a make do and mend approach to social care in recent times but our changing population means that it no longer an option.

I spoke about my Nan earlier. A woman of limited means who experienced catastrophic care costs because she developed dementia. My family is not a rich family. We are not a poor family either. We are like many families up and down the country. When I was growing up my dad decided to take us on a two week holiday to Spain each year, instead of paying into a pension. He’s never bought a brand new car in his life but he never let his children go without either. The costs of care which fell upon my Nan and my family, fell randomly.

Is it right that a woman of limited means who dies of dementia at 85 passes nothing meaningful onto her family when a wealthy man who dies of a heart attack at the age of 60 does? What about those who plan their financial futures having invested in expensive tax advice to avoid the costs of care? It is my view that these are deeply political questions.

In order to adequately fund the NHS and care system in the future, the truth is that a political party needs to be elected to Government having stood on a manifesto that sets out honestly and clearly how we pay for elderly care and how we manage in a fair and transparent way the rising costs of new treatments, new drugs and new technology.

No matter how well researched, well intentioned, well-reasoned the recommendations from an independent commission, someone at some point will have to take a tough decision.

When I think about the cross-party work that has been done on this in the past, I think I can also be forgiven for being cautious. Take the discussions that took place between by predecessor, the Rt Hon Friend the Member for Leigh and the then Conservative and Liberal Democrat Opposition prior to the 2010 election. Just weeks out from the election, the Conservatives pulled the plug on those talks and accusations of “death taxes” were suddenly being hurled – so much for a grown up debate to answer the difficult questions. Take also the attempt at cross-party agreement in the last parliament which led to some of the Dilnot proposals on capping the costs of care. These proposals were in the Conservative Party’s manifesto, but were swiftly kicked into the long-grass just weeks after the election. I’m not sure that attempts to take the politics out of inherently political decisions have worked.

Even if we take something which should be straightforward – a new runway for example – an independent commission hasn’t exactly led to consensus on how to proceed – just more delay. As the well-respected Nuffield Trust has said: “Experience shows that independent commissions into difficult issues can have little impact if their recommendations do not line up with political, local or financial circumstances.”

How we pay for elderly care is one of the most difficult decisions facing our generation. The truth is it will require political leadership. A political party needs to own the solutions and be determined to make the case for them. I am not ashamed to say that I want the Labour Party to lead this debate. I want us to build on some of the excellent work that has already been done in this area, in particular that of Kate Barker and The King’s Fund. And I want us to spend time talking to people up and down the country about the kind of health and care service they want to see and to have a frank and honest discussion about what some of the different options to pay for that service might be.

I must also be honest though and say that I think it was a profoundly political decision in the last parliament to cut the amount of money available to councils to pay for adult social care. I say gently to the Hon Member for North Norfolk that he stood at that dispatch box opposite and defended the cuts that his Government were making to social care – he dismissed many of warnings that my hon friend the Member for Leicester West was making when she was the Shadow Care Minister about delayed discharges, about cuts to home care, and reductions in other vital services like meals on wheels and home adaptations. So I don’t think it is either realistic or right to pretend we don’t have fundamental differences on this issue.

Any attempt at finding consensus must begin with an acknowledgement of the damage done to social care over the last five years.

The public are crying out for some honesty in this debate. They understand the pressures created by rising demand and new technologies and they want to be treated like adults. To suggest that this can be all neatly sewn up by an independent commission with the politics taken out of it sounds attractive but I worry it just won’t deliver. For the millions of people who depend on our NHS and social care system, we can’t afford to have yet another Parliament where we fail to grasp the nettle. I know this proposal is well intentioned but I fear it is not the answer.

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It looks as if the era of markets and competition within the NHS has come to an end. The vanguards and devolution experiments are challenging the traditional boundaries. Many pages of planning guidance contains no mention of competition – Monitor is being morphed into something else entirely. Commissioning as has been tried through its various guises is adapting further in different ways in different places. Integrated providers and hybrids of commissioner/provider are now possible. New kinds of organisational bodies could be taking over the role as strategic commissioner of integrated services.

So – much thought is being given to future structures.

At one end of the debate is the proposal to fully reorganise the whole NHS back to its 1970’s. At the other end of the debate are those who see progress through evolution; through relationships and people with structures and even legislation being almost irrelevant. Also many fear another top down reorganisation which would be costly and damaging to relationships and so far has never worked.

Going into the last election the Labour Party was in the latter camp – it believed that its policy objectives could be achieved by removing the market structures and making the existing organisations and structures work in a different way. This now appears to be what is actually happening in the real world NHS.

All agree that there should no longer by a market or a purchaser provider split but the two camps differ on the role for planning and/or commissioning. Those in the reorganisation camp don’t really explain how services are to be planned or how the money will flow through the system, we have different systems in Wales and Scotland but both have some form of commissioning – both have some services which are either private, franchised or otherwise outside the core public service provisions – and of course social care is privatised and commissioned everywhere. Some services are better planned and provided across a larger population than the local and so decisions have to be made by someone about how costs are shared or allocated.

In the evolution camp then there is the acceptance that the provisions of some services will remain in the non-public sector (at least for the medium term) and that GP services, pharmacy, dentistry have to be commissioned. So in the evolutionary model there is still a split between the planners and service management of the providers, although this does not mean there has to be separate organisations! Arguably in any system there is a split between commissioning and provision, the issue is how to manage the commissioning bit and ensure accountability.

It is relatively simple to see how most primary care, community care, urgent care and social care services can be organised on a local basis. There could be either a separate health authority, or simply just the existing local authority, planning and providing all the necessary services – they are essentially local in character. So too are many services provided through a District General Hospital. It is a great pity the care system was not set up in this way in the first place but the wrong team won the argument about the role of local democratically elected local councils!!!

But with more careful thought it’s clear that some emergency, hospital and mental health services do not fit into such a local pattern – specialised services certainly don’t. This was even recognised long ago when the major teaching hospitals were allowed a great deal of autonomy outside the main management structure.

Funding for core services can be addressed through weighted capitation but for some services different models are necessary just as some developments and major projects require their own separate funding streams.

Under the reorganisation model all the existing NHS Trusts and Foundation Trusts like Barts, Royal Marsden or Salford Royal could no longer continue as separate organisations. They would somehow have to be fitted into the local health authorities (one for each major local authority areas) or into a regional authority. Already in some places there are developments so that one body provides a wide range of social care alongside both acute and primary care services and also undertakes most of the commissioning responsibilities (from both CCG and local authority). So far those proposing the reorganisation approach have not provided any details about how the transition would be made or what the impact would be on the real organisations that would have to be broken up in some way.

