Largest ever private contract put to tender in NHS collapses

Topics covered: Ridouts professional advice

An ambitious five-year contract worth £800m to provide older peoples services in Cambridgeshire and Peterborough has collapsed eight months after being set up at a cost of £1m to the CCG. The rationale for the collapse was that the contract was not ‘financially sustainable’.

The contract included a clause whereby the company would have to meet outcomes based targets to get up to 15% of its funding. This clause combined with the deep savings that were required to make the contract viable resulted in a contract which was doomed from its outset.

The collapsed project could be seen as a rally against the march to privatisation of the NHS. This follows the collapse of the Circle contract to run Hinchingbrooke Hospital at the start of 2015. It shouldn’t be forgotten that private companies are generally constructed to make profit; and the provision of care doesn’t often lend itself to such an assessment.

NHS trusts often run at a deficit, and indeed the vast majority of trusts this year will be operating with a sizeable deficit. In this case, as with Hinchingbrooke before it, private organisations simply don’t have the access to the funds to run at a deficit as easily as those publicly owned organisations.

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