Thursday, 23 February 2012

Why capital funding overshadows the debate on NHS reform

Community providers are being pushed aside as commissioners recognise only those with money, not their track record
Stephen Bubb
Stephen Bubb of Aveco says the NHS needs community providers with new ideas about delivering services. Photograph: Graham Turner for the Guardian
In any economy, let alone one in recession, capital is king, so it is a primary consideration when contemplating reform of public services.
As both the chief executive of Social Enterprise London and chair of theTransition Institute, which supports public services, I am an advocate of those independent providers who offer affordable, quality services with social impact and real accountability.
Today we are being asked how we stand on NHS reforms. Through the work we have done in public services and, in particular, health, we have seen some wonderful organisations offer innovative, patient-centred services on reduced budgets. To achieve this does mean acknowledging competition in the NHS.
But here is where I have a problem: almost without exception, the procurement processes that have come from government in the last 18 months have been large – and are getting larger. They have increasingly favoured those applicants with capital, lots of it. In some bidding rounds, applicants have been required to prove the existence of large capital sums or capital bonds as an essential part of the process, which excludes most if not all community-driven providers.
The innovators I refer to offer extraordinary opportunity to link motivated staff with happy patients, such as those treated by City Health Care Partnership CIC in Hull. City Health is an employee-owned service, like Central Surrey Health, that provides award-winning, community-based healthcare. I have to say both these organisations do not have the look or feel of a privatised company, but a new generation of public service, with the strongest possible public service ethic.
I read with interest Sir Stephen Bubb, chief executive of Acevo, the Association of Chief Executives of Voluntary Organisations, and a board member of the Transition Institute, whose article in the Times on Wednesday considered the NHS reforms. Bubb was a member of the Future Forum that reviewed the reforms over the summer and he attended the No 10 NHS summit on Monday.
As someone at the heart of the debate, Bubb tells us: "Almost everyone agrees we have a problem when over 70% of NHS funding is spent on treating long-term conditions, usually in the most inefficient way there is: in hospital.
"And almost everyone agrees that if the NHS is to cope with these pressures, it must shift resources towards preventative, patient-led, community-based services which treat chronic conditions far more effectively and which act to pre-empt acute crises of ill health."
He goes on to say: "Might I also suggest that the majority of observers agree that to carry out this change effectively, the NHS must allow new providers with new ideas to break the bureaucratic stranglehold on service delivery … What frustrates many of my members, the leaders of the country's charities and social enterprises, is that, despite the consensus on both problems and solutions, the debate over reform focuses on the phantom of 'privatisation'."
All of us on the front lines of community service share Bubb's belief that, with a fair crack at the whip, we could make a real contribution, but to do that a number of things have to change.
I don't think this is a debate about whether to privatise or not: the NHS has always been a mixed model and will continue to be so. No, this is about big versus small or, more specifically and sadly, this is about financial versus social capital.
Most of the members Bubb is referring to have a great track record but limited access to capital. Like Social Enterprise London members and those approaching the Transition Institute, they are finding it harder and harder to succeed in a commissioning process that pits them against companies which don't have the track record but do have the cash.
The principle of this debate is clear: everyone wants universal, quality healthcare, free at the point of use, but the means to achieving that are bound to be complex, even if money wasn't so tight. The Transition Institute thinks it has part of the answer in that we can supply willing providers of quality, community-driven service solutions. All government has to do is procure those services and look for capital elsewhere.
Allison Ogden Newton is chief executive of Social Enterprise London