Under the alternative approach, the one favoured by the SHA, there would be no market based commissioning but there could still be separate organisations that provide services. This is the situation in non-market Wales where three major provider bodies were allowed to continue after the market was removed – this appears to work well enough.

In the evolved model there would be some organisations that had their own separate identity, their own board and accountability through the commissioning relationships with one or more commissioning bodies. These bodies will still be part of the NHS and subject to direction by the secretary of state who would have the overall legal and political responsibility for the service. In the SHA version these bodies would be like Foundation Trusts having a two tier governance structure and non-executive directors.

The weakness of the evolved model which retains separate provider bodies is that it is harder to ensure that it is exempt from any externally imposed competition rules. The Efford Bill set out how this could be done by restoring the role of the secretary of state, abolishing the market related parts of the current legislation and by restoring the NHS contracts. Most agree this is enough but it’s hard to ever be 100% sure. Equally it is also possible that any post reorganisation structure could be vulnerable to manipulation but also any incoming government committed to privatisation and markets could simply pass new laws for yet another reorganisation!!!

So two big policy issues are. How does the money flow through the system? And. What role is there for hospitals and independent Trusts of some sort?

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As news arrives from Cambridge of yet another privatisation inspired project going horribly and expensively wrong let’s hope people in Staffordshire, South Warwickshire, Southport and elsewhere are thinking long and hard.

The Stafford Cancer contract saga is long running and is now so hopelessly flawed that it should simply be wound up. The use of a complicated procurement process which was supposed to be about a competitive dialogue between various qualified providers bringing new ideas has ended with a negotiation with the obvious NHS providers. The attempt to outsource commissioning has been unpicked.

It matters because even if everything else is ignored (and it should not be) then the commissioners and providers of cancer services are to be locked into a complex legally enforceable contract for ten years. So for ten years as the rest of the NHS tries hard to evolve and develop collaboration through vanguards, devolution and other imaginative attempts to make services better the cancer services in Staffordshire and Stoke will be locked out; bound together by the guesses made now.

It is fair to accept that when the saga began there were the best of intentions; you can accept that cancer services in the area were not as good as they should have been. What would have helped would have been some kind of root cause analysis of why this was the case. Still, work began quite purposefully on what better services should be like and some consultation and engagement took place.

Embedded in the ideas being developed was to use a lead provider model, where some of the commissioning decisions are moved from the commissioner to a lead provider who takes on the role of integrating services. Nothing wrong with the idea although it shows a weak commissioner. Anyway the project got approval from NHS England. As was said at the time:-

Five of Staffordshire’s Clinical Commissioning Groups (CCGs) are teaming up with Macmillan Cancer Support to transform the way people with cancer or those at the end of their lives are cared for and supported.

The project will look at commissioning services in a new way – so that there would be one principal organisation responsible for the overall provision of cancer care and one for end of life care.

Then it came to light that the commissioners were to use a competitive tendering approach to find the lead provider. What they were asking for is set out below as taken from the contract noticei. In the Financial Times it was reported that:-

The NHS is embarking on its biggest and most wide-ranging outsourcing of services so far by inviting companies to bid for £1.2bn in contracts to provide frontline cancer treatment in district hospitals and care for the terminally ill.

The deals could see the private sector delivering all cancer and end-of-life treatment for children and adults across Staffordshire and Stoke on Trent. This will involve diagnosis and treatment such as radiology, radiotherapy, breast screening, chemotherapy, nursing and surgery for patients in hospitals, hospices and at home.

Two years later a lengthy process using FoI has now established that there is no proper record of how the decision to use competitive tendering was taken, no proper business case was prepared (even though this was a contact for over £600m), no options appraisal was carried out into the best method to use and there was no attempt by the CCGs involved to follow their arrangements to involve service users in decisions about how services are organised. The whole process was built on sand.

Fast forward to today and we have the CCGs involved through the procurement/project process negotiating with the NHS providers of the services and carrying out due diligence. It is possible that by early next year the contract could be ready for signature.

Hopefully before signing anything the CCGs will wake up and insist on a full (final) business case and publish it and get some independent expert assurance of what is in the case as would be required in any such major exercise involving £600m. Even then once the actual details of what the contract requires are established then there has to be a proper engagement with the service users taking more months.

But why bother? The failure of the contract in Cambridge hangs over the Staffordshire experiment. There, after much negotiating a contract was finally agreed with just the NHS providers that were left and it failed within a matter of months.

Come on Staffordshire give it up.

i A two-stage, ten-year contract to transform the provision of cancer care in Staffordshire and Stoke. Stage 1 will be fee based, for up to two years, and requires a prime provider to manage all the services along existing cancer care pathways with a view to: managing and improving data quality and collection to establish detailed baseline information about activity and costs; understanding patient and payment flows; achieving a limited set of service outcomes focused on improving the patient’s experience of the service and ensuring equality of access and treatment. Achievement of the Stage 1 aims will trigger the commencement of Stage 2.
In Stage 2 the provider will assume responsibility for the provision of cancer care, in expectation of streamlining the service model. Performance will be against ambitious clinical and service outcomes, with payment based on achieving stipulated outcomes. Service provision (Stages 1 and 2) will initially be for four tumour sites (bladder, lung, prostate, breast) with a requirement to provide services in respect of all tumour sites by contract year 5.

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The National Health Service in England is being dismantled. But you wouldn’t know it from listening to the radio or reading the newspapers. As so often, you have to look beyond the headlines about pressures on funding and the junior doctors’ dispute to find out what’s really going on. In 1990, Kenneth Clarke introduced an internal market into the NHS, following on from the ‘options for radical reform’ set out by Oliver Letwin and John Redwood in 1988. It had three pillars: GP fund-holding (delegating budgets to individual GP practices); the replacement of health authorities by ‘NHS trusts’ (self-governing accounting centres with borrowing powers, and their own finance, human resources and PR departments) and the splitting of purchasers from providers (the planning and delivery of services was to be undertaken by separate bodies, with the money flowing between them). In its 1997 manifesto, New Labour promised to ‘end the Tory internal market’. It did get rid of GP fund-holding (only to reintroduce it later as Practice Based Commissioning), but otherwise took the Tories’ ideology even further by introducing, in 2003, the market-oriented ‘NHS foundation trusts’ and their regulator, Monitor, as well as scaling up the Private Finance Initiative. Clarke was able to say on the sixtieth birthday of the NHS in 2008 that ‘in the late 1980s I would have said it is politically impossible to do what we are now doing.’

