Backlash after Virgin gets payout over failed healthcare contract bid

11 December 2017

A dispute has broken out after it emerged Virgin Care was handed a substantial payout after taking legal action against the NHS when it lost a bid to provide children’s services in Surrey.

In March 2012, Virgin Care, part of Richard Branson’s Virgin empire, won a £500m contract to run a number of community services in Surrey.

Since then, it has provided healthcare in seven Surrey community hospitals, community nursing, community dentistry, health visiting and specialist services, including physiotherapy, diabetes treatment and renal care.

The contract lapsed in 2017, with the county’s clinical commissioning groups (CCGs) instead opting to split it into smaller contracts across a number of different providers. 

The new three-year, £82m deal covering health visitors, school nurses and speech and occupational therapy for children was awarded to Surrey Healthy Children and Family Services, an alliance formed by Surrey and Borders Partnership Foundation Trust and two social enterprises. 

Virgin Care took legal action against six CCGs, Surrey County Council and NHS England in November last year after its failed bid.

It cited “serious flaws in the procurement process” which had left it “so concerned” that it had launched proceedings.

In a joint statement, Virgin Care and Guildford and Waverley CCG said the matter had been resolved and that the terms were confidential.

However, a finance paper published on NHS Surrey Downs’ website, one of the six CCGs involved, said the “liability” in the case was £328,000. The figure has since been removed with a CCG spokesman confirming it had been removed because “the level of detail should not have been included in the report”.

The news of the payout has caused a backlash, with local residents launching a campaign to get Virgin Care to “return the NHS’s money and never sue the NHS again”. Almost 60,000 people have signed the petition to date.

Shadow health secretary Jonathan Ashworth said it was “scandalous that NHS money is being wasted fighting off legal bids from private companies”.

“Ministers need to make clear how much public money has been used in this case—at the least it seems hundreds of thousands of pounds. That is money that could be being used for NHS patients who are waiting longer than ever for routine services.”

Colenzo Jarrett-Thorpe, national officer for trade union Unite, said: “This infamous act opened up this cherished public service to the market as prey for the same spivs and speculators that caused the financial crisis.”

Keith Taylor, Green MEP and a member of the European Parliament’s Public Health Committee, said: “The £300,000 handed over to Virgin Care will be taken straight out of taxpayers’ pockets. 

“More than a quarter of a million pounds worth of patient care has just evaporated from Surrey NHS budget because they refused to roll over for the government’s favoured fat cats. It’s disgraceful.”

Timeline of the Virgin Care legal dispute

March 2012: Virgin Care wins a £500m contract to provide healthcare in hospitals and other specialist services in Surrey.

March 2015: The firm competes for another £82m contract to provide a range of services for children across the county.

March 2016 : Virgin Care loses out to Children and Family Health Surrey, an alliance of local trusts and care providers.

November 2016: Legal action started against NHS England, six Surrey clinical commissioning groups and the county council.

March 2017: Virgin Care’s first Surrey healthcare contract lapses, with CCGs opting to split it into smaller contracts.

November 2017: One report says the action on the £82m contract was settled with a £328,000 payout. Others say it could be higher.

December 2017:  More than 121,000 people sign an online petition demanding Virgin and Richard Branson “return the NHS’s money”.

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