    23 February 2012 7:48PM
    Thank you Allison for this insighttful and appropriate article, the point about the difference between organisations for profit and those for 'better profit' is not at this point in time distinguished in procurement processes across the public sector neither does the process of supporting such staff lead organisation bear the fruits of their committement - it is true that this government sits on the most exciting opportunity to release with proper support the potential drive and enthusiasm of it public sector workers.
    However in health and other sectors it needs to get the credibility and buy in from staff, they need action and many very interesting developments could be on the way that may support this move but they need supporting and that means finance.
    They may need to understand that unions still may not understand that by creating co ownership in its wider sense is not that appealing whilst understanding that such things as large capital bonds to even bid for work are just not feasible nor are they needed with the stringent processes already wrapped around floatation.
    To allow large corpoarte accountancy firms to set the bar based on such developments as the Foundation Trust accreditation proces at this stage of social business development are and is restrictive. The failure regimen is simple not some big test nor given choice of form does it seem that complex - the next concern a bond to enter the market - for sure it's on it's way more money out of front line delivery to support failed for profit organisation like those who have made money out of cosmetic surgery , great !!!!
  • IanGreener
    24 February 2012 12:56PM
    Thank you Allison, this is a thoughtful piece. I think you reach the right diagnosis, but I'm not sure I entirely agree with your solution.
    I think it is clear that there is a consensus that we need more community-based services to prevent un-necessary hospital admissions, to treat patients more appropriately.
    I will also agree that in order to foster innovation, we need new community-based organisations to work with the NHS as it requires fresh perspectives and new ways of doing things to find new answers.
    However, I disagree that competition is necessary to achieve this. I also have concerns about the NHS relying on non-public provision for the long-term delivery of services.
    It isn't necessary for new organisations providing care for the NHS to be competing with other providers of care. We can do this just as we co-operatively. The NHS can buy care from social enterprises and other non-public bodies without the need for them to be competing with one another. I have no problems with the idea of such services being commissioned, and their impact and effects evaluated through careful research. I'm not sure what the gains from getting social enterprises to compete would be, and think a research-driven approach, for a change, would be a positive way forward.
    Equally it seems to me to be unwise, either for social enterprises or the NHS, for non-public providers to become dependent on public funding. It's a bad idea for the NHS in case those providers run into financial difficulties, and which will result either in them having to be bailed out by the government, or patients face the disruption of having to be reallocated to other providers, possibly in systems which don't have the spare capacity to support them.
    It also seems like a bad idea for social enterprises to become dependent on public funding - their vibrancy is surely based on being able to be sustainable without becoming dependent on the state. If social enterprises are dependent on the state for financing, they might as well be public bodies. The private health sector is, I read, already getting 25% of its revenues from the public purse, so effectively sustained by it. That doesn't strike me as being healthy for either public funders or private companies, and repeating the error with social enterprises would be short-sighted.
    My suggestion then would be a more research-driven approach - asking social enterprises to provide services to the NHS which would be evaluated, and if successful, rolled out across the system, but funded publicly. There is no intrinsic reason why public funding should prevent innovation - that's about good management, and there's no intrinsic reason why good management only exits outside the public sector.
  • janeiwheeler
    24 February 2012 1:53PM
    Alison this is a really interesting article - and our observations would echo yours, namely that current procurement processes pose significant challenges for smaller organisations wishing to retain their services, or expand into new areas.
    We identified this trend not solely in the realm of community services - although over the last year these are the largest contracts that have been procured and so the issue is perhaps more pronounced in this realm.
    Working with Social Entreprises, private companies and the NHS we also believe that this trend isn't just apparent in the independent sector but also within the NHS. Smaller Trusts and Mental Health Trusts are struggling to show the organisational capacity and capability that commissioners require
    It is also worth mentioning, as I'm sure you would recognise, that smaller organisations (which may have local advantages and be strong on innovation) face other barriers than their financial strength or backing. Whilst an organisation may have a great track record of service delivery, frequently the scoring within a procurement will place at least as much weight on track record of managing a transition from an existing provider or implementation of a new service. For a smaller organisation a large scale procurement/mobilisation for either their own core business, or for another local service may well be one of their first experiences of a procurement of this magnitude. Their ability to demonstrate to commissioners the organisational capacity to undertake a complex transfer of staff, due diligence process, IT systems change etc, all whilst achieving tough financial savings can place doubts in assessors mind. Bear in mind that most large organisations undertake this process regularly and can easily draw on recent relevant experience .
    It will be interesting to see how current trends to centralise and procure larger and larger services (for example at cluster level rather than PCT - eg with Out of Hours and 111) will help or hinder the ability of smaller organisations, across all sectors, to be assessed as credible providers alongside their larger competitors.
    We wrote about our observations here:
  • Contributor
    24 February 2012 10:49PM
    ...on reduced budgets. To achieve this does mean acknowledging competition in the NHS.
    That is economically innumerate. You cannot say that reduced budgets mean that you have to have competition, in fact, reduced budgets mean that you should *collaborate* more. Competition by default means there has to be excess capacity, and that can only be achieved in times of plenty.
    which excludes most if not all community-driven providers.
    Well, that may be because the existing providers are *competing* perhaps if you learned to *collaborate* then you may share some of the funds. For example, my local hospital collaborates with Macmillan. The hospital have recently built a new ambulatory cancer unit and there are facilities for Macmillan in this new building - it is the base for their nurses locally. This makes sense because patients who receive treatment in the unit will be cared at home by the Macmillan nurses. This is joined up, collaborative services. It is a great shame that this nasty, pig-headed government cannot see that collaboration works and is far more powerful than competition at delivering high quality integrated services.
    Bubb tells us: "Almost everyone agrees we have a problem when over 70% of NHS funding is spent on treating long-term conditions, usually in the most inefficient way there is: in hospital.
    In fact this is an evidence-free statement. Many health economists say that care in the community will NOT save money. The proper question to ask is what is the best for patients (amazing, isn't it, that Sir Steve Bubb thinks of money first, and patients second? It kinda sums him up). There is evidence that care in people's homes is better for patients and that they recover quicker. It may cost more, but does that matter if it is better for the patient? However, bear this in mind. If a patient is discharged too early from hospital and into "community care" they may be more likely to be re-admitted and so cost more. So Care in the community should not be seen as a replacement for much of the care in hospitals, it should be regarded as an integrated part of the whole pathway. But integration requires collaboration, and we get back to where I started...

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