Agenda item

Future arrangements for Eastern Cheshire Dermatology Contract

To receive a briefing and presentation on the Eastern Cheshire Dermatology Contract and forecasted changes to the service in respect of the current provider serving notice on the contract.  Report to follow.


Neil Evans, Commissioning Director at Eastern Cheshire Clinical Commissioning Group, attended the Committee to brief Members on an emerging and serious risk to the current service provided by Vernova; in respect of the  dermatology contract across East Cheshire.


When Vernova was initially awarded the contract, it was the only bid received, the market was limited and there were limited opportunities for choice.  From a clinical context there have been no issues with either quality or provision by Vernova.


On April 5 2018, Vernova served 12 months notice on the contract, at the current rate of spend it is likely to become insolvent faster than the 12 months leaving no provision of service for East Cheshire.


Neil explained that neighbouring arrangements for dermatology are also stretched.  Salford Royal serve the entire area of Manchester, and whilst there could be scope to extend into Cheshire, it would only include the immediate areas of Disley and Poynton.  Likewise, Royal Stoke had little capacity for East Cheshire.


Short term proposals included reducing the losses to Vernova to reduce the risk of insolvency and enable more time for another provider to be found.


Vernova currently rent or own it’s premises, however there were some in Congleton and Knutsford where a sub contracted arrangement was in place at a high cost.  Potentially Vernova could pull out of these arrangements but this would adversely impact patients in the Congleton and Knutsford area, this equated to 1,990 patients a month, 24,000 appointments a year, approximately 12% of the total number of patients.


Neil explained that there were financial areas of the business that Vernova could be reduced for example, patients with Alopecia were entitled, under the NHS, to the provision of a wig.   Currently Vernova pick up the costs however much they are.  A revised proposal would ensure a more moderate policy.


Approximately 40 patients per year received Photodynamic Therapy (PDT) services at the Knutsford site.  Salford Royal would accept patients for this service and any new referrals could go to Salford potentially reducing some financial savings.  Patients do travel for dermatology services so signposting to Salford would not be an inappropriate course of action.


Vernova has also agreed to consult on organisational change to deliver savings related to staff of £90k per year.


The Committee noted that Vernova is a relatively small organisation and the dermatology service is large, whilst some funding had gone in to support the organisation, it had not made much impact.  It was also considered that the ambition of Vernova could have impacted on their achievable delivery.

The Committee asked Neil what had changed with the service since the contract had been awarded.  Neil advised that assumptions had been made, which included the cost of buildings.  Additionally histology costs had proved to be more expensive than expected, these costs are smaller for NHS Trusts that had hospitals with in-house laboratory provision, however Vernova had to pay for this service.


The Committee asked if an NHS Trust could provide the lab service for histology, Neil explained that Mid Cheshire Hospital Foundation Trust was a shared service but there were capacity issues.  The price was on a par with the current service provision in Manchester.



(a)  That Neil be thanked for his attendance and presentation;

(b)  That Neil keep the Committee updated on progress post June to advise on the current position;

(c)  That this Committee undertake either a 3 or 6 month review depending on the speed of progress.

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