Developing a voluntary sector provider market Issues for commissioners and Third Sector Organisations. Kevin Pritchard CBS Director Page -1-
Third Sector Provider Development National Aims Aims of the Third Sector Commissioning Task Force July 2005 1. Promote commercial relationships between public sector commissioners & third sector 2. Work to remove barriers to entry for all providers 3. Promote equality of access for third sector organisations compared with other sector providers 4. Minimise Transaction costs for the third sector in dealing with the NHS And to build on the strengths of third sector organisations in maximising the benefit of local public spending in local communities. Third Sector Strengths Rooted in local Communities Provide an environment where innovation and social responsibility can thrive The nursery level for entrepreneurship A catalyst for local and regional development Employ more people than the entire NHS Asset base of over 70 billion makes a significant contribution to our economy Have a growing role in mainstream service provision: housing; environmental regeneration; learning disability; mental health; drugs and alcohol; advocacy Growing relationship with central government, eg. through compact Page -2-
Third Sector National Programmes 14 March, 2007 National Programme for Third Sector Commissioning Programme to build understanding of working with third sector The Minister for the Third Sector, Ed Miliband, has announced a 2 million programme to help the public sector work more closely with the third sector to improve people's lives through the delivery of public services. The Improvement and Development Agency (IDeA) will work with 2,000 commissioners from across the public sector, including staff in Jobcentre Plus, health authorities, the National Offender Management Service and local authorities to build understanding at a local level of third sector organisations and the unique benefits they can bring to the design and delivery of services. The National Programme for Third Sector Commissioning, which was first announced in last December's Partnership in Public Services action plan, will receive strategic direction from a steering group including representatives from the third sector and government. Ed Miliband, Minister for the Third Sector, said 'To bring about genuine culture change we must foster greater understanding particularly at local level of the benefits third sector organisations can bring in delivering services that change people's lives for the better. With their proven track record of working with local organisations to achieve practical improvements in services, I am delighted to welcome IDeA on board as a partner in shaping and delivering this important programme. Page -3-
Third Sector Providers The National Context This framework is about practical action. It is for everyone involved in commissioning local services so they can work together to improve the health, well-being and independence of everyone living in their local area. We believe that local commissioners have the opportunity to make a real difference by focusing on the outcomes that people want for themselves and for their communities. Patricia Hewitt & Ruth Kelly February 2007 Page -4-
National Commissioning & Operating Frameworks Commissioning Framework for Health and Well-being what did this mean for the third sector? The Commissioning Framework for Health and Well-being was published for consultation on March 6th 2007. This is a summary of key points for the third sector. A copy of the full document, and all the consultation materials, are available from www.commissioning.csip.org.uk What is the Commissioning Framework for Health and Well-being? It provided guidance for health and local authorities in commissioning primary care (with the exception of the nationally negotiated GMS contract), community health care, social care, public health, well-being, as well as other relevant services, support and interventions. The framework covers all of the population in a locality adults and children their family and carers, and all care groups. What are its key messages? It signals a clear commitment to greater choice and innovation, delivered through new business relationships and partnerships. Its key aims are:- > A shift towards services that are personal, sensitive to individual need and maintain independence and dignity. > A strategic reorientation towards promoting health and well-being, investing now to reduce future ill health costs. > A stronger focus on commissioning the services and interventions which will achieve better health, across health and local Government, everyone working together to promote inclusion and tackle health inequalities. What role can the third sector play in supporting this framework approach? Page -5-
What role can the third sector play in supporting this framework? There are two main ways in which the third sector can contribute:- Needs Assessment & Service Planning The framework emphasises the need for person-centred, individual care. A key role for many third sector organisations is providing advocacy. This is a key contribution to the development of both individual and strategic needs assements. Service Provision All potential and current providers including third sector providers should actively engage and work with commissioners How does it help the third sector engage with the NHS? We are proposing that each PCT and local authority undertake a Joint Strategic Needs Assessment to identify: current and predicted health and well-being outcomes, what people in the local community want from their services, a view of the future, predicting and anticipating potential new or unmet need, informed by equality impact assessments. This Joint Strategic Needs Assessment will be available to all potential and current providers, and so will help all current and potential providers (including the third sector) design potential services. All commissioners will be expected to establish a provider forum for current and potential service providers. Page -6-
