Capita’s ‘scandalous’ risks unravel

Outsourcing firm Capita’s promise of primary care savings may have come true but at the expense of efficiency, standards and jobs. Tim Tonkin reports

‘Misjudged’, ‘high risk’, ‘deeply unsatisfactory’ and ‘failure to deliver’.    

Such are the types of words and phrases that pepper the contents of the NAO’s (National Audit Office’s) 52-page report into NHS England’s contract with private provider Capita, and the latter’s provision of primary care support services over the past two-and-a-half years.

This sobering and often brutally honest assessment of the deficiencies of the contract and subsequent delivery of support services, will undoubtedly come as little surprise to GPs in England; many of whom will have experienced first-hand the kind of shortcomings that have become synonymous with PCSE (Primary Care Support England).

It is, however, in stark contrast to the ambitious and optimistic outlook that seemed to surround NHS England’s decision in August 2015 to hand control of the running of primary care support services to Capita.

Capita was awarded the seven-year contract, worth £330m during the course of its lifetime, to provide primary care support services under what would become known as PCSE.

The contract had been tendered by NHS England on the basis that any successful bidder would be able to achieve a 40 per cent saving against the existing running costs of the service, while at the same time ‘maintaining high-quality and standardised’ support services within primary care.

In securing the contract, Capita’s bid ambitiously stated that it would aim to reduce the cost of running support services by 69 per cent, effectively cutting the £77m spent in 2014-15 to £24m by 2021/22.

To achieve this, it planned to impose significant reductions in the staffing of the service from 1,390 in 2015 to just 314 by March, while, at the same time, maintaining PCSEs existing functions.

However, in its report, the NAO says that, in taking this approach, NHS England and Capita had ultimately misunderstood the risks around the outsourcing of support services.

It added that this misunderstanding had ultimately led to a provision of service to nearly 40,000 GPs, dentists, opticians and pharmacists that fell ‘a long way below an acceptable standard’.

It says: ‘NHS England’s decision to contract with Capita both to run existing services but also simultaneously to transform those services, was high risk.

‘NHS England lacked adequate data on the volume and cost of the services before the contract was awarded, and there were no consistent measures of performance … As a result, it made a number of assumptions about the volume, cost and performance of the services in order to set service specifications and performance standards.

‘Capita was incentivised through the contract to close existing services to minimise its losses but the interaction between running, closing and transforming services was more complex than Capita or NHS England had anticipated.

‘This was a high-risk strategy, particularly for a set of incompletely understood services being outsourced for the first time.’


Comprehensive cover

The range of core support services encompassed by PCSE were extensive, and cover everything from the reimbursing of GP and pharmacy payments to the handling of the NHS pension scheme for GPs, to the transfer of patient medical records between practices.

PCSE was also responsible for ensuring the delivery of supplies to practices; from stationary and forms to medical equipment such as syringes.

Yet, as the NAO report notes, things started to go wrong early on, with GP practices and other primary care services beginning to flag dissatisfaction and concern with aspects of the service, such as delayed transfer of medical records, as early as May 2016.

Two months earlier, Capita had rolled out a digital portal, designed to facilitate ordering of supplies, and the following month, had introduced a new process for labelling and transferring medical records.

The NAO’s report noted that these changes were ultimately poorly implemented and, when compounded by shortages of stock in the NHS supply chain, had left doctors and other health providers struggling to maintain their operations.

It says: ‘These issues resulted in a significant increase in the number of calls to Capita’s customer support centre, which could not cope with the increase.

‘Between December 2015 and November 2016, Capita closed 35 of the 38 support offices it inherited and cut staff numbers from 1,300 to 660.’

Indeed, it was in this month that the BMA GPs committee wrote to Capita to express its concerns about the level of service being provided by PCSE; in particular delays in practices receiving medical supplies, poor management of the performers list and issues with payments to doctors’ pensions.

Two months later, GPC endorsed a motion of no confidence in Capita, with the committee again flagging its concerns in writing to NHS England and its chief executive Simon Stevens directly.

The association was not alone in its concern.

Such was the situation that in September 2016, just over a year into the contract, NHS England had to intervene in Capita’s management of PCSE, even taking the step of embedding its own ‘expert management team’ within the organisation.

‘It [NHS England] told us that by the end of summer 2016, it had become clear that Capita’s improvement plans were ineffectual in some areas and that issues had become more widespread.

‘NHS England served default notices, placing five of Capita’s nine services in a formal rectification process: the customer support centre; the medical records service; the patient registration service; the national performers lists service; and payments to opticians.’


Contractual difficulties

Despite taking steps to remedy the issues with PCSE, the NAO’s report makes clear that inherent shortcomings in the original contract between NHS England and Capita contributed to problems in provision.

The NAO notes that although NHS England failed to include performance measures across all areas of service expected to be provided by Capita, rendering the former unable to accurately assess whether PCSE was meeting the needs of those relying on it.

