Virgin Care Contract – Financials and Tech Will Be Critical

One of the largest NHS contracts awarded to a private sector firm has gone to Virgin Care to deliver 200 types of NHS and social care services to more than 200,000 people in Bath and north-east Somerset. The contract is worth £70 million a year for seven years with an optional three year extension.

Virgin Care will become the “prime contractor”, with many other service providers working as sub-contractors. The work includes a range of care for adults and children, from services for those with diabetes, dementia or who have suffered a stroke, as well as people with mental health conditions. It also includes care of children with learning disabilities and elderly people undergoing post-operation rehabilitation.

That list suggests immediately that this is high-profile, sensitive work with huge importance to the service recipients, and often their friends and families too. Outsourcing in the health service is always controversial; issues include whether this takes work and income away from other voluntary or public sector bodies, staff transfer questions, and whether the “profit motive” gets in the way of patient care.

We have only taken a quick look at some of the documentation that has been provided by the commissioners – at first sight, they have been pretty open about the process. There is plenty to look at here if you are interested. The evaluation panel note here looks pretty good; I have to say the process is just as I would have recommended.

However, there are some big questions that won’t be answered until implementation takes place. The collapse of the not too dis-similar UnitingCare contract in Cambridge sounded the alarm for this sort of deal, and we have to hope we don’t see any repeat here.

The biggest issue in Cambridge was the gap between the provider’s expectation of income from the contract and what was actually available. Once delivery was underway, UnitingCare rapidly found they could not make it work financially, and pulled out. Now Virgin is in a stronger financial position, so could even stand to lose money for a while, but we have to hope the financial modelling by both parties (buyer and supplier) through the process to date has been accurate and robust.

The other question is around technology. Glancing at some of the documents and videos, it is clear that Virgin has presented technology improvements as a big part of their sales pitch. It is less clear whether this is proven technology, used by the firm elsewhere, or aspirational concepts and plans. We know from past experience that NHS IT is not easy to get right. Particularly with this sort of work, with very fragmented delivery and many small sub-contractors, the co-ordination is critical, so processes and systems of any type must be effective.

We have no philosophical issues with the private sector delivering NHS work; what works best for the service users and the taxpayer (and that is a balancing act) is what matters. Indeed, Virgin has said that all profits will be re-invested  - however, there will no doubt be management fees to the firm, so cynics will say that is purely a presentational issue.  But there will be a lot of focus on this deal, and we hope for everyone’s sake it works a whole lot better than the Cambridge experience.

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