NHS cost-cutting Capita contract put 'patients at serious risk of harm', find auditors

National Audit Office says the firm had an ‘aggressive’ programme of office closures and redundancies

Ill-considered outsourcing effort has seen Capita incur double the losses it was predicting (PA)

Patients have been “put at serious risk of harm” by the failure of a £330m outsourcing exercise which NHS England contracted to the private firm Capita in a bid to cut costs, the National Audit Office has warned.

Women were dropped from national cervical cancer screening programmes and medical records and supplies have gone undelivered because of NHS England’s “deeply unsatisfactory” contract, it said in a report.

In a damning review the auditors lamented the outsourcing failure of another major public contract, saying neither the NHS nor Capita understood the complexity of the service.

It follows two-and-a-half years of disruption for GPs, dentists, opticians, pharmacists and their patients as a result of NHS England’s ambition to cut its £90m-a-year bill for primary care back office services by a third.

The NAO was particularly scathing of NHS England’s inability to check Capita’s “aggressive” programme of office closures and redundancies, even when it became clear “it was having a harmful impact on service delivery”.

Health service leaders said the fallout is on-going and has prevented doctors from working at a time when the NHS is already struggling to recruit, and hoped this would be a lesson for future outsourcing efforts.

However NHS England said the deal has made savings of £60m so far, which can be reinvested in services. The NAO said the extent of any harm to patients – if any – will not be known for years to come.

“Although NHS England has saved significant sums of money, value for money is not just about cost reduction,” the report says.

Serious service failures identified by the NAO include:

• Thousands of invitations to cervical cancer screening not being sent on time and 87 women being told they were no longer to receive screening, as well as patients put at risk by delays in removing doctors who should no longer be practising;
• Two-thirds of GP practices receiving incorrect medical records when patients had moved and half a million new patient letters unsent;
• 1,000 GPs, dentists and opticians being unable to work because of delays, resulting in lost jobs and earnings.

It also notes it has had to spend more than £10m on costs related to these performance issues, while Capita has had £5.3m deducted by NHS England as penalties for poor performance so far.

Penalties are capped at £480,000 a month – 20 per cent of the contract payment – but have not been applied for over a year because of a dispute between the two parties on how Capita’s performance should be measured.

The company claims it is achieving 41 out of 45 of its targets, as of February this year, when factors it considers outside its control – such as the other NHS organisations or its own subcontractors – are factored in.

However the performance reported by the practices and pharmacies, who rely on Capita for everything from approving pension payments, ordering supplies and transporting medical records, only meets 32 out of 45 targets.

“This is a damning but fair account,” said Professor Helen Stokes-Lampard, chair of the Royal College of GPs. “The long list of failures made by Capita have been incredibly frustrating for GPs and our teams, and we are still dealing with the fallout.”

She added that lessons must be learned for future outsourcing bids with private companies that mismanagement “can have serious consequences for our patients’ safety”.

The contract aimed to save money by centralising services into three regional centres and introducing new digital systems for things like tracking patient records, pharmacy payments or sending out screening invites.

Previously the service was delivered in 47 regional offices and 1,650 staff under a variety of different contracts and providers.

However the failings since Capita took over the contract in September 2015 have delayed this and NHS England “has not yet secured the transformation that it wanted”, the NAO said.

Meg Hillier MP, chair of the Public Accounts Committee, said of the report’s findings: “Trying to slash costs by more than a third at the same time as implementing a raft of modernisation measures was over ambitious, disruptive for thousands of doctors, dentists, opticians and pharmacists and potentially put patients at risk of serious harm.

“Yet again this is poor contracting by government with one of its major suppliers and it must learn lessons.”

An NHS England spokesperson said: “While not without its difficulties, by making this change over the past two years the NHS has successfully saved taxpayers £60m, as the NAO themselves confirm.

“This £60m in lower administrative cost has all been successfully reinvested in frontline NHS patient care, and has helped fund the equivalent of an extra 30,000 operations.”

A Capita spokesperson said its new chief executive, Jonathan Lewis, has already admitted the company “previously has taken on some contracts that contained too many unknowns” and this will change in future.

They added: “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.”