NHS Services – CCG Commissioning Issues Need Attention

Sometimes we get a "comment" on a post that is so interesting, we want to run it as a full article on the basis that not everyone sees the comment first time around. That was the case last week with a comment on our Surrey NHS article here. So thanks to Michael Angel (who works for Ensemble Purchasing, a collaborative procurement organisation in London) for agreeing to let us do that in his case. Here are his thoughts on NHS services commissioning and how clinical commissioning groups (CCGs) can improve performance.

"I agree with much with what you’ve said Peter, however not so much on the bypassing of real competition as from my experience the competition is not biting like it used to.

Look at the £450M Community Services tender being tendered by Ealing, whereby London North-West University Healthcare have withdrawn citing they cannot meet the cost cap and Virgin have been cagey in their comments. The ceiling pricing and risk profile of these Services is essentially driving competition away. You could argue this is massaging the competition; however, I see this as encouraging providers on board in a loss leader approach that usually ends with a lot of heartache.

In this Surrey instance with the consortium, it seems there was no agreement on the definition of roles and responsibilities the providers would supply in the delivery of these Services. That suggests poor relationship management and leadership skills in this case and sadly it’s not going to end well.

The bigger question I guess is what role can procurement play in this rather complex field? My experience in this area is not enough time is afforded to properly plan the procurement exercise and have that EBI to help shape the delivery of the services. Often these projects are managed by 1 person, and I for one don’t believe that’s enough. For me it tends to be that the following areas are not thought through properly:

Market engagement – Is much done beyond the issue of a PIN and open days? Is there an in-depth market engagement process whereby the customers reach out to other sectors such as the third and encouraging aligning with private companies who have the finance to support them in a joint bid?

Structure of Service Delivery and Contract – Is it to be delivered by a Sole Provider or a Consortium? What would work in the best interest of the Services being delivered?

Finance – Is the fixed tariff model and annual increase cap really viable? More so when demand and costs will increase proportionality each year.

Service Delivery – What realistically can separate the competition in how they deliver the Services as most of is it mandated by regulation? They could use different IT systems, however there is an upfront cost in implementation. It will always come down to price and not cost.

Relationship Management – Who will be the lead commissioner? Who will co-ordinate and manage the other supporting partners if it’s a Service being provided to multiple CCG’s or Local Authorities? Not much attention is ever focused on this element until post contract.

Contract Management – Who actually manages the contract? Who ensures the Service is delivered in line with what is agreed in the contract and that the provider/s have agreed to defined roles?

Procurement in this area always takes a kicking, however I don’t believe it is sufficiently resourced to carry out an effective procurement exercise. Often someone is drafted in to put together a contract without consideration for the above areas".

 

Voices (2)

  1. Mr Grumpy's Sidekick:

    I think that this is a great observation by Michael. There are a couple of other pieces which would be interesting to see here (maybe some FOI opportunities):

    – What was the contract cost stated within the tender/ award notice and what is the invoice cost year on year? This will answer the question on underbidding and making the difference up through contract variations.
    – What is the cost to the public sector in bidding for other public sector contracts. Does the argument of contestability stand when you think public sector organisations are employing bid writers/ consultants to support them?

    I know of one public sector organisation who are bidding for a contract to provide services where they have highlighted the ceiling cap is too low (it doesn’t even cover the TUPE costs) but will bid below this ceiling with the aim of getting the contract and negotiating a more sensible value once their foot is in the door.

    1. Michael Angel:

      Interesting point around contract variations and whether they can keep them roughly in line with the ‘Safe Harbours’ criteria. It’s a risky approach for both Customer and Supplier and could well put the whole contract at further risk!

      The decision makers at the highest level will only start to listen should contract failure lead to patients and service users being put at high risk. If the very fact the market is telling them that certain services can’t be delivered within a specified budget, that’s when you need to go back to the drawing board and determine whether legislation needs to be reviewed or whether the funding needs to be reviewed.

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