Judge blocks outsourcing children's health contract to Virgin Care due to 'considerable impact' on NHS

A High Court judge has temporarily blocked a council’s attempt to outsource a £100m contract for providing children’s health services to Virgin Care, because of the “considerable cost and disruption” it would cause the NHS and patients.

The Independent reported last year that Lancashire County Council had selected the private health provider, part of Sir Richard Branson’s Virgin empire, to provide mental and physical health services for patients up to the age of 19.

The deal was criticised by local MPs as “galloping privatisation” when it was announced.

Two Lancashire NHS trusts brought a legal case against the council saying it failed to apply rules governing the award of public contracts. They also claimed the decision would cost them more than £2m and result in 160 staff losing their jobs.

Ninety-five per cent of the £108m healthy child programme contract funds public health nursing services, including school nurses and health visitors.

Regular health visits, maternal mental health checkups and breastfeeding and weight reviews for children up to the age of five are included.

The promotion of healthy lifestyles and support for a wide array of health and wellbeing needs in older children are also incorporated.

Losing these services would likely mean significant turnover in the staff supporting these patients, many of whom are also involved in other services.

This disruption was not adequately factored in by the council, the court ruled.

The ruling against Lancashire came weeks after reports that other NHS bodies made an undisclosed settlement to Virgin Care following a similar case.

The company filed proceedings at the UK High Court naming the six local NHS clinical commissioning groups (CCGs) in Surrey, as well as Surrey County Council and NHS England, last year after it lost out on an £82m contract to provide children’s health services across the county.

It cited concerns over “serious flaws” in the way the contract was awarded.

The Labour Party said it was “scandalous” that the NHS had to defend a legal battle with the company and called on the Department of Health to disclose details of the settlement.

The Lancashire trusts’ case will be heard in the spring, and the transfer of services was suspended until its conclusion.

Lancashire County Council had appealed against this suspension in a bid to allow the service to transfer over to Virgin Care as planned on 31 March, warning it could not allow a gap where no one provided the service.

However, this was rejected by Sir Justice Peter Fraser in January, who pointed out that the contract could be extended with the current providers while the case was heard.

This month, a more detailed summary of Justice Fraser’s reasons and the legal arguments put forward by the current providers, NHS Blackpool Teaching Hospitals and Lancashire Care Foundation Trusts, was published.

In it he set out the extent of the disruption that handing the contract to Virgin Care would cause them and the services they provide in the region.

This is in part because the trusts had only recently restructured a number of services to make processes between community and hospital care more streamlined.

Justice Fraser said: “In addition to the cost and disruption that will cause – which I find would be considerable – the loss of the contract will make it more difficult for the trusts to deliver other similar public services which they are contracted to deliver, and these will require new pathways to care to be developed.”

He added that the loss of staff roles was “in a sense inevitable”, where any provider loses a subsequent contract bid, but will also “impact upon the provision of healthcare as a whole” in the county.

While the trusts have said they are in line to lose £2.08m as a result of this disruption and the loss of related income, Justice Fraser said: “It is clear to me, on the evidence, that the effect upon both the trusts goes far wider than simply those aspects to which a money figure can be attributed.”

Blackpool Teaching Hospitals has argued “the loss of skilled staff – estimated at 160 people – will result in a reduction in the ability [of the trust] to maintain other contracts for other children’s health services in addition to the ones the subject of the procurement challenge”.

Justice Fraser said it was “undoubtedly the case that lifting the automatic suspension would also result in the loss of senior staff who currently manage the full range of children’s services provided across all contracts”.

But these areas “cannot be compensated for by damages”, he added.

The High Court also noted that the difference in cost of each of the contracts considered by the council was only marginal, so this was not a major factor in the decision.

Shaun Turner, Lancashire County Council’s cabinet member for health and wellbeing, said it had reviewed its contracts to ensure consistent services across the region.

He added: “A winning bidder was chosen using a fair, open and transparent procurement process, inviting bids from suitably experienced organisations. Providing a good service for our children and young people will always be our priority and the successful provider scored more highly in a rigorous process, weighted in favour of the quality of service provided.

“However, as a result of an ongoing legal challenge to the process, no contract has yet been awarded.”

A spokesperson for Virgin Care told The Independent: ”We are currently involved in a procurement process in Lancashire and it would be inappropriate for us to comment further on that process at this time.”