Then came Andrew Lansley’s Health and Social Care Act 2012. No longer does the government – or anybody else – have a legal duty to provide hospital services throughout England. The hundred or so NHS trusts were all prospectively abolished, and a plan set out to transform them (if not to close them down or sell them off) into foundation trusts. The 150 or so foundation trusts had their private patient income cap abolished and were permitted to receive 49 per cent of their income from non-NHS sources. About 113 private providers have since been licensed by Monitor, and tendering for services has been made virtually compulsory. ‘Public health’ has been carved out of the NHS, and shared between local and central government. Meanwhile, Lansley, having stood down as an MP before the election in May, has been given a peerage and hired as a consultant to Bain & Company, which, according to its website, ‘helps leading healthcare companies work on the full spectrum of strategy, operations, organisation and mergers and acquisitions’. The appointment at Bain was signed off in July 2015 by Baroness Browning, who chairs the Advisory Committee on Business Appointments – herself a consultant to Cumberlege, Eden and Partners, ‘a specialist consultancy to the health sector’ led by Baroness Cumberlege. You couldn’t make it up.

We are now at a crucial time in the wrecking process. Under the 2012 Act, clinical commissioning groups (CCGs) buy services from providers, especially from NHS foundation trusts. But the trusts are no longer obliged to provide particular services. Since April 2013, their services have fallen essentially into two categories: Commissioner Requested Services (CRS), and the rest. Services designated as CRS are subject to ‘continuity of service’ restrictions on the trust’s ability to cut or alter them. Monitor has the power to make the trust provide CRS services for a specified period, but cannot stop them being cut once that period expires. Trusts also need to have Monitor’s consent before they sell off buildings and equipment used to provide CRS. Services that are not CRS are not subject to these restrictions. So the more services that are not designated as CRS, the more freedom an NHS foundation trust has to do what it likes – so long as 51 per cent of its income comes from NHS services.

When the 2012 Act was implemented, the services that foundation trusts had to provide under the previous rules were automatically designated CRS for three years, until April 2016, in their new licences. But Monitor said then that the planning and purchasing responsibilities of CCGs include ‘designating a range of services that local commissioners believe should continue to be provided locally if any individual provider is at risk of failing financially. We call these Commissioner Requested Services.’ CCGs are supposed to imagine that the foundation trusts they contract with could financially fail and to use a four-stage Designation Framework to come up with a new list of CRS by April 2016 on the basis of that imagining. ‘We expect the number of services that are designated as Commissioner Requested Services to decrease as a result’ of CCGs doing that, Monitor says, because if a trust goes bust it is expected to provide fewer services than it would otherwise. In other words, services that were mandatory until April 2013, and which for three years afterwards will have had some protection from ‘continuity of service’ conditions, are expected to decrease. This is an instance of applying powers supposed to ensure continuity in order to bring about discontinuity.

Halting the demise of the NHS in England won’t happen without a new law. The National Health Service Bill, scheduled to have its second reading in the House of Commons on 11 March next year, would prevent the specific sleight of hand I have described from going ahead, as well as reversing 25 years of marketisation. It was tabled in June by the Green MP Caroline Lucas, and is supported by Labour (including Jeremy Corbyn and John McDonnell), as well as by Lib Dem, SNP and Plaid Cymru MPs and the British Medical Association.

The question now is whether Labour under Corbyn will end its support for the market in the NHS and get behind the bill. The shadow health minister, Heidi Alexander, is still finding her feet, but the signs are not good. Unlike McDonnell, she has not brought in new political advisers. She is being advised by those who advised Andy Burnham, and judging from a meeting I had with her very recently New Labour thinking on the NHS is for now still very much in place. Ross McKibbin, writing in the LRB of 8 October, expected Corbyn’s leadership to end in tears. If that turns out to be the case, one reason may well be that Corbyn just wasn’t able to translate the support he has in the party into parliamentary backing.

First published in the London Review of Books.

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No. Is it dying? Quite possibly.

These questions are prompted by what is going on in the NHS right now and by the second annual lecture for NHS Providers, given by Sir David Nicholson last week.

Having largely kept silent since leaving NHS England Sir David re-appeared to tell the government, point blank, that it simply has to find more money for the NHS. No doubt about that.

He opened by saying that he would not be making any major policy pronouncements: ‘So I won’t be saying that the Department of Health should be abolished or that the purchaser–provider split should be put in the dustbin of history where it belongs.’ In questions, however, he was tempted further.

Sir David lived with – indeed implemented – the purchaser–provider split for the better part of the last 25 years of his NHS career. One suspects he saw the intellectual attraction of it – that it is no bad thing if the NHS consciously decides what it wants to buy with its £100 billion budget, and then commissions it from whoever is best placed to provide it: competing publicly owned services, or the private and voluntary sectors. But one suspects his heart was never entirely in it. In answer to questions he noted, with a slightly wolfish smile, that ‘remarkably the system worked without it’ in the years before 1991, while adding that the danger without it is that the NHS becomes totally dominated by providers. Some ‘counter-weight’ is needed to prevent that.

But, he said, if you look at many of the leading clinical commissioning groups, ‘they are really providers, that’s what they want to be’ and the world of vanguards is seeing commissioners and providers seeking to change the way services are provided through a model of co-operation that doesn’t really fit with the purchaser–provider divide. As we seek new ways for the money to flow in order to create the new models of care, it would be sensible ‘to put it [the split] to one side and not seek ideologically to try to get ourselves back to that. And I think it will disappear over time.’

One suspects Sir David may be right – or that, at the very least, the purchaser–provider divide is starting to evolve radically. Take Devo Manc and any other areas that take on the whole health and social care budget. There may well still be contracts operating within such arrangements. But if the location of care is going to change significantly, the planning behind that is going to look a lot more like planning than purchaser/providing, particularly if the whole thing has to stay within budget.

Equally, seeking to sort out long-troubled ‘whole health economies’ – Cumbria, Essex and parts of Devon – almost by definition means looking beyond the purchaser–provider divide, as does the attempt by the Care Quality Commission for a whole-system form of inspection and Jeremy Hunt’s idea for a single measure of ‘good’.

There are other factors in play. Provider deficits – in both foundation and non-foundation trusts – are stretching the model to breaking point. This goes right back to the original argument between Gordon Brown and the Treasury, and Tony Blair and Alan Milburn, over the creation of foundation trusts. That dispute was partly politically motivated on Brown’s part. But the Treasury had a question to which no satisfactory answer has yet been found. What happens when a foundation trust goes bust? Who meets the bill? The answer, back then, was always, the Treasury, which is why it refused to allow foundation trusts full borrowing powers.