Even when concerns were identified, the report found that the contract lacked mechanisms that allowed NHS England to intervene in service changes such as the closure of support offices.

It said: ‘Although Capita’s site closure programme required NHS England’s engagement throughout the process, the contract did not require NHS England’s agreement to close offices, and between May and November 2016, Capita closed a further 20 offices.’

For its part, Capita told the NAO that its decision to cut back on support staff, based on flawed assumptions about the volume of activity, had exacerbated delays and deficiencies with PCSE.

It says: ‘Capita also acknowledges that it made performance issues worse, by continuing to close support offices in summer 2016 even though it was aware the customer service centre was struggling to meet demand.

‘The site closures resulted in the loss of local expertise. Procedures in place to retain local expertise did not work effectively as the staff who were retained did not always understand the systems being used in other regions.’

More than two years on from the contract being awarded, the financial fortunes of NHS England and Capita could not contrast more sharply.

In 2015, Capita had asserted that while it anticipated losses of £64m during the first two years following its take-over of the service, it was confident in its ability to make good on these during the latter stages of the contract.

The reality has proved to be far different.


Profit warning

The beginning of 2018 saw Capita issue a profit warning, with the NAO’s report confirming that the private provider has incurred losses totalling £125m over the first two-and-a-half years of the contract.

To date, Capita has been hit by more than £5m in penalty payments by NHS England, in response to poor performance in its provision of PCSE.

NHS England, meanwhile, has made savings of £60m during the same period, just shy of the £64m it had anticipated.

The NAO notes that while this outcome might represent a welcome outcome, it makes clear that, in its assessment, NHS England put saving money ahead of service provision in its decision to contract primary care services.

It says: ‘NHS England’s assessment of the contract risk focused on the likelihood of it failing to achieve its financial savings target and did not adequately assess the risk of Capita failing to provide the service to a good standard.

‘While some services have now improved, it is deeply unsatisfactory that, two and a half years into the contract, NHS England and Capita have not yet reached the level of partnership working required to make a contract like this work effectively.

‘Although NHS England has saved significant sums of money, value for money is not just about cost reduction. NHS England will need to address the current service failures over the remaining life of the contract if it is to achieve both the savings and service improvements it intended.’

A Capita spokesperson says: ‘As today’s NAO report concludes, the complexity of the support services being let by NHS England was not fully understood when the contract was signed.

‘The report notes that several organisations and legacy issues all contributed to underperformance. It has been acknowledged that performance has improved and Capita will continue to work with all parties to address the remaining service issues. We have accepted accountability for not meeting our high standards of service previously.

‘Our new chief executive has made it clear that Capita previously has taken on some contracts that contained too many unknowns. Our new strategy will ensure we focus on doing fewer things better and securing business that we know can be delivered well.’

The spokesperson also adds: ‘We have apologised to service users who have not received the consistent level of service quality that they should expect or that we would expect to provide. Capita welcomes the opportunity to work with the BMA directly on service improvements and the timely delivery of transformation to deliver long-term benefits to GPs.’

The BMA has described the NAO’s assessment of the contract and the subsequent delivery of PCSE services as nothing short of ‘scandalous’.

GPC has written to Mr Stevens calling for him to devise a plan to respond to the litany of issues and concerns highlighted by the NAO.


Online aid

The association is also launching an online campaign for GPs and practice staff to pledge their support for a properly run PCSE service.  

For GPC chair Richard Vautrey, the report’s findings are in many ways a vindication of all the work and lobbying carried out by the association over the past two years to force health leaders and politicians to act over the debacle that is PCSE.

Echoing the recommendation of the NAO, Dr Vautrey said that NHS England now had to consider bringing elements of the PCSE service back ‘in-house’, for the systemic inadequacies to be effectively dealt with.

He says: ‘For the last two years the BMA has repeatedly pressured NHS England to address the problems with PCSE delivery, and now that the NAO has so clearly backed our concerns we hope this assessment of its failures will finally make NHS England and the Government sit up, listen and act.

‘This damning report lays bare the scale of the failures impacting patients, services and GPs due to this poorly thought-out and woefully run programme delivered by Capita.

‘That NHS England ignored the BMA’s serious concerns and went ahead with massive cost-cutting by commissioning Capita to take charge of PCSE – with the expectation that they’d have to strip resources to the bone – with no thought of the consequences is nothing short of scandalous.

‘It’s clear that Capita prioritised money over service, and were incentivised by NHS England to close support offices and cut staff as quickly as possible regardless of the problems that were quickly developing.

‘While NHS England may have hit its financial targets, the two years of chaos experienced in practices up and down the country by patients and GPs – whether this is to do with records, supplies or payments – sits completely at odds with this definition of ‘success’. It’s GPs and patients who have paid the price for this.’

Find out more about PCSE’s failures

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