April 9, 2013 9:16 pm

Serco grapples with watershed NHS contract

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Improvements will come from reducing the amount of laborious paperwork that nurses, occupational therapists and physiotherapists have to do, the company claims

When Serco won a groundbreaking deal to take over Suffolk’s community health services last March, it came as a shock to 1,030 NHS nurses and medics who found themselves transferred to the FTSE 100-listed multinational.

Outsourcing district nursing services – including community hospitals, physiotherapists and paediatric teams – represented a watershed for the NHS. It was only a month after Aim-listed Circle Holdings had been named as the first for-profit organisation to be allowed to run a general hospital: Hinchingbrooke in Cambridgeshire.

But Serco’s win was doubly unexpected because the incumbent provider, North Essex Partnership NHS Foundation Trust, was one of the best performers in the UK. It had made a £150m bid to retain the three-year contract – less than the £156m it had previously charged. But Serco won the contract by offering to serve the same population at a cost to the taxpayer of just £140m.

Six months since taking on that contract, on October 31, much of the initial work has been done. Serco says that 23 out of the 25 “transition consultants” it parachuted in to overhaul work practices are now on their way to new projects.

How the contract pans out may prove the bigger story, though.

Already, job cuts are being contested. Although Serco initially thought it could run the contract with 137 fewer employees, this figure has been reduced to about 90 after pressure from unions and the job reduction process will be slower.

Despite this, the company insists that “more efficient practices” will enable it to improve services as well as delivering returns to shareholders.

Even after paying for employees, buildings and equipment – including £4m spent on new technology – Serco is hoping that the contract will deliver profit margins in line with the rest of its business: about 6 per cent a year, although not in the first year.

Service improvements will come from raising the number of hours that nurses, occupational therapists and physiotherapists spend with patients, the company claims. It says it can do this by reducing the amount of laborious paperwork they do. One of the company’s own targets is increasing practitioners’ “face time” with patients from 40 per cent to 60 per cent within three years.

New technology is crucial to this, as is the pooling of administrative functions at a newly hired 24-hour centre in Ipswich.

Sharon Colclough, director of community services for Serco, says NHS staff used to perform time-consuming jobs that should have been left to administrative personnel, such as arranging for a stair chair to be delivered to an elderly woman, and that consultations with specialists were often duplicated. Serco is planning to introduce one “care co-ordinator” with a wider range of skills, who will bring in specialists as necessary.

By the end of this month, Ms Colclough says Serco will have “safely handed over the business” – in effect, putting the day-to-day running back into the hands of the same employees.

To critics, this raises the question of whether the NHS Trust could have overhauled the district’s health services on its own.

Ms Colclough, a former NHS Trust chief executive, says this is unlikely, not least because Serco was able to provide £4m of cash upfront to invest in new technology and training. “People working in community services in the NHS have always known what the changes needed to be to improve the delivery of care, but the investment has not always been as readily available,” she argues.

But whether Serco’s investment will be enough to quell public anxiety over private sector involvement in the NHS remains to be seen.

Unison, the health workers’ union, says its relationship with Serco had improved since the start of the contract but the issue remained as to “whether it is appropriate for a private sector company to be making money out of delivering health services to vulnerable patients”.

Privatising community health services is likely to erode employment conditions in the long run, according to healthcare analysts Laing & Buisson. It has identified a “clear parallel” between community health services now and social care services, such as such as nursing and mental-health care homes, 20 years ago.

“In the two decades since, domiciliary social care services have effectively been privatised in the UK as independent sector providers have entered the market, offering less generous pay and terms of employment,” its report said.

With Serco’s name already tarnished by the poor running of an out-of-hours GP service in Cornwall, the company admits it will have a tough time winning public approval.

“It’s not a loss leader,” says Ms Colclough, “but it does have to be a shining example.”

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