Supporting primary care services: NHS England’s contract with Capita inquiry

NHS England’s outsourcing strategy led to a short-sighted rush to achieve savings, heedless of the impact on patients or practitioners. NHS England saw primary care support services, which were delivered across 47 local offices and managed under local arrangements, as ripe for transformation. But NHS England focused on maximising financial savings quickly, at the expense of service quality, without any piloting, effective user consultation or time spent getting the contract right. NHS England paid only lip service to engagement with doctors, dentists, opticians and pharmacists on service changes. Stakeholders, such as the Optical Confederation and the Local Optical Committee Support Unit, told us that NHS England and Capita had not adequately involved practitioners in designing services to test whether plans would work. They said that they had raised concerns about service changes, but had been ignored. NHS England accepts that some of its previous engagement with stakeholders has been only “lip service”. Additionally, performance indicators used for measuring Capita’s performance were focused on speed and efficiency, rather than providing a quality service. Performance indicators did not cover all the services that Capita was required to deliver and were not agreed from the start of the contract. It is deplorable that NHS England did not engage with practitioners and was content to expose primary care practitioners to the risk of poor service performance in order to make savings. Recommendation: NHS England should assess the likely impact on users of a service before outsourcing and should update the Committee by July 2019 on how it is involving stakeholders at an earlier stage in changes to the service, for example by seeking and responding to their views on transformation plans and getting them involved in pilots.

Neither NHS England nor Capita properly understood the scale of the challenge before agreeing the contract. NHS England wanted to reduce its costs by 35% from the first year of the contract at the same time as implementing a range of modernisation measures. This was a high-risk approach, particularly as the service was not well understood and was being outsourced for the first time. There was poor data on the volume, cost and performance of services and not enough was known about how local services were working and in particular what was working well which could have informed the transformation. But despite this, neither NHS England nor Capita did enough to gather the necessary information, assess the risks or test whether Capita would be able to deliver the service to a good standard. The short transition period between Capita signing the contract and making changes to the service meant there was no time to identify the many unknowns. Recommendation: NHS England should report back to us by January 2019 on how it will improve its future contracting, including, for example, by understanding what is already working well locally, collecting sufficient data on the services being outsourced, setting appropriate performance measures and ensuring that service changes are sufficiently piloted. 6 Supporting Primary Care Services: NHS England’s contract with Capita

NHS England incentivised Capita to close offices as quickly as possible but did not have the mechanisms to stop the office closure programme when it proved to be a costly mistake. Capita expected to make losses of £64 million in the first two years of the contract, in order that NHS England could meet its objective to reduce its costs. Capita therefore had a financial incentive to close primary care support offices and reduce staff as quickly as possible, in order to minimise those losses and, between December 2015 and November 2016, it closed 35 of the 38 support offices it inherited. The office closures resulted in the loss of local expertise and meant that Capita did not have the resources needed to deliver the services required. NHS England raised concerns about the office closures in May 2016, too late in the day, and it did not have the contractual mechanisms to stop Capita from going ahead with its plans. Capita now acknowledges that it was a mistake to carry on closing offices and that in continuing to do so “we just made the problem worse as we went along … we should have stopped.” As Capita needed to spend more than it expected to support failing services it has in fact made a loss of £125 million in the first two years and accepts that it is unlikely to make a profit over the remainder of the contract. Capita has told us that it will devote the resources required to ensure that it delivers the contract and we will watch this closely. Recommendation: NHS England and wider government contractors must ensure that basics, such as appropriate mechanisms to intervene in service changes if they do not go as planned, are part of any contract.

Failure to deliver services led to disruptions and extra costs for doctors, dentists, opticians and pharmacists. Capita’s failures to deliver back-office functions resulted in approximately 1,000 GPs, dentists and opticians being delayed from working with patients, and some lost earnings as a result. The failure to update performers lists (confirmation that practitioners are still suitably qualified to practice) also potentially compromised patient safety in cases where practitioners should have been removed. Stakeholders also raised concerns about missed and inaccurate payments to practitioners, a backlog of half a million patient registration letters and failures to deliver medical supplies. Recommendation: NHS England should write to us by January 2019 setting out what they have done to compensate primary care practitioners for the disruption to the service.