The nearest parallels to foundation trusts are universities and housing associations. But, in the last analysis, a financially failed university can be closed and a housing association has assets and rental streams, so it can be taken over.

In the NHS, these solutions appear not to apply. This is partly because – very broadly speaking – we are now left mainly with district general hospitals and larger organisations, having closed huge numbers of small hospitals between the 1970s and 1990s.

District general hospitals may be being hollowed out from above by the concentration of specialist services and from below by the desire for care closer to people’s homes. But the need for a decent-sized health facility in large towns is not going away, and there appears to be no private market to successfully take financially failed ones over as Hinchingbrooke demonstrated. So the theory of the market – that financially failed organisations will close and or be taken over for pennies – appears unable to deliver for NHS hospitals.

All this puts the theory of the purchaser–provider split under huge pressure. Not everywhere, but in many places. Add to all that the moves towards accountable care-type provider organisations, or provider networks that commission within themselves while being answerable to a more strategic commissioner, and a decidedly different form of commissioning is emerging. The core idea behind the purchaser–provider split – consciously decide what you want to provide and then acquire it from whoever is best placed to provide it – lives on. But the English singularity – lots of small commissioners all operating a purchaser–provider split – looks to be on its way out. A long slow exhalation rather than an overnight death. But dying.

First published by the Kings Fund

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Can the NHS handle the outsourcing of clinical services?

Executive Summary

  1. The NHS now contracts out the provision of health services to the private sector to the tune of over £20 billion a year, or a fifth of the total healthcare budget. Although a significant proportion of this is made up of contracts with Dentists, Pharmacies, Opticians and General Practitioners, the newest and biggest area of outsourcing is in relation to those services which the NHS, until very recently, used to provide directly: community health services and secondary care.
  2. Over the last four years there has been a 50% increase in the amount spent in the private sector on these services by local commissioning bodies and NHS trusts, from £6.6bn in 2009 to £10bn in 2014.
  3. This trend looks set to continue with the introduction of the Health and Social Care Act 2012 which places a requirement on Clinical Commissioning Groups (CCGs) to put services out to competitive tender.
  4. Administering, monitoring and enforcing these contracts is costly. We estimate that there are now some 53,000 contracts between the NHS and the private sector, including contracts for primary care services. These contracts, as well as the contracts with NHS providers, are arranged and administered by 25,000 staff working in CCGs, Commissioning Support Units (CSUs) and NHS England’s local area teams, at an annual cost of £1.5bn.
  5. The safety and quality of healthcare in England now depends increasingly on how effectively the NHS monitors and enforces this myriad of contracts with the private sector. But contracting for healthcare is highly problematic. Asymmetry of information makes it almost impossible for a commissioner of services to know whether a provider is delivering according to the terms of the contract, or is cutting corners or reducing quality in order to gain extra revenue.
  6. There have been a number of documented high-profile cases, such as Winterbourne View and Serco’s out-of-hours primary care contract in Cornwall, where the NHS has failed to manage contracts with private sector providers effectively. The Public Accounts Committee has identified significant weaknesses in central government’s general capacity to monitor and enforce contracts with large private companies and Monitor, the economic regulator of the healthcare market, has identified similar serious weaknesses in the capacity of local CCGs.
  7. However, little is known about how CCGs inspect and enforce contracts with the private sector. Using available official data, and data from 181CCGs which responded to a survey, we identified the following:
    • Out of the total of some 53,000 contracts which the NHS holds with private providers of care, the 211 CCGs currently hold over 15,000. Expenditure by CCGs on contracts with the private sector amounted to £9.3bn in 2013-14, 16% of their £65bn budget.
    • Given the complexity of monitoring contracts for healthcare, regular site visits to private providers of NHS services ought to take place. However, there is little record of the number of site inspections which CCGs carry out in relation to the contracts that they hold. Out of those which responded to our survey 109 (60%) did not record how many site inspections they undertook, or were unable to say how many they had done. Of even greater concern, 22 (12%) did not carry out any site inspections.
    • CCGs remain the contracting bodies, with statutory responsibilities, but most of them have contracted out their contract monitoring function to Commissioning Support Units or CSUs. CSUs, which between them employ some 8,500 staff, are at present technically part of NHS England, although the government intends them to become private companies by April 2016. Most CCGs also share contracts with other CCGs.
    • These complex arrangements are the reason why many CCGs said they were unable to answer questions about the number of contracts they hold or how many site visits have been undertaken.
    • In a 2013 study of CCGs Monitor found that they were reluctant to enforce the terms of contracts for fear of exacerbating the financial situation of providers. Our survey supports this finding. We found that only seven out of the 15,000 contracts had been terminated because of poor performance and only 134 contract query notices had been issued. Only 16 CCGs had imposed any form of financial sanction on private providers.
  8. The picture which emerges from these facts is of an NHS poorly equipped to ensure that healthcare services outsourced to for-profit providers will provide safe, high-quality care and good value for money. At the same time accountability for the handling of the £9.3bn which CCGs are now spending annually on non-NHS providers of NHS care is being thwarted by the outsourcing of the contract monitoring work for which CCGs are legally responsible to unaccountable Commissioning Support Units which are soon to be privatised.

Recommendations

If the outsourcing of NHS clinical services to the private sector is to continue, and if patients and the public are to be confident that standards are being met and that value for money is achieved, a number of measures need to be taken to address the issues raised in this report.

  1. NHS England should commission an independent audit of CCGs’ capacity to monitor and manage contracts with non-NHS providers before any further major contracts are arranged.
  2. NHS England should reconsider its plans to privatise the contract monitoring of NHS contracts. CCGs are the statutory bodies responsible for enforcing contracts between the NHS and the private sector, not CSUs, which remain unaccountable if anything goes wrong. This problem will be exacerbated if CSUs become private companies, as is intended, from April 2016. With nearly £10bn worth of contracts with the private sector already in place, it is vital that statutory bodies are genuinely responsible and accountable for ensuring that private providers deliver according to the terms of their contracts.
  3. To improve transparency CCGs should be required to publish regular performance data on the number and value of contracts they hold, how they know whether contracts are performing well, the number and type of staff they employ to monitor and enforce contracts, and the amount of any over-payments they may have made to providers due to error or fraud.

