Editor's blog Monday December 6: Tom Watson MP wins DH FOI battle on KPMG Dr Foster Intelligence NHS Choices/NHS Direct review

- Dr Foster Intelligence were involved in this 2009 review with KPMG of NHS Choices - the service Dr Foster Intelligence launched in 2007, and for which they lost the contract at its re-tender in 2008

- DH provided Capita's commercially-contracted NHS Choices staff with free office space, IT support and clinical informatics products

- Capita’s three-year fixed price contract for NHS Choices was worth £58 million - yet “could potentially be worth up to £90 million over the period, through contract variations and paying for additional costs outside of the fixed price agreement which relate to delivering the road map" – and curiously “Capita has undertaken to deliver the outputs of Choices' strategic road map for a fixed price"

- KPMG / DFI Report states, "the Capita contract was procured under competitive tender on the basis that it offered the best price and approach for DH. Many of the deliverables under the contract are not measurable by KPIs, the deliverables are open to interpretation and this could give rise to additional variations and further cost"

Hats off to Tom Watson MP, whose persistence in seeking FOI release of the DH-commissioned review by KPMG and Dr Foster Intelligence of NHS Choices and NHS Direct has finally won.

You can find the downloadable, and redacted, PDF document here.

It's one for the history students, up to a point, in that the wrong has already been done.

And wrong there was, it seems clear, through woeful commercial incompetence.

You may recall that we exclusively revealed back in April that KPMG had a nice little contract to review back office functions for DH.

The initial interest is that:
a) KPMG are so sensitive about disclosure of the identity of their staff that the covering letter to DH's Miles Ayling is signed "KPMG" in a pseudo-human script typeface (Aaah! Bless!)
b) KPMG really don't want their work being disclosed, as the letter notes: "Our draft report is confidential and is released to you on the basis that it is not to be copied, referred to or disclosed, in whole or in part, without our prior written consent, save as permitted in our contract of engagement". How good of them to actually allow their client to read it, it would appear.
c) It makes you wonder whether such reports are now being prepared in anticipation of the White Paper reforms.
d) Dr Foster Intelligence were involved in the 2009 review of NHS Choices - a service which the Dr Foster Intelligence launched in 2007 and for which they lost the contract at its re-tender in 2008.

The covering letter also says, "to the fullest extent permitted by law we will not accept responsibility or liability to any other party (including the addressees’ legal and other professional advisers) in respect of our work or the report". That would leave me wondering about the quality and value of what I had commissioned, if I were in DH.

Of its 'limitations in scope', the report states, "Identification of longer term integration benefits (financial and non-financial) would be dependent on significant further analysis and require:
 confirmation of vision, strategy and organisational structure
 more detailed business planning
 review and changes to relevant commissioning arrangements
 full involvement of both management teams to understand more fully what benefits could be realised from existing resources and commercial relationships; we have maintained commercial confidentiality between the two organisations and therefore have not disclosed the detail of overlaps and potential cost savings to the respective management teams".

Perfect, no? Management consultancy demonstrates the clear and pressing need for more management consultancy. I wonder if that phrase (or a close variant thereupon) appears in every management consultancy report DH and the NHS broadly have ever commissioned?

The report guesses that "the contract and management of Choices could be combined with the operations of NHSD(irect) within one entity, based on the following rationale:
 meeting people’s needs for health advice and information through remote (phone) and virtual (web) channels, where appropriate, has the potential to significantly reduce the ‘cost of contact’ within the wider health and social care system at a time when financial pressures are significant".

I would love to see the evidence that it would reduce the "cost of contact": I suspect that is an heroic assumption. There aren't any references.

It looks even more heroic once we learn, a few pages on, that NHS Direct "is currently failing on a number of Key Performance Indicators (KPIs) due to the significant increase in call volumes". It seems to ignore the fairly basic lesson that if you build it (it being capacity), they will come.

It also reveals that "Choices staff are provided with free use of DH office space and certain IT assets. The Clinical Information Advisory Group (CIAG) also makes routine contributions to Choices services", which looks very much unlike a full cost approach to a commercial contract. I wonder if this is still the case today? And if not, when it changed?

The document subsequently reveals that "As a cost centre within DH, Choices is predominantly based in DH offices and uses assets provided by DH to deliver its services. We
understand that DH estimate £10,000 to be the notional cost per head for contractors occupying DH premises, however does not actually impose any associated charges on Capita. We assume that this arrangement will prevail for the remaining duration of the Capita contract, i.e. until November 2011". It also states that 'Intelligent Client Function', who run Choices for DH, employ 16 staff (one role vacant at time of study in 2009). However, no numbers are given for the Capita staff, leaving us unable to judge the free money in kind provided to Capita by DH under this unusual arrangement. But if you want to get a broad picture, look at Slide 39.