Service failures following the outsourcing put patients at risk of serious harm. Delays in moving medical records impacted patients’ ability to access necessary care, and 87 women were incorrectly notified that they were no longer part of the cervical screening programme. A review by one of NHS England’s Medical Directors in December 2016 noted that the failures had the potential to put patients at risk of serious harm. NHS England is currently assessing an incident to identify whether there has been actual patient harm. Recommendation: NHS England should, by January 2019, update us on whether there is evidence of any harm to patients. Supporting Primary Care Services: NHS England’s contract with Capita 7

A lack of collaboration between NHS England and Capita resulted in them taking too long to address the issues with the service. Capita’s chief executive noted that partnership working is key to delivering contracts successfully. For example, he cited that there should be strong alignment between objectives and performance measures, and an environment in which either party could challenge the other about performance measures and delivery. However, some two and a half years into the contract, basic elements of the contract between NHS England and Capita are still not agreed. For example, they have still not agreed on all the performance measures or how to calculate payments owed to Capita. NHS England recognises that it has not always been having the right conversations with Capita. There have recently been improvements in their partnership working, including the introduction of senior-level meetings that we heard are held on a monthly basis since March 2018. But it has taken over two and a half years to put in place these top-level meetings. Recommendation: NHS England and Capita should write back to the Committee by January 2019, showing whether changes to their partnership working has improved the relationship, and whether they have agreed outstanding areas of difference. 8 Supporting Primary Care Services: NHS England’s contract with Capita 1 The contract with Capita

This was complex service being outsourced for the first time. Neither NHS England nor Capita fully understood the service being outsourced, including the volume and scope of services, and the ways in which services were being delivered differently across the country.10 Capita told us that when it took over the service, there was no national data on the service and that it was running blind for a period of time. Capita acknowledged that it did not carry out sufficient due diligence or assess what the issues were before it signed the contract to deliver these services. It also accepted that it should have done more to ensure that it had access to all the data it needed.11 Despite this lack of data, 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.12

Capita aimed to develop national data over the first three months of the contact (transition period) but acknowledged that it took longer than that to produce the national data that was needed to set the performance indicators.13 NHS England acknowledged that the transition period unearthed many problems and that a longer transition period would have been beneficial before Capita began to make service changes.14 Office closures

Capita’s bid depended on it closing local primary care support offices and delivering a major transformation of services to meet NHS England’s objective to reduce its costs.15 Capita expected to make losses of £64 million in the first two years of the contract, in order that NHS England could meet its objective to reduce its costs. Capita, therefore, had a financial incentive to close support offices and reduce staff as quickly as possible, in order to minimise its losses over the first two years of the contract. Between December 2015 and November 2016, Capita closed 35 of the 38 support offices it inherited and cut staff numbers from 1,300 to 660.16 7 Q 39; C&AG’s Report, para 13 8 Qq 96, 137–140 9 Qq 97–98 10 Qq 30–32, 34, 39, 78–79 81–83, 90–94, 96, 137; C&AG’s Report, para 7 11 Qq 31, 34, 39, 94, 96 12 C&AG’s Report, para 14 13 Qq 39–40 14 Qq 82, 99–100 15 C&AG’s Report, para 1.9 16 Q 140; C&AG’s Report, paras 9, 15 10 Supporting Primary Care Services: NHS England’s contract with Capita

Stakeholders told us that the site closures resulted in the loss of local expertise and meant that Capita did not have the resources needed to deliver the service.17 Capita acknowledged that it was a mistake to carry on closing offices, once it started receiving complaints about the service, and that in continuing to do so “we just made the problem worse as we went along … we should have stopped.” It accepted that it would have been better to have developed and applied national operating procedures at each office before starting to close them. However, it told us that this would have taken up to two years to achieve and would have resulted in a higher contract price and a delay in delivering efficiency savings for NHS England.18 NHS England raised concerns about the office closures in May 2016, but had not included contractual mechanisms to stop Capita from going ahead with its plans as it would have had to pay more for this flexibility.19

Capita told us that over the first two years of the contract it has made a loss of £125 million, and that if you add the loss of margin on the contract, it is closer to £140 million. It also acknowledged that it was unlikely to make a profit over the remainder of the contract. However, it told us that it was committed to continuing to invest to ensure that it delivers the key performance indicators associated with the contract. Capita also said that it and NHS England had made a commitment to reset their working relationship and ensure they bring the requisite resources and attention to any outstanding elements of contract execution. It emphasised that, working in partnership with NHS England, “we are committed to delivering against the contract.”20 In the first two years of the contract, NHS England achieved savings of £60 million compared to expected savings of £64 million.21 17 Optical Confederation and the Local Optical Committee Support Unit (CPC0004) 18 Qq 32–38 19 Qq 101–103, 127; C&AG’s Report, para 15 20 Qq 42, 56, 136 21 Qq 78, 100; C&AG’s Report, para 19 Supporting Primary Care Services: NHS England’s contract with Capita 11 2 Impact of service failures, partnership working and engagement Impact of service failures

Capita acknowledged that its execution of the contract was not good and it apologised unreservedly for this.22 Failure to deliver key aspects of primary care support services had a detrimental impact on patients, primary care services and primary care providers. For example, the service was disrupted by delays in processing new applications and making changes to the performers lists (confirmation that practitioners are suitably qualified to practice). This resulted in approximately 1,000 GPs, dentists and opticians being delayed from working with patients at a time when the NHS is in need of people to deliver patient care, and some lost earnings as a result.23 The British Dental Association told us that before Capita took over an application to be added to the performers list typically took about six weeks to be processed. After Capita took over, its members reported delays of five to six months, while some had to wait a year to get their application processed.24

