Surrey Downs Clinical Commissioning Group (SDCCG) stands to lose £2.5m in a dispute with an award-winning healthcare service after an NHS bureaucrat decided not to renew its contract.

At a meeting of SDCCG's governing body, held at Elmbridge Civic Centre, on Friday, September 27, its members were given an update on the decision, delegated to its chief officer, Miles Freeman, in August, not to renew the contract of the now-defunct Epsom Downs Integrated Care Services (Edics), which provided specialist NHS clinics in the community.

Edics was awarded Any Qualified Provider status last July - an NHS benchmark which certifies that healthcare providers meet NHS standards and prices.

It is currently in mediation with SDCCG which, if unsuccessful, could lead to a formal adjudication process.

Keith Edmunds, SDCCG's chief finance officer, told the governing body that the "spread between the best case and worst case" of what the CCG would incur if the dispute went against it "is in the order of £2.5m."

He added: "The CCG declined to offer a new contract [to Edics] for commercial reasons.

"We have made short-term arrangements for continuation of services and there will now be a more formal and structured review of some of those services leading to longer-term contracting arrangements."

When asked by a member of the governing body when the legal dispute is likely to be settled, Mr Edmunds said the process is "not within our control" but said that "some months is probably a best guess".

Governing body member, Dr Ibrahim Wali, said SDCCG needs a "contingency plan" to prevent a situation similar to Edics arising again.

He said: "What if another provider disappears or another problem happens? If we have something set up in future if there is a problem it could be managed better."

Alison Pointu, governing body member, also asked whether the "CCG is going to put something in place to gather learning from what has happened in terms of commissioning responsibilities".

Mr Freeman replied: "I certainly wouldn't be looking to publish anything until the dispute is fully settled.

"It's sometimes quite difficult to go back over what was a series of issues that related to a previous organisation, eight or nine different contract managers, and a national process around Any Qualified Providers which may be faulty.

"We've internally learnt some of those lessons and we're building them into the review.

"It's almost inherent that when the NHS reorganises itself you inherit some contracts you're not happy with."

When asked by the Epsom Guardian, during the public question-and-answer session at the end of the meeting, to elaborate on why SDCCG was "not happy with" the Edics contract it had inherited from the primary care trust, Mr Freeman said that it was inappropriate to comment while a formal dispute resolution process was ongoing.

But he added: "Some of the reasons for the issue of inherited contracts is that we've just gone through a massive change and when people have been managing contracts you do lose some of the organisational memory and some of the contracts hadn't been accurately documented and without the people who understood what the unwritten elements to some of the contracts were.

"It has been an unsatisfactory situation and we've also set ourselves a standard of having very tight contractual management and understanding exactly what we're paying for."

Cliff Bush, a lay member on the governing body, said the demise of Edics should serve as a "shot across the bows of the shareholders" of other providers as to how they should manage their organisations - a reference to the fact that a large number of SDCCG's members had shares in Edics.

He said: "There will be lots of conflicts of interest. So it's not for us to tell the shareholders what to do, but they should manage it on our behalf. "This needs to be a shot across the bows of the shareholders to understand their perspective of what they need to do, not shout afterwards."

Speaking to the Epsom Guardian after the meeting, Dr Claire Fuller, SDCCG's chairman, said that, as a new organisation, the CCG has inevitably experienced teething problems and that there "will be another Edics".

But she believes the CCG has been strengthened by having to face big issues in its infancy and that its members are now "flourishing" in their new roles.