NHS for Sale: Myths, Lies & Deception (23 page)

Private companies are also not averse to drumming up demand for unnecessary investigations when it stands to profit from them. In 2013 the
BMJ
reported that Specsavers, who had won thirty contracts to provide community audiology services, were sending leaflets to patients urging them to ask their GP to refer them to Specsavers for ‘free’ tests and hearing aids (‘free’ of course meaning paid for by the NHS). The invitation was also placed in newspapers and on buses. CCGs raised the alarm, saying that the drive was likely to stimulate unnecessary demand, eating into an
already tight NHS budget. Dr Nigel Watson from the BMA’s GP committee, called it ‘the ugly side of commercialism’, but Specsavers claimed it was their job to give patients ‘access and choice’. And not to worry about who had to pay for it presumably.
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One name crops up repeatedly in any discussion of the outsourcing of public services. Serco, once referred to as ‘the biggest company you’ve never heard of’, is now quite well known to the public and for all the wrong reasons. Since successive governments began outsourcing public services its name has appeared with monotonous regularity in UK headlines, associated with such poor practices as overcharging, falsified figures and a culture of ‘lying and cheating’.
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A closer study of Serco provides a useful example of private versus public ethos and what can go wrong when public services are outsourced to large supranational corporations.

Ninety per cent of Serco’s global business is with public sector organisations, with 60 per cent of that business coming from the UK, where it is involved in an astonishingly wide range of activities including prisons, public transport, school inspections, ‘Boris bikes’ and the UK’s ballistic missile early warning system.
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It is what John Harris, in an excellent article, refers to as a ‘public service company’,
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operating a parallel state.

Serco entered the UK health market in 2006 with a five-
year contract to run GP out of hours (OOH) services in Cornwall, having won with a bid that undercut the local GP co-operative by £1.5m. The contract was renewed in 2011, but in 2012 the service was severely criticised by the Care Quality Commission after whistleblowers drew attention to problems with understaffing and data falsification. In 2013 the Public Accounts Committee published a critical report accusing Serco of ‘bullying employees, providing a short staffed and substandard service and manipulating data to hide the truth’.
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The company admitted to having buffed up its performance data by altering them on 252 occasions in order to meet targets.
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The report was also critical of the local NHS authorities who had failed to negotiate a good contract, failed to scrutinise Serco’s performance and failed to penalise Serco or terminate the contract when problems were revealed by whistleblowers. The report commented that Serco had consistently failed to meet national quality standards, and that the service was still not satisfactory despite the earlier CQC report. Margaret Hodge noted: ‘The failures … matter because the NHS will be making increasing use of private and voluntary providers to deliver NHS services.’
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In the face of this evidence one might reasonably ask why, but apparently nobody did.

Serco said they were ‘deeply saddened and very sorry’ for what went on in Cornwall and in December 2013 announced that they had agreed to early termination of the contract after experiencing ‘some operational challenges’. Valerie Michie, managing director of Serco’s healthcare business, summed up with the immortal words: ‘The services we deliver in Cornwall … are no longer core to the future delivery of our healthcare strategy.’
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Despite this record, in March 2012 Serco won a £140m contract to deliver community health services in Suffolk after undercutting the incumbent trust by £10m. There were immediate fears that Serco had underestimated the true cost of running community health services, and these were soon borne out when Serco rapidly announced plans to cut 137 jobs out of 700 (proposals which were challenged by unions who threatened legal action). The local CCG subsequently identified numerous problems including inappropriate workload, lack of equipment, poor infection control, high stress levels and low morale among staff as well as recruitment difficulties.
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In 2013 the
HSJ
reported that Serco was even appealing to the local NHS to help it fill vacant posts for nurses and physiotherapists, a request that was turned down.
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NHS staff that moved over to Serco were relatively protected but new staff were given inferior contracts and struggled to manage the workload as staffing levels fell.