The contracting NHS: key facts

  • 53,000 estimated number of contracts held between the NHS and the private sector for healthcare in England, including for primary care services.
  • £22.6bn total value of NHS contracts with the private sector, including primary care services.
  • 24% percentage of NHS England’s total budget of £95bn which is spent in the private sector, including for primary care services.
  • £9.3bn amount spent by CCGs on contracts with the private sector for NHS services in 2013-4.
  • 16% percentage of the total Clinical Commissioning Group budget of £65bn which is now spent on the private sector.
  • 15,000 estimated number of contracts between CCGs and the private sector.
  • 90 average number of contracts with the private sector held by each CCG.
  • 25,000 number of staff employed in CCGs, CSUs, and NHS Local Area Teams to commission, administer and enforce NHS contracts.
  • £1.3bn combined budget of CCGs and NHS England Local Area Teams for commissioning, administering and enforcing NHS contracts.
  • £700m amount spent by CCGS on CSUs to administer, monitor and enforce their contracts with NHS and private sector providers.

The contracting landscape

  1. Until 1990 the NHS was a complex but unified organisation, comparable to a very large multinational company. Its services were planned and funded centrally; service delivery was organised through a system of regional and district branches of the central NHS management. Good performance was achieved through line management but relied implicitly on trust, which in turn rested on a service ethos grounded in a shared commitment to prioritising the wellbeing of patients.
  2. In 1990 the NHS and Community Care Act introduced the purchaser-provider split and an ‘internal market’ in which NHS acute hospitals, mental health and ambulance services became semi-independent ‘trusts’, operating under non-enforceable contracts with local ‘purchasers’. (Many NHS hospital trusts send patients for treatment in local private hospitals to avoid financial penalties for not treating them within 18 weeks of referral, as occurred in 2014 when Musgrove Park Hospital in Taunton sent patients for cataract surgery to the private operator Vanguard ) In addition, between 2004 and 2006 new contractual arrangements were introduced between the NHS and private providers of primary care services, dentistry, pharmacy, general practice and ophthalmic services.
  3. By 2013, when the Health and Social Care Act came into effect, the market had ceased to be purely internal; private providers were now able to compete to provide NHS clinical services, using legally enforceable contracts. Clinical Commissioning Groups (CCGs), which now took on the PCTs’ purchasing function, were required to put contracts out for competitive tender to the private sector.
  4. The Department of Health has acknowledged that it does not keep a central record of the total number of contracts which underpin this new NHS market.2 Looking at various data sources, including a Freedom of Information (FOI) survey we conducted of all 211CCGs, we estimate that there are now some 53,000 contracts between the NHS in England and private sector providers. This includes the contracts which are held by NHS England with dental practices, pharmacies, ophthalmic service providers and general practices, all of which are independent businesses, as well as the contracts with non-NHS providers held byCCGs.

    The number of contracts between the NHS and the private sector for the provision of healthcare services.

    Table 1 The number of contracts between the NHS and the private sector for the provision of healthcare services

  5. Hospitals and other providers may themselves also commission services; e.g. hospitals may have contracts with private laboratories to provide diagnostic services, or with other hospitals (including private hospitals) for the treatment of some of their patients, in effect subcontracting some of the work they are themselves under contract with CCGs to provide. However, we have been able to find no information on the number of these contracts.
  6. According to the Department of Health’s accounts for 2013-2014 the total expenditure on contracts for health care with the private sector amounts to £22bn, or almost a quarter of the £95bn allocated to NHS England to provide health care. The value ofCCG contracts with the private sector now amounts to £9.3 billion, or around 16% of the £65 billion allocated toCCGs. Unlike primary care services (dentistry, pharmacy, ophthalmic services, and general practice),CCG contracts with the private sector are for services – community health services and secondary care – which, until recently, the NHS provided directly.

     Expenditure on contracts with the private sector for the provision of NHS care in 2013-14

    Table 2 Expenditure on contracts with the private sector for the provision of NHS care in 2013-14

  7. As Figure 1 demonstrates,
    Growth in the expenditure of PCTs/CCGs and NHS Trusts on private sector provision 2002 – 20141

    Growth in the expenditure of PCTs/CCGs and NHS Trusts
    on private sector provision 2002 – 20141

    since the opening up of NHS services to the private sector, following the Blair and Brown government reforms, there has been a rapid increase in the number and value of services outsourced by local commissioning organisations to the private sector. For example in the last five years there was a 50% increase in the amount spent by PCTs/CCGs and NHS trusts on non-NHS providers, increasing the total spend from £6.6bn to £10bn. We expect that this trajectory will continue under the provisions of the Health and Social Care Act 2012.

  8. The nature of the companies with which the NHS contracts is relevant when considering the capacity of CCGs and the NHS to monitor the contracts, as it can affect the nature of the contractual relationship. Any private company must make a profit in order to survive, and the Companies Act requires company staff to prioritise the interest of shareholders. These incentives and pressures can impact on how the provider behaves: if profits can be increased (or losses reduced) by cutting the quality of services to patients, or by cutting corners, there is an incentive to do it, and this may be enhanced by pressure from managers who have corporate profit targets to meet.
  9. CCGs also hold contracts with NHS Trusts and other NHS bodies, but due to the fact that they have different governance and accountability arrangements and have inherited a public service ethos these contracts can often still be successfully managed through relational or trust-based contracting arrangements.
  10. The ownership structure of firms is also relevant. Competitive markets are inherently dynamic and firms of any kind, from large multinationals to small family businesses, may have problems which impact on patients. Firms owned by private equity (i.e. companies whose shares are not publicly traded), however, are a distinctive category because private equity companies rarely intend to retain ownership of other firms in the long term: they typically seek to realise a medium-term return on the other companies they own through high returns on debt or through restructuring and resale. The problems to which this can sometimes give rise were exemplified by Castlebeck Holdings, which was dismantled after the scandal at Winterbourne View:

    Castlebeck Care (Winterbourne View)

    Winterbourne View was a private hospital near Bristol for adult NHS patients with mental disabilities, built and operated by Castlebeck Care. In May 2011 a BBC reporter secretly filmed patients being grossly abused by the staff. The subsequent Serious Case Review reported that ‘the majority of staff at the hospital were unregulated support workers who are not subject to any code of conduct or minimum training standard. Over time Winterbourne View Hospital became a Support Worker-led hospital…’.

    Contract monitoring had been virtually non-existent, and regulation had not compensated for its failure. The Care Quality Commission (CQC) had ignored three warnings from whistleblowers and had carried out three inspections in the previous year which failed to find any evidence of abuse.

    A subsequent CQC inspection of 23 of Castlebeck’s other hospitals and homes identified several ‘company-wide themes’ including ‘lack of training for staff’; ‘inadequate staffing levels’; ‘poor care planning’; and ‘failure to notify relevant authorities of safeguarding incidents’. The Serious Case Review found that ‘even though the hospital was not meeting its contractual requirements in terms of the levels of supervision provided to individual patients, [the NHS] commissioners continued to place people there’.