Is there any support available to the third sector to develop as a provider? The framework outlines the potential opportunity to provide additional incentives by - Paying a supplement to the NHS tariff price, where this is necessary to secure new provision; Providing guarantees within the contract; Reducing the capital investment required from the provider; For suitable primary care providers, considering providing pump-priming loans to start up a service Commissioners can take into account any social dividend when considering bids from providers What are the next steps to take this forward? The Department of Health will continue to build on the work of the Third Sector Commissioning Taskforce. As an example, by Autumn 2007 a contract template will be developed for out-of-hospital services which is appropriate to the Third Sector. This new contract will then be implemented for services commissioned in 2008/09. The Third Sector is invited to use the opportunity to participate in the consultation on this framework at www.commissioning.csip.org.uk and The national Audit Office website www.nao.org.uk has guidance on developing financial relationships with third sector providers which offers to assistance to both Commissioners and providers. Page -7-
How do we know what the priorities in local areas will be? The Joint Strategic Needs Assessment will inform the priorities in each local area. The PCT Prospectus and the Local Area Agreement between PCTs and local authorities will be used to clearly signal commissioners strategic intentions and priorities to all current and potential providers including the third sector. In addition commissioning contracting portals will be developed to publish key contracts How does the framework create a fair playing field for the third sector? The framework takes on board the recommendations of the third Sector Commissioning Taskforce, in summary it recognises the need to:- > Adopt procurement practices that are fair and open, transparent on pricing, minimising transaction costs. > Be clear about the distinction between grants and legally-binding contracts. > Adopt appropriate and proportionate contractual mechanisms including contract length, assignment of risk between commissioner and provider. > Contracts will move away from services given to health improvement and outcomes achieved, giving the third sector the opportunity to develop innovative ways of meeting identified needs. Page -8-
Cabinet Office Improvement & Development Agency Report Feb 2008 Baseline Report on the evaluation of the national programme for third sector commissioning. Only 21% of TSO s polled understood the 8 principles of commissioning: Understand the needs of users and communities Consult with potential provider organisations in advance of new service commissioning Put user outcomes at the heart of the strategic process Map the widest range of providers to understand all possible contributions Commissioners should invest in the capacity of the provider base Ensure contracting processes are transparent and fair Ensure long term contracts and risk sharing are ways of achieving efficiency and effectiveness Seek feedback from service users, communities and providers on the effectiveness of the commissioning process in meeting local needs. Page -9-
The Third Sector - challenges 'Third Sector' is a term used to describe a variety of institutions which sit between the state and the private sector, and which are well placed to deliver key public services because of their resourcefulness, community links, specialist knowledge, and commitment to the Government s public services agenda. The Third Sector is increasingly important in bridging the gap between people s expectations of public services and their delivery in the first instance. The Third Sector not only has the potential to deliver better services, but tapping into their expertise has the potential to aid in their design and continuous improvement. However, engaging with the Third Sector presents a unique challenge for procurement professionals; taking into account different approaches and methods, similarities and differences between the two sectors, how do you assess and support what is needed to build the capacity for the Third Sector to deliver services? Building and supporting negotiation and procurement skills Involving and engaging the Third Sector in government procurement strategy Commissioning; what is it and how is it different to procurement and funding? EU Procurement rules and their influence Working with the Sector and ensuring value for money COMPACT; the funding and procurement code of good practice The National Programme for Third Sector Commissioning Specialist guidance and support for developing and nurturing this new relationship Page -10-
Commissioner & Provider Relationships: no longer quite so simple! Commissioners can now consider a wide range of provider relationship models in designing service delivery: In House NHS Provider Contract Public Sector Consortiums Non Profit Distributing Organisation Multiple Contracts & Sub Contracts Local Authority Company Charity Third Sector Voluntary Organisations Public Interest Company Joint Venture Partnering Contract Framework Agreements Concession/Franchise PFI or DBFO (Design Build Finance & Operate Page -11-