The document also makes a monumentally counter-intuitive suggestion that "In the longer term, the principal strategic source of benefit potential for the wider NHS is likely to flow from users migrating to more cost effective digital channels away from face-to-face or direct contacts within the health and social care system. This project did not assess the business case for this service shift".

Phew.

For one thing, I suspect that relatively few clinicians would strongly argue that the information age had saved them time with patients. It will certainly have made some of those patients somewhat better-informed, which is of course marvellous and to be commended as empowering those patients to have more control in their care (although whether all clincians appreciate it is unclear).

The concept that NHS Direct has led to significant reduction in 'face-to-face or direct contacts' is highly questionable.

Sp.
Oh dear. I know this is a draft and all that, but somebody at KPMG is woeful at English.

Slide 19 states that NHS Direct and NHS Choices "provide largely complimentary, but sometimes overlapping services to the same end user". Clearly I have been missing out: I could have called 0845 46 47 to be told, "oh you look rather fetching in that cravat", and gone online at www.nhs.uk to discover, "yes, I do like that rouched silk, but I think green might bring your eyes out more".

Capita: not unaware of how many beans make five
The DH's proud tradition of ensuring rigorous value-for -money for every penny of tacpayers' money spent gets yet another hearty boost with the revelation that "Capita’s three year fixed price contract is worth £58 million (excl. VAT) over three years, but could be worth up to £90 million over the period through contract variations.

And if by any chance that were not reassurance enough for you (and how in all fairness could it not be?), you will be even gladder to know that regarding any budget tweaks, "The Choices Programme Board must approve any variation spend over £0.25 million". Super. Another triumph for public sector use of private sector expertise.

The DH's NHS Choices contract with Capita: bad value for money
The lustre of the reputation for competence of the commercial management in the DH takers another well-earned buffing, as the report describes how "the Capita contract was procured under competitive tender on the basis that it offered the best price and approach for DH. Many of the deliverables under the contract are not measurable by KPIs, the deliverables are open to interpretation and this could give rise to additional variations and further cost.  The Capita contract covers a broad range of services and predominantly relates to people’s time".

It goes on to say, "The contract is output based, meaning that Capita has agreed to deliver the objectives / ‘deliverables’ as laid out in the tender document. This in theory shifts the risk onto Capita and provides DH with certainty as to cost
 The objectives laid out in the tender document are not readily measurable or have no discernable KPIs. It is therefore difficult to prove or disprove whether objectives have been satisfied, particularly in an environment where the strategic road map is continually evolving. This means that significant contract variations could give rise to further costs".

We also learn that "The contract predominantly relates to people costs and time spent, rather than tangible assets. The contract also does not include certain additional costs which would be required to satisfy the strategic road map laid out in the tender document, such as for stands and displays when attending events or exhibitions". So it didn't even include all costs as per the bid document. Genius.

Oh, and what is the contract for NHS Choices worth to Capita?

"x".

They've redacted it, you see.

Except the forgot to redact it on later slides (86 is pretty clear), and so we can sort-of-exclusively reveal that "Capita’s three-year fixed price contract is worth £58 million (ex VAT). The contract could potentially be worth up to £90 million over the period, through contract variations and paying for additional costs outside of the fixed price agreement which relate to delivering the road map".

But wait a minute: slide 86 clearly states that "DFI operated on a time and materials basis, whereas Capita operate on a deliverables basis e.g. Capita has undertaken to deliver the outputs of Choices' strategic road map for a fixed price". Which totally contradicts the above-mentioned concept of potentially near-doubling the fixed budget through "paying for additional costs outside of the fixed price agreement which relate to delivering the road map".

It did state that "Due to the initial set up costs the payment profile of the contract is front loaded, with a greater level of payment in the early part of the contract", and that "At July 2009, Choices has £37 million (ex VAT) remaining on its fixed price contract with Capita".

Oh, and how much could the taxpayer benefit if the had merged Choices and Direct?

KPMG and DFI reckon on a "total potential for cost saving benefits ranging from £5.0 million to £8.8 million".

I wonder what this KPMG / Dr Foster Intelligance report cost?

I wonder whether Sir Hugh Taylor feels very proud of all this?

As it is asserted, so it shall be
The report blathers on, "Digital transformation in health and social care should facilitate a considerable step change in system performance
 in both cost efficiency and service quality terms, helping people’s needs to be met remotely where they can be, and enabling the referral of those who need face to face interventions to the right services for them quickly and accurately".

Proof, please?