    Behind these failures lay the fact that with an annual turnover of £55m Castlebeck was carrying £428m of debt on which it was paying interest of £38m a year, resulting in a trading loss of £19m in 2008 and £10m in 2009. This financial model reflected the purchase of Castlebeck in 2006 by a private equity company registered in Jersey. The surplus was going to the owners of the debt, leaving management struggling to cut costs.

  11. The nature of the businesses which contract with the NHS to provide healthcare services varies considerably. In the dental sector, the NHS mainly holds contracts with small or medium sized businesses, whilst NHS pharmacy contracts tend to be held with larger multiple chains such as Boots or Lloyds. This is also the case with NHS ophthalmic services, where chains such as Boots, Vision Express and Specsavers dominate. On the other hand the contracts with General Practices are mainly with small independent providers which also receive financial support from the NHS in relation to their premises and IT infrastructure; only a very small proportion currently belong to corporate chains.
  12. No comparable information is publicly available about the non-NHS providers of services toCCGs. In order to establish the nature of these we looked at those licensed by Monitor under the Health and Social Care Act to provide NHS Clinical Services toCCGs. In 2014 59% of these companies were for-profit providers and out of these 58% were backed by private equity.

    Figure 2 Provider companies licensed by Monitor in October 2014, by company type (n=97)

    Figure 2 Provider companies licensed by Monitor in October
    2014, by company type (n=97)

  13. In relation to each of the NHS’s 53,000 contracts, resources are needed in order to monitor and enforce them, otherwise there is no guarantee that the provider of the contract will deliver safe and effective care. The Health and Social Care Act placed the commissioning of NHS services, including contracts with NHS and private providers, in two parts of the new infrastructure – CCGs and NHS Local Area Teams.
  14. Under the new structure the resources spent on the work of commissioning and managing contracts, including managing contracts with NHS providers, are substantial. The 211 CCGs employ some 12,500 people, 20 and receive from central government around £25 per person whose healthcare they are responsible for to cover their running costs – a total of £1.3bn. For the 27 NHS Local Area Teams (which contract for NHS dentistry, pharmacy, ophthalmology and GP services) the available data suggest that there are around 3,440 employees, with a budget of £230 million.
  15. The remainder of this report focuses on the contracts that CCGs enter into with private providers. These follow a standard form drawn up by NHS England, but responsibility for the detailed provisions of each contract, and for ensuring that the terms of the contract are met, rests with CCGs.
  16. These contracts can be very complex. As Monitor notes: ‘health care commissioners often have to secure a huge number of different services from a single provider, meaning that negotiations between commissioners and providers can cover hundreds, sometimes thousands, of service lines’.According to the 181 CCGs which answered our survey, the average number of contracts held by each CCG with private sector providers was 90.
  17. These contracts are also of a qualitatively different nature from the nonenforceable contracts which existed in the NHS previously, and they lay heavier responsibilities on commissioners. They are negotiated privately between the parties and disputes can be litigated in the courts. The costs of negotiation and litigation may deter commissioners with limited budgets from undertaking effective enforcement of contracts.
  18. Such contracts are also confidential and not subject to the transparency requirements of the Freedom of Information Act. Commissioners’ rights to enter premises, inspect documents, interview patients, etc, are governed by the provisions of the contract itself. How far a contract confers such rights will affect the capacity of the commissioners to enforce it, and the absence of transparency makes third parties unable to tell whether a contract is in the public interest or whether it is performing well.
  19. Moreover, although individual CCGs are legally responsible for the contracts they make with NHS and non-NHS providers, their ability to hold providers directly to account is complicated by two factors.
  20. First, most CCGs contract out their contract management function to Clinical Support Units (CSUs). These bodies, of which in December 2014 there were 10, employ in total around 8,500 staff to undertake most of the contract management function for CCGs, and do so for up to 20 or more CCGs at a time.
  21. The exact legal and constitutional status of CSUs is unclear, which is a matter for concern given that they now play a central role in overseeing how large sums of public money are spent. They are in practice embryonic companies, initially consisting largely of staff who were previously employed by PCTs. At present they are ‘hosted’ by NHS England, but from April 2016 they are due to become fully private entities. CCGs currently pay them a total of around £700m a year for their services, or just over half the amount that CCGs receive from central government for their running costs. From February 2015 onwards CCGs which choose to outsource their commissioning work are required to put contracts for it out to tender when their current contracts expire. (See NHS England: Commissioning Support Lead Provider Framework Factsheet). NHS England has ruled two CSUs, which currently provide contract support for 47 CCGs, ineligible to compete to provide ‘end to end’ (i.e. comprehensive) services in future. They are expected to cease operation, while two other CSUs have announced plans to merge with a third in April 2015, leaving six remaining CSUs and three other private companies, to compete for all future end-to-end commissioning support contracts. One of the new companies is a consortium and another plans to use a ‘supply chain’ of additional companies to do some of work. In such cases the outsourcing of NHS clinical services will itself involve several levels of outsourcing. (See David Williams, ‘Jobs at risk as NHS England rejects two CSU bids’, HSJ 28 January 2015 and ‘Revealed: winners and losers of CCG support framework’, HSJ 5 February 2015).
  22. A second complication is that most CCGs collaborate with others in contracting for the provision of services for their respective populations. Typically, a single CCG will be the ‘lead’ commissioner with other CCGs joining in the contract as associate commissioners. The lead commissioner takes the lead in dealing with contractual performance issues on behalf of the associate commissioners.
  23. Both of these reasons may help to explain why 12 CCGs out of the 181 which responded to our survey were unable to tell us how many contracts they held with non-NHS providers.
  24. Health care is a complex good, meaning that it is very difficult to specify exactly what service is needed within a contract, making contracts for health care particularly difficult to monitor and enforce. Healthcare contracts also suffer from information asymmetry, whereby the commissioning body – in this case the CCG – will always know less about how well the contractor is performing than the contractor does. This makes it possible for contractors to ‘cheat’ or shirk on their contractual obligations and to provide false information about their performance.
  25. The incentive is intensified if the firm’s finances are under pressure, and in recent years some private providers of clinical services to the NHS have struggled to generate significant profits from contracts.
  26. These problems are not solely encountered by CCGs. In February 2014 the Public Accounts Committee (PAC) found that central government departments, with a total of £40bn in contracts with private sector providers, suffered acutely from asymmetry of information, and a severe imbalance of power and skills: The PAC found that there was ‘a longstanding problem of insufficient investment in staff with contract management skills.’
  27. The government’s Chief Procurement Officer told the Committee that ‘There has been an asymmetry between the suppliers and the officials. The suppliers sell deals, run deals and are earning big salaries. They have done it multiple times. Sometimes, they are up against officials who have none of those characteristics…’ The Committee concluded that ‘Government is clearly failing to manage performance across the board, and to achieve the best for citizens out of the contracts into which they have entered’.
  28. This raises the question whether 211 CCGs and ten CSUs, which are managing contracts with private providers worth £9.3bn, have the resources to do even as well as major government departments. In 2013 the economic regulator of the health service in England, Monitor, undertook a study of the effectiveness of local contracting within the NHS, interviewing CCGs and CSUs. The researchers found that the efficacy of local contracting was undermined by four factors.
  29. First, information asymmetry was a serious problem. They found that ‘providers have far better data than commissioners about the work they do and the costs of doing it, which they may be unwilling to share. Even where providers do share information, commissioners are not always able to have confidence in it because the quality of the information is sometimes poor’.
  30. Second, commissioners were ‘often at a disadvantage to providers in terms of both the scale of available resources (i.e. staff and time) and the skills and capabilities of those [in the] contracting teams. Both sides acknowledged that this can give providers the upper hand in contract negotiations’. Commissioners’ lack of contracting expertise increased the already high transaction costs of managing local contracts.
  31. Third, the threat of contract enforcement was not always credible. The report found that ‘Commissioners are sometimes reluctant to enforce contracts, particularly by imposing financial penalties, for fear of exacerbating providers’ existing problems’. Serco’s out-of-hours contract for Cornwall (Box 2) is an example of this.