The GP commissioners proved tougher than their colleagues in Cornwall and began imposing financial penalties after Serco failed to make adequate improvements, although the money was to be restored once an action plan was agreed. A report by the CCG found that ‘most frontline staff still state that they have no understanding of where the organisation is going and what needs to happen or change to get there’.
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Serco continues to run this contract until 2015, but has said they will not bid to renew it. Meanwhile they pulled out of a contract to run Braintree Community Hospital in Essex.

Elsewhere Serco was branching out into the pathology business with two NHS London trusts – yet another tale of substandard service, low staff morale and overcharging described in
Chapter 9
.

Eventually the government had to act and in 2013 Serco
was barred from bidding for new contracts until it cleaned up its business. But in May 2014 they were back again and winning contracts
despite
still being under investigation by the Serious Fraud Office. A poll run by Survation at this time reported that the public had had enough. 80 per cent of the public thought Serco should not be allowed to bid for public service contracts, and had low levels of trust in outsourcing companies in general.
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In August 2014 Serco had also had enough and announced it was pulling out of the clinical health services market in the UK, having lost £18m.
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The woeful tale of Serco’s misadventure into NHS clinical services embodies many of the concerns around outsourcing. Overambitious bids were followed by an inability to deliver, data falsification, overcharging, poor treatment of staff,
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a substandard service for patients and finally departure when profits were not forthcoming. The contracts were poorly drawn up – Margaret Hodge noted that in Cornwall ‘you had the absurd situation where a company was seemingly lying about what it was doing but there was nothing in the contract that could allow you to terminate it – indeed they still appeared to be eligible for their bonus payments’.
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She went on to identify the problem at the very heart of outsourcing NHS services when she noted that such companies were ‘good at winning contracts but too often they’re bad at running services’.
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Indeed, where tendering is concerned the level playing field promised by the government is a myth because the core business of these multinational companies is winning public sector contracts. They have the knowhow and legal expertise plus deep pockets for loss leaders, all of which gives them the advantage over charities, social enterprises and NHS staff who the coalition suggested would be in with a chance when it came to competing for
NHS contracts. Having won the contract they must then deliver a service of which they may well have no previous experience, with predictably poor outcomes.

In this chapter we have already had examples of contracts awarded to the private sector leading to destabilisation of local NHS services and there are a number of reasons why this may happen. It might be because the NHS is left to discover and then deal with poor outcomes for NHS patients who have been treated by a private company, as with the patients who had problems after joint surgery in the private ISTC. It may be because a private firm has abandoned a contract and left patients without cover, as happened after companies walked away from unprofitable contracts to run GP surgeries. It may be because the outsourcing of profitable services may leave an NHS unit unable to deliver the rump unprofitable service, as is threatened when MSK services are cherry picked leaving the local trusts with only the acute and emergency orthopaedic work.

The latest and perhaps most worrying example is unfolding in Nottingham where last year the local CCG awarded community dermatology services to Circle. The dermatologists at the local hospital, which had bid unsuccessfully for the contract, were reportedly concerned about job stability under a private employer, and also feared that Circle would not offer opportunities for training and academic research. The CCG ignored their concerns and six out of eight consultant dermatologists have since left, five citing their unwillingness to work for Circle. This means Nottingham University Hospitals Trust, until recently a national centre of excellence for dermatology, is now unable
to offer acute and emergency adult dermatology services, an extraordinary and potentially dangerous situation by any standards.
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The British Association of Dermatologists (BAD) warned that the privatisation and fragmentation of specialist services was ‘decimating’ some areas of the NHS. Dr David Eedy, president of BAD, said an increasing number of private providers were taking on dermatology services around the UK, including in Cumbria and Colchester. He added that the exodus of staff should have been predicted:

Nobody has thought through the implications for teaching, training and research – the whole future of British dermatology. Nottingham is just one example of the many fires we are fighting across the UK to try to keep dermatology services open in the face of poorly thought out commissioning decisions, and the Government’s lack of understanding of the implications of pushing NHS services into unsustainable models provided by commercially driven private providers or enterprises.
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NHS hospitals are complex organisations whose many departments are interdependent to a high degree, which is often not appreciated by non-clinicians. They resemble children’s Jenga towers in as much as removal of one block may lead to instability while the removal of too many blocks will inevitably lead to the collapse of the structure. Not only are different specialities dependent on the clinical expertise of many others (for example obstetricians and paediatricians must work closely together) but within departments expensive work has traditionally been cross-subsidised by simple and easier work. Thus NHS services will be destabilised
if specific expertise is removed or easy work is outsourced. In Nottingham this has happened with fatal results for acute adult dermatology. Consultant dermatologists are in short supply, with 200 posts unfilled across the country, and it will be no easy matter to rebuild this department. NHS specialist teams, representing years of expertise, are like Humpty Dumpty – easy to break up, nigh on impossible to put back together again.

By 2013 outsourcing scandals were becoming commonplace, with ten separate investigations taking place (seven of them involving Serco) into services ranging from OOH GP services to housing for asylum seekers. It emerged that neither the Cabinet Office nor any other department knew how much public money was being spent on outsourcing and Margaret Hodge asked the National Audit Office (NAO) to look at government outsourcing, They chose to concentrate on four major companies (Atos, Serco, G4S and Capita) because of the scale of their work, their notoriety, and the criticism they had attracted.

The NAO report highlighted the fact that the government was outsourcing most contracts to a small number of firms, and Margaret Hodge voiced ‘big concerns’ over ‘quasi monopolies that have sprung up in some parts of the public sector’. The report also drew attention to a number of other problems which will by now be familiar to the reader – lack of transparency over profits and outcomes, failure to pay corporation tax, overbilling, a culture which did not tolerate whistleblowers and the inability of small contractors to compete with the multinationals.
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Unfortunately their conclusion was not that the widespread
outsourcing of public services was an expensive way of getting a substandard service but that there should be better monitoring and stricter financial penalties. In other words, more public money should be spent on making the private sector clean up its act and behave more ethically, something which has been nigh on impossible to achieve so far. The elephant-in-the-room question that remains unanswered by all these committees and reports is – why is the solution to failed outsourcing more failed outsourcing?

The record of the private sector delivering NHS care is not a happy one. Because of the triumph of ‘commercial confidentiality’ hard data is hard to come by, but there is already plenty of evidence of worse outcomes for patients, unethical behaviour and poor value for the taxpayer, a complete contradiction of the claims made by supporters of private sector involvement. Meanwhile the NHS, criticised in the past as a monopoly provider, is in danger of being replaced by a small number of quasi monopoly providers.

It is easy to see how companies this big, winning the majority of public sector contracts and delivering vital public services, could become indispensable.
The Daily Telegraph
once suggested that ‘without Serco, Britain would struggle to go to war’. Given what we know (rather than what politicians tell us) it must be equally dangerous to allow the NHS to rely heavily on expensive, substandard, unaccountable, cost-cutting and sometimes unethical and fraudulent private delivery to the extent that the purveyors of it, like the banks in the financial crisis of 2008, become ‘too big to fail’.

The vexed question of ‘public sector ethos’ remains largely unaddressed. If the market is an inadequate guarantor of provision, then it is also inadequate as a motivator for people working in outsourced services. Outsourcing provision
to profit-making firms, while keeping funding in public hands in order to resolve problems of market failure, raises the interesting problem of how people working in outsourced sectors are supposed to be motivated. Are they expected to work to public-sector ethos, while the firms for whom they work are profit-driven – with resulting tensions? Or do they too become profit-maximisers and give up the public service ethos? Do they need to be encouraged to have a distinctive ethos that guides their striving for excellence, replacing the profit motive? How is pursuit of that ethos to be guaranteed, and what is to stop practitioners slipping back into idleness? It is a particular dilemma for healthcare professionals, whose duty of care is to the patient, but who may find themselves working for the private sector whose first duty is to shareholders and who act accordingly. It is regrettable that professional bodies such as the General Medical Council have largely failed to address this question, leaving doctors exposed to potential problems arising from the conflict between professional duty and commercial pressures from employers.