Matrix SCM – eProcurement innovation to drive better social care procurement

We’ve wondered recently whether buying music rights – like our friend Richard Kirstein – is the "sexiest” spend category in the procurement world. Well, there’s no danger of social care being considered in that manner. Yet its importance to many of us, now or in the future, and to the economies of the developed world, cannot be over-estimated.

The recent Local Government Association Procurement Strategy was surprisingly silent on the topic of social care procurement - surprising because the UK’s National Audit Office recently estimated that local authorities manage £19 billion of spend annually in that area in 2012/13. To put that in perspective, it is more than MOD spends on defence equipment, and twice as much as the entire “common category” spend in UK central government on which so much energy, focus and resource has been placed in recent years.

There is also another £10 billion spent on care and support by “self-funders” i.e. people who buy the same sort of services with their own money. (And that’s not counting the huge informal resources provided by family and friends). We might also remember the Southern Cross failure in 2011,when the biggest provider in the market went under, costing me around £5,000 (shares) and bringing much more serious problems to thousands of their customers and residents.

So anything that can help local authorities buy these services better is to be welcomed. And one such tool is provided by Matrix SCM, known originally as a “vendor neutral” contingent labour service provider, but increasingly focused on the social care market as well as other services spend areas.

I recently spoke to Julian Young, founder of the firm in 2008, about their work in the social care market and the Matrix technology platform in particular.

“We’re really promoting a buying philosophy, and providing an enterprise wide platform for services procurement”, he explained. 82 councils are using the Matrix platform; not all for their social care procurement, but it is a growing area for the firm.

In Birmingham, for example, all domiciliary care is purchased through the system (and there’s an interesting case study available here covering the council’s work with Matrix). The Council’s buyers place their requirements into the platform - preferably using outcome based specifications – and both existing suppliers and new ones through an ‘open demand” site can bid.

The platform allows shortlisting, scoring against criteria and price bidding. Price is only considered when suppliers are above the quality threshold. The platform is compliant with the EU “dynamic purchasing systems” regulations, which means that suppliers can apply to join the process at any time rather than only once every few years as in the case of traditional public sector frameworks.

What the platform has done is opened up the market to more bidders, often smaller firms rather than the large-scale providers. The ability to manage a greater number of contracts effectively allows more providers the chance to win relatively small contracts (so there is a comparison here maybe with the Keelvar / Norfolk case study, and using optimisation technology to achieve the same thing).

“This is a market where aggregating spend is wrong in many cases and often does not lead to better value” says Young. “And councils can’t keep saving money by simply squeezing suppliers”.

The results appear impressive in Birmingham; prices have come down, whilst quality has increased (based on the winning bidders’ quality evaluation). There is also better control over spend, with management via the platform and access for the council to real-time management information and data.

The platform is also being used when ‘personal budgets’ are in place. Here, the individual care recipient can choose where and how to spend the funds provided by the council for their care. Suppliers have to be approved and then come onto the platform, whilst the funding package is agreed between the council and the recipient. The user can then spend their ‘virtual’ money within the platform, drawing off the goods and services against their allowance. Matrix pay the vendor, then invoice the council. So transaction costs are minimised, compared to (for example) using a card based system for the same process.

Like most good ideas, other suppliers are looking at or working within this area. Cloudbuy have targeted it as a priority area for instance. But it is such a huge market, there is clearly room for a number of firms here. And let’s hope that good ideas and good technology like this improve how this critical spend category is managed, preferably before I get to the point of needing these services!

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