An independent investigation published today into the collapse of a £750 million contract to provide mental health and community services for adults and older people in Cambridgeshire has blamed “lack of commercial expertise” for its failure.
In a damming report, the National Audit Office (NAO), said the Cambridgeshire and Peterborough Clinical Commission Group and UnitingCare Partnership “could and should have foreseen” the risks, which led to losses of £9 million in procurement costs and another £16 million when the contract was terminated in December last year after only eight months.
The two health bodies entered into a £726 million, five-year agreement to provide core services for adults and older people, which were set to revolutionise the delivery of care and plug a £250 million funding shortfall.
“This contract was innovative and ambitious, but ultimately an unsuccessful venture, which failed for financial reasons, which could and should have been foreseen,” said Amyas Morse, head of the NAO.
“It had the strong potential to join together all bodies in the local health economy and to deliver better patient care. However, limited oversight and a lack of commercial expertise led to problems that quickly became insurmountable.”
The report also referred to the debacle over Circle pulling the plug on its contract to run Hinchingbrooke Hospital in March 2015.
It said the termination of the older people’s contract suggested the health sector “may not have learned lessons about assessing and managing risk when working with a private provider”.
The report acknowledged that the CCG was facing a funding shortfall of £250 million in the five years till 2018/19 and is one of the most financially challenged CCGs in the country.
The UnitingCare business case predicted estimated savings of £178 million to the local health economy by 2020, mostly be reducing inappropriate emergency hospital admissions.
A contract was signed in November 2014, despite a number of uncertainties and outstanding issues, and launched the following April. By May 2015, however, UnitingCare was requesting £34 million of extra funding for the first year and the contract collapsed when the CCG said no further funding was available.
The CCG has said it accepts the NAO’s findings and the suggestions contained in the report.
“It is clear that there was a wide disparity between the CCG’s contract expectations and UnitingCare’s expectations of income. The CCG recognises that there were too many outstanding issues at contract signature and that there was also gaps in the procurement advice the CCG has received. There is much to learn, and where the CCG has been able to, changes have already been made.
“We continue to support the model of care that is now being delivered locally and we are working closely with all our health and care partners to ensure that patients receive good outcomes from the care they receive within the resources available to the health and care system as a whole.”
Keith Spencer, chief executive of UnitingCare, said both parties had concluded that the arrangements were no longer financially sustainable.