Market Management Considerations Commissioner issues in procuring Commissioners are Considering 3 rd Sector provider concerns around procurements; They need to; Be open about the approach you intend to take. Tender documentation should be meaningful, and proportionate to the service. Allow time for planning and preparation (Fail to plan? Plan to fail!). Build an understanding of full cost recovery pricing in negotiations with providers. Contract terms to cover contingencies, for both sides. Work jointly on economy of scale opportunities within the contract. Commit to an outcome. Be wary of short (1 year) and long (5 year +) contracts don t stifle opportunity or lock into long term solutions that become inappropriate design in change and improvement. Consistency of process/demands/engagement a costly customer to account manage. Commissioners and the EU Procurement Process: The process is actually quite clear! Understand the strategic opportunity for using Prior Indicative Notices (PINS) to signpost future intentions and opportunities and to test markets through expressions of interest. Consider Procurement Compacts for SME s and Voluntary Sectors to utilise frameworks Page -12-
Third Sector Provider Working with Support Organisations Nationally Procurement Portal Procurement Guide Principles & Rules Market Making Tool Core Principles Purpose Transparency Objectivity Proportionality Non-discrimination Accountability Subsidiarity Consistency No double jeopardy Interdependence Page -13-
Third Sector Provider How will opportunities be published? The Procurement Portal Key Benefits Commissioners Providers Facilitate development of best practice commissioning and contracting Meet legal requirements Improved response to advertisements Single source of information, promoting transparency, objectivity and non-discrimination Reduction in information requests The Portal Secure website Advertise opportunities Record awarded contracts Patients Services are fair, personalised, effective, safe and locally accountable. Services provide choice, value for money and value added SHAs and DH View of market management Aid competition panel Look at commissioning strategies long term Page -14-
DH Commercial Directorate Timings Procurement Portal - Timings Activity / Milestone 2008 2009 Phase 1 Phase 2 Phase 3 Mar Apr May Jun Jul Aug Sep Oct Apr System Specification System Development System Deployment & Test System Launch, Training & Education* Ongoing System Development Launch of Competition Panel Transfer of Portal Ownership to the NHS *Use will be mandated Page -15-
Third Sector Provider Working with Support Organisations Regionally Future Builders England 2007 In our recent research, we found that public commissioners think that VCOs sometimes lack capacity in the following areas: Financial management, governance and business planning Monitoring requirements, registration or quality standards Information to plan ahead and understanding of the wider operating environment Recruiting, training and retaining qualified and skilled staff Market awareness of purchasers needs Information communications technology There are four practical ways commissioners can assist: Add Futurebuilders website and groundwork contact details to your guidance documentation for tenders. Talk to Futurebuilders about a more strategic approach to building capacity of local VCOs. Discuss readiness assessment with Third Sector Providers at the time of PIN issues to markets. Guide Third Sector organisations through the procurement calendar and a self assessment. (www.gmcbs.co.uk) Page -16-
Third Sector Provider Service Self Assessment- Are you ready? A strategic assessment of organisational readiness to undertake the commissioning challenge. This activity should help identify engagement with an appropriate commissioning model and highlight any change management requirements which the organisation will need to manage before entering the market for procurement purposes FINANCIAL ASSESSMENT What is the your current financial status? Are you obliged to deliver any financial return/repayment? (www.nao.org.uk) ORGANISATIONAL READINESS ASSESSMENT Do you have the right skills? Are you clear about the roles & responsibilities? Have you gauged the internal & external challenges? How To Choose The Right Commissioning Model? Decision criteria the 5 Cs The following criteria are suggested as a way of deciding which model is right for each organisation or each service strategy: Clout the provider organisation must be able to be taken seriously Credibility what real difference can we make in the commissioning strategy and where are the short term signs of delivery? Capacity which model will allow us to create the most capacity? Capability which model will maximise the skills and experience available? Competition versus Collaboration which model most suits the PCTs stance in each service? COMMISSIONING MODEL SELECTION What Next? How do we align ourselves with commissioning modes What ties in with suits our needs & requirements? 4 Following this activity you should have developed a thorough understanding of your organisation s service delivery and management capability. The last step in the planning stage is agreeing the budget required to deliver the services identified as per health needs assessment Page -17-