Stakeholders also raised concerns about: missed and inaccurate payments to practitioners; backlogs of half a million patient registration letters; market entry delays for pharmacists; failures to deliver NHS stationery and medical supplies; and poor service from the customer support centre. A survey by the British Medical Association, carried out in December 2017, found that: 62% of respondents reported that urgent requests for patient records were not actioned in a timely manner; 64% reported that they had received incorrect patient records in the last three months; 73% reported the new medical records service had increased workload; and 51% reported incorrect pension deductions in the last twelve months. 25 Capita told us that it had not assessed what it has cost GPs, dentists and opticians and pharmacists to install new IT systems and train staff to deal with new processes, but noted that once new systems are introduced they should reduce the cost of the process for everybody.26

Some of the service failures have put patients at risk of serious harm. For example: delays in moving medical records impacted patients’ ability to access necessary care; 87 women were incorrectly notified that they were no longer part of the cervical screening programme; and inappropriate handling of patients on the violent patient scheme, which aims to provide a secure environment in which patients who have been violent or aggressive in their GP practice can receive general medical services, compromised patient safety.27 A review by one of NHS England’s Medical Directors, in December 2016, did not identify any situations where serious patient harm had resulted from these service failures but noted the full effect of these failures may not be apparent for some time. Immediately before our evidence session NHS England told us it was currently assessing an incident to identify whether there has been actual patient harm.28 22 Q 42 23 C&AG’s Report, para 10, figure 2; British Dental Association (CPC0007); British Medical Association (CPC0003); Norfolk Health Overview and Scrutiny Committee (CPC0002) 24 British Dental Association (CPC0007) 25 British Dental Association (CPC0007); British Medical Association (CPC0003); Norfolk Health Overview Committee (CPC0002); Optical Confederation and the Local Optical Committee Support Unit (CPC0004); British Dental Association (CPC0007); Royal College of General Practitioners (CPC0005) 26 Q 141 27 C&AG’s Report, figure 2; Royal College of General Practitioners (CPC0005); British Medical Association (CPC0005) 28 C&AG’s Report, para 10; NHS England (CPC0009) 12 Supporting Primary Care Services: NHS England’s contract with Capita The working relationship between NHS England and Capita

Capita’s chief executive told us that that partnership working is key to delivering contracts successfully. He noted that the most successful contracts are those where there is a strong alignment of objectives and key performance indicators between the contracting entity and the provider of the outsourced service. He added that there should be an environment in which either party can challenge the other about performance measures and assumptions about the contract and how it should be executed.29 NHS England also acknowledged that partnership working is extremely important in contracts such as this one, as there is no way that every eventuality can be foreseen and factored into the contract.30

However, NHS England recognised that it has not always been having the right conversations with Capita. By May 2018, two and a half years into the contract, basic elements of the contract between NHS England and Capita were still not agreed. For example, they have still had not agreed on 11 performance measures or how to calculate payments owed to Capita.31 There have recently been improvements in their partnership working with a resetting of the way the two organisations work together. This has included the introduction since March 2018 of senior-level meetings that witnesses told us are held on a monthly basis to assess performance against Capita’s remedial plan. Capita told us that they have now agreed seven of the outstanding performance measures, had an agreement in principle for two more, with two yet to be finalised.32 Engagement with stakeholders

Stakeholders told us that NHS England and Capita had not adequately involved practitioners in designing services to test whether plans would work. For example, the Optical Confederation and the Local Optical Committee Support Unit told us that they had repeatedly raised concerns with NHS England about service changes, but had been ignored, and tried to help identify workable solutions. The Optical Confederation and the Local Optical Committee Support Unit also told us that they are committed to working with NHS England to help deliver the modernisation of the payments service to opticians but “do not wish to be left shouting unheeded warnings from the side lines a second time”. 33

The British Medical Association told us that it has been engaging with NHS England to highlight the ongoing issues with primary care support services, and on several occasions, had been promised improvements. It told us that some progress has been made, but that services still fall short of what is acceptable and there is still an urgent need to resolve these issues to give practices and GPs confidence in the service.34

NHS England told us that there has been engagement with stakeholder throughout the process but accepted that some of this engagement had been only “lip service”. Capita also accepted that stakeholders had not been brought in to the process as much as they should have been. NHS England said it is now trying to make sure engagement happens 29 Q 54 30 Q 133 31 Qq 41–42, 126, 129; C&AG Report, para 16 32 Qq 41, 56–61, 71, 102 33 Optical Confederation and the Local Optical Committee Support Unit (CPC0004) 34 British Medical Association (CPC0003) Supporting Primary Care Services: NHS England’s contract with Capita 13 early and that it listens and responds appropriately. Both NHS England and Capita said they plan to get key players, such as the British Medical Association, more actively involved in the future.35 35 Qq 62, 146 14 Supporting Primary Care Services: NHS England’s contract with Capita