Serco’s out-of-hours contract for Cornwall

From 2006 Serco had a contract to provide out-of-hours GP care services for the 500,000 residents of Cornwall. In June 2013 the Public Accounts Committee (PAC) reported that: ‘In early 2012 whistleblowers raised concerns that the out-of-hours service in Cornwall was short staffed and that the contractor, Serco, had lied about its performance by altering data… Evidence has confirmed that [this] was substantially true… Serco staff altered data on 252 occasions, resulting in Serco overstating the performance it reported to the primary care trust… Serco conceded that the contract manager had been paid a bonus which was linked to performance…’

At one point a single doctor had been on duty for the entire county. The Committee found that ‘The primary care trust did not scrutinise Serco’s performance effectively. When these issues came to light, it did not penalise Serco, withhold payment or terminate the contract.’

The former chair of the local Strategic Health Authority explained that ‘it has been our culture in the NHS not to levy fines and penalties, because… it often causes more problems by taking money away from places that are struggling.’ Commenting on this the Comptroller and Auditor General said that ‘dealing with a very large, powerful organisation that is all over the public sector is a bit different… when dealing with such an organisation, you probably need to be pretty robust in the way you defend your interests. You need to ensure that if you are entitled to anything or you have a point of leverage, you use it to the full.’

  1. Fourth, effective contract enforcement was also undermined by commissioners being dependent on providers: the report found that ‘lack of perceived or actual competition, reducing [the] provider’s appetite to perform to highest standards’, plus the knowledge on both sides ‘that the commissioner is reliant or critically reliant on the provider’, limited how effectively commissioners could enforce contracts.
  2. Many of these problems in monitoring and enforcing contracts with the private sector have manifested themselves in recent cases where failures in contract monitoring have led to patients being harmed, or put at risk of harm, or misleading information being provided to commissioners. It is significant that these cases have come to light as a result of a tragedy (Box 3), or whistleblowing, undercover reporting, or CQC inspections (Box 4), and not as a result of contract monitoring.

Box 3: Contracting for Out of Hours Care:

Take Care Now In 2008 a company called Take Care Now (TCN) had contracts to provide out-of-hours primary care for a total of 1.4 million patients in Suffolk, Cambridgeshire, Great Yarmouth and Waveney, South West Essex and Worcestershire. It had, however, great difficulty in recruiting and retaining staff and relied heavily on agency doctors from Europe. In February 2008 one of these gave a patient, David Gray, ten times the correct dose of dimorphine, which killed him.

A subsequent investigation by the Care Quality Commission found that TCN was persistently understaffed; that previous ‘near misses’ and Serious Untoward Incidents had not been properly recorded or learned from; that there had been official warnings about the use of dimorphine by agency doctors from European countries where this drug was not used; and that in general the company had shown an inadequate appreciation of its responsibilities for patient safety.

The CQC report also found that monitoring of the company’s contracts by the commissioning PCTs had been extremely weak:

‘The staff in the PCTs with responsibility for routine monitoring of the contracts for out-of-hours did not understand TCN’s reports on performance. They could not adequately explain the data or the basic activity figures… Before the start of this investigation, none of the PCTs robustly monitored staffing levels, skill mix or whether the shifts were filled, and most did not monitor them at all. The PCTs did not have a clear picture of problems in out-of-hours services. They were not generally aware of serious incidents. None of the PCTs had robust established arrangements to share information on poorly performing clinicians.’

  1.  These cases where private providers have failed to perform make it clear that the information asymmetry can only be truly overcome through site visits to providers. We therefore asked how many times CCGs visited the sites where NHS-funded services were being provided by non-NHS providers as part of the CCGs’ contract monitoring work. Whilst many CCGs told us that their contract monitoring involved meeting regularly with private providers of NHS services, we thought it would be useful to identify how often actual site visits took place. Interestingly, a large number of CCGs (109 out of the 181 which responded) were unable to answer because they didn’t record this information. Of those that did record how many site visits had been made between April 2013 and October 2014, 22 reported that they had not made any, while 39 had undertaken fewer than 10.

Box 4: The Spire Wellesley

In June 2013 an NHS patient at the private Spire Wellesley hospital in Southend received a ‘wrong site’ joint replacement implant. Wrong site surgery is a ‘never event’ – a ‘serious, largely preventable patient safety incident that should not occur if the available preventative measures have been implemented by healthcare providers’ – but it was only a year later, after two further wrong site implants had occurred, that a CQC inspector learned about the NHS patient’s case from hospital staff.

 The CQC inspector noted that approximately 37% of the Spire Wellesley’s patients were NHS patients, but that there were ‘marked differences between the NHS process and Spire Hospital’s adverse event /near miss reporting policy. The Spire policy… lacked detail of how a serious or never event should be reviewed to ensure practice changes and lessons are learnt to prevent a reoccurrence… only one member of staff had received appropriate training in investigation management… Whilst the clinical effectiveness committee discussed serious incidents this was rarely shared formally with junior staff in the clinical areas or the Resident Medical Officer.’

