• Community midwifery service pilot shut its doors earlier this year
  • Small independent provider has appointed liquidator
  • Insolvency papers show deficiency of assets of more than £800,000

Commissioners are investigating the abrupt closure of a midwifery service hailed as a “trailblazing” model in the NHS long-term plan which ceased operations after racking up £900,000 of debt.

Neighbourhood Midwives, a small independent midwifery provider, was commissioned to pilot a continuity of carer midwifery service model in Waltham Forest in November 2016. The pilot was extended in November 2018. 

However, mounting financial problems forced the company to close its doors on 31 January this year, giving clients only one week’s notice. The women in its care were transferred to Barts Health Trust and Homerton University Hospital Foundation Trust.

HSJ revealed in January how the provider, whose chief executive Annie Francis served on NHS England’s Better Births review panel, built up liabilities in excess of £900,000, having made a financial loss every single year since 2013-14.

Ms Francis blamed the failure on the high cost of indemnity coverage for the midwives – almost £1m in total for the time it operated – and an ill-fated IT project.

In a statement, Waltham Forest Clinical Commissioning Group told HSJ it had started working with its local maternity service partners to “better understand the circumstances leading to the closure of Neighbourhood Midwives – so far, this has included looking at the chronology of the continuity of care pilot in the borough and some of its key successes”.

NHS England and Waltham Forest CCG also met last month “to discuss the closure of the service”.

Neighbourhood Midwives chief executive Annie Francis told HSJ the service was using the pilot to establish itself as an NHS provider and show its model of care was cost-effective, delivered good outcomes, and gave pregnant women greater choice.

It offered women continuity of carer, ensuring they were looked after from the prenatal stage through birth to post-natal care by the same midwife or small team of midwives. This was a key recommendation from the 2016 Better Births review of midwifery services in England.

Neighbourhood Midwives had hoped a public sector contract would ensure its financial viability, but it found it needed to keep expanding its workforce to generate the level of activity that would give it the income necessary to generate a surplus and start repaying investors.

“The reasons we had to close are complex and not the fault of any one individual,” Ms Francis said. “It is my view that a significant number of structural and system-wide barriers to innovative new ways of working remain in place and largely explain why a small independent provider was unable to integrate into the complex environment of the NHS.”

The company has appointed a liquidator and has voluntarily started winding up. However, papers filed with Companies House reveal the company does not have enough assets to pay most of its creditors. Less the assets, it will have a total deficiency of more than £800,000.

Current estimates show the company will be able to pay its staff outstanding wages and less than a tenth of the £460,000 it owes its only secured creditor, Baxi Partnership, a management consultancy. The company will be paying some of the debt owed to the unsecured creditors, but a final figure has yet to be determined.

There are 25 unsecured creditors who are owed more than £350,000. These include current and former company directors as well as former Blue Peter presenter Peter Duncan, the husband of Ms Francis, who is owed more than £150,000. Neighbourhood Midwives also owes HM Revenue and Customs nearly £40,000.

Baxi financed Neighbourhood Midwives with loans as well as investing in the company. It owns 20 per cent of its shares.

Ewan Hall, a Baxi director, said: “It has been a tough few years for Neighbourhood Midwives”. He added the company’s goal was “ambitious” but “as a small, independent provider this ultimately proved too difficult”.

“As an investor and creditor we obviously hoped for a different outcome,” he added. “But we hope that lessons can be taken from the positive care and outcomes achieved by Neighbourhood Midwives.”