NAO slams troubled £330m Capita NHS primary care services outsourcing deal

But not just the supplier – as the national spending watchdog says both parties ‘misjudged the scale and nature of the risk in outsourcing these services’

Posted 17 May 2018 by

The National Audit Office (NAO) has just issued a hard-hitting report on NHS England’s poor management of its controversial primary care support services contract (PCSE).

The public sector spending watchdog’s verdict: that neither customer nor its chosen partner, outsourcer Capita, fully understood the complexity and variation of the service being outsourced – and so both parties “misjudged the scale and nature of the risk in outsourcing these services”.

The result being that the service to primary care practitioners, including Capita’s delivery of PCSE, “has fallen a long way below an acceptable standard” – for as many as 39,000 GPs, dentists, opticians and pharmacists.

In August 2015, NHS England entered into a seven-year £330 million contract with Capita Business Services Ltd (Capita) to deliver primary care support services and deliver back a projected saving 35% of expenditure.

But 2.5 years into the contract, basic principles are still not agreed, which limits NHS England’s ability to hold Capita to account and the pair have still not agreed how to calculate 11 performance measures or how these data should be used to calculate payments owed to Capita for delivering the services.

Capita’s bid depended on numerous cost-cutting measures including closing sites and delivering a “major transformation” of services to meet NHS England’s objective to reduce its costs, such as introducing an online service for submitting GP payments and ordering medical supplies.

Good ideas – but that was the wrong focus, it seems: “Although NHS England has saved significant sums of money, value for money is not just about cost reduction”.

For example,  although no actual harm to patients has been identified, says the auditor, Capita’s aggressive approach had an impact on the delivery of primary care services and had the potential to seriously harm patients.

NHS England’s decision to choose the Capita plan to run existing services but also simultaneously “transform” those services was high risk, NAO has concluded.

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 – but NHS England was “unable” to stop Capita’s aggressive office closure programme without cancelling the contract, even though it was having a harmful impact on service delivery.

And as a result, 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 set out to achieve originally.