Contract monitoring by the CCG had failed to ensure the safety of NHS patients treated at the hospital. In August 2014 the chair of the CCG’s Quality, Finance and Performance Committee asked why no contract report was available, ‘as despite issues with quality and safety at Spire Wellesley that have been raised by the CCG and CQC, we are still sending more patients there…’

  1. The former Chair of the Strategic Health Authority in the Serco case told the Public Accounts Committee that ‘it has been our culture in the NHS not to levy fines and penalties, because… it often causes more problems by taking money away from places that are struggling’ (see Box 2 above). This suggests a disincentive to use financial sanctions to enforce a contract even when a provider was seriously failing.
  2. We therefore also asked how many contracts with non-NHS providers had been terminated because of poor performance and how many sanctions had been applied. Of the 15,166 such contracts that were held by CCGs only seven had been terminated. In terms of financial sanctions imposed under contracts with non-NHS providers, 149 CCGs said that they had imposed none; sixteen had imposed financial sanctions totalling £3.8 million, although in relation to £1.9m of this no monies were permanently withheld, so it is unclear whether it amounted to a sanction. A hundred and thirty three CCGs had not issued any contract queries since 2013 in relation to the contracts that they held with nonNHS providers.
  3. Finally it should be noted that two CCGs said they could not provide us with information on the number of staff employed in contract monitoring, or the number of site visits undertaken, because it was commercially sensitive information belonging to the CSUs they were employing. One stated that ‘The CSU’s ability to apply for tender of future contracts would undoubtedly be harmed if the details you have asked for are disclosed and it would be significant: in our opinion this prejudicial effect outweighs the public’s right to know how public funds are spent’.
  4. If such information is deemed to be commercially sensitive after April 2016, when it is intended that all commissioning support will be provided by private companies (including CSUs, which will then also become private companies), it will not be possible to know how CCGs which use CSUs are exercising their responsibilities under the Health and Social Care Act 2012.

Conclusion and recommendations

  1. The Health and Social Care Act 2012 marked the final step in the creation of an external market for NHS care, a market underpinned by a myriad of contracts, increasingly being held between the NHS and private providers of healthcare.
  2. All the contracts which underpin the NHS market, including contracts with NHS providers, require administration of one form or another, and there are now some 25,000 staff employed by the NHS in this endeavour. These staff are spread between Local Area Teams (3,400), which manage primary care, dental, ophthalmic and pharmacy contracts, and CCGs (12,500) and CSUs (8,500), which manage secondary care and community health contracts, at an estimated total annual cost of £1.5bn.
  3. However, there is a significant lack of information about how this resource is used in practice, and how effective it is. As both Monitor and the Public Accounts Committee have found, acquiring the expertise and the resources for contracting effectively with private providers is a serious problem. The data provided to us by CCGs provide evidence of the challenges that CCGs face, but also raise significant questions about the transparency of the contracting arrangements, and about who is exercising the powers granted to CCGs under the Health and Social Care Act.
  4. If the outsourcing of NHS clinical services to the private sector is to continue, and if patients and the public are to be confident that standards are being met and that value for money is achieved, a number of measures need to be taken to address the issues raised in this report.
  5. NHS England should commission an independent audit of CCGs’ capacity to monitor and manage contracts with non-NHS providers before any further major contracts are arranged.
  6. NHS England should re-consider its plans to privatise the contract monitoring of NHS contracts. CCGs are the statutory bodies responsible for enforcing contracts between the NHS and the private sector, not CSUs, which remain unaccountable if anything goes wrong. This problem will be exacerbated if CSUs become private companies, as is intended, from April 2016. With nearly £10bn worth of contracts with the private sector already in place, it is vital that statutory bodies are genuinely responsible and accountable for ensuring that private providers deliver according to the terms of their contracts.
  7. To increase transparency CCGs should be required to publish regular performance data on the number and value of contracts they hold, how they know whether contracts are performing well, the number and type of staff they employ to monitor and enforce contracts, and the amount of any overpayments they may have made to providers due to fraud or error.

This report was produced by the CHPI research team with the assistance of Laura Stoll and Mubeen Bhutta and is reproduced with their kind permission.

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The commercially confidential Memorandum of Information for the controversial £700 million tender for Cancer Care in Staffordshire has been leaked and published online on openDemocracy.org

Cancer Not For Profit member and Labour PPC for Stafford, Kate Godfrey, has shared her contract concerns on The Guardian after discovering the contents revealed frightening new prospects for the NHS in Staffordshire.

The campaign group have been calling on commissioners for greater transparency and more information about the implications of this contract. The subsequently leaked secret document, which must have come from a source close to the heart of the commissioning process, may indicate that not all is well within the ranks of the team at the heart of this project. Unite the Union’s West Midlands Regional Secretary, Gerard Coyne, is a supporter of the Cancer Not For Profit campaign, he said:

‘I stood on a platform with Cancer Not For Profit in Stafford in September last year calling on the CCGs for greater transparency around this much feared privatisation, now we know why they were being so secretive. The detail emerging from the MOI confirms our worst fears, that this contract is ripe for big business, with the new ‘prime provider’ able to ‘disinvest’ the services of current care providers. It allows them hire and fire contractors from hospices to hospitals to suit their own profit margins. 

There are specific references to a contract designed for ‘VAT efficiencies’,an issue that doesn’t concern the NHS, so it can only be because the Government are sweetening the deal for private companies to legally defraud the tax payer. The Tories have been lining this up since they walked into Number 10, they’ve installed a system which forces NHS commissioners to abdicate responsibility because the Health and Social Care Act 2012 has made their job impossible, but if they let this massive cancer contract go the NHS will never get it back.’

The campaign group Cancer Not For Profit have been asking why this massive experiment is even being considered and have been calling on the Programme Team to share the business case for this project. However, the document reveals that in fact the onus is on the bidders to create such a document and the commissioners did not even have a desired outcomes framework in place, an essential component which was in development apparently, they also neglect to outline how they envisage this great experiment is even to be achieved.

Though there have been several ‘public awareness’ events held by the programme team Andrew Donald CO of Staffs and Surrounds and Cannock Chase CCGs feels formal public consultation is not required claiming that there’s not a significant enough change in providers to make it a legal requirement. Such a stance is questionable if the ‘prime provider’ is able to bring in sub contracts and disinvest others. The Transforming Cancer and End of Life Care Programme Team appear to have no idea what is going to happen to cancer and end of life care in Staffordshire, they just don’t want to be responsible for managing it any more.

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