Healthy contracting supports effective system wide commissioning

Richard Hill, Senior Manager in the Attain Commercial Team explains how a systems approach can turn commissioning intentions into better health and care…

All too often in my work across the health and social care landscape I see contract teams that are often the poor partner in many organisations, understaffed, unempowered, and driven by national contract cycles rather than local CCG priorities. In the worst cases the operational performance of providers is not fully known and understood, but even in the better examples, contracting is not integrated into the work of other departments or using its inherent power to drive change. Combined with this, innovative work and much needed progress, can often be hindered by traditional adversarial relationships that still dominate contracting in some local health economies. These shortcomings that have usually developed over many years cannot often be speedily fixed and limit the ability of a CCG to understand the commercial landscape, map out the available scope for change, and take quick action. In today’s financial environment this is critical, as we all know, CCGs and providers alike are expected to push further and faster in partnership than ever before.

By enhancing your contract system, you can allow it to drive best practice across the whole of the organisation, the CCG can operate more effectively and move quickly when required.

Symptoms of sub-par performance

If your organisation regards contracting as “something we do at the end of the year”, something to make sure that we comply with NHS England or something our providers demand, then it likely suffers from the following symptoms:

  • Commissioning intentions – not cascaded into operational/contract bound targets, not financially assessed, and annually rolled over.
  • Procurement plans – that don’t reflect commissioning intentions and are constrained by current contractual commitments.
  • Contract plans – that don’t adhere to procurement rules, link to commissioning intentions, financial targets…..”the repeated issuing of 1 year contracts with 12 months’ notice”
  • Finance plans –lack detail outside of the non-acute portfolio is commonplace and often don’t contain forecasts/targets for those activity based contracts upon which efficiencies can be driven.

Finally a contracts team that are at the fringes of developments, working to a six month planning horizon, pulling documents together after they are needed, and becoming increasingly distressed from January to March every year. Sounds familiar? Then read on…

Revving up your processes – top 3

The key to ‘turbo-charging’ your commercial processes is to align the work of the key functional areas so as to multiply their effectiveness and put the CCG in control of events as opposed to feeling constrained by timing/legal based tools and rules. It is also about using the power of the system to address those changes in demand for services – activity and quality – that are unforeseen and so not easily projected into the planning round.

1.     Commissioning and contracts – when we are creating/updating our commissioning intentions we systematically match each clinical area to the corresponding contract(s) so we have a clear link to existing commercial arrangements, timings, and constraints. We should ask the question: do we plan to change this service, (new supplier, new service, more efficiency, integration etc.), and, when do we envision doing it (1–5 years out).  From this work we have the basis for creating a contract plan that reflects both short, medium, and long-term commissioning intension. We can translate “talk” into measurable actions.

2.     Finances and contracts – take the information from the previous stage and place a value – +£/-£ – on every potential change to a contract. This enables us to put an overall value on all commissioning intentions to see the net impact on the CCG in the context of its overall finances and strategy. We use this information to update the long-term financial plan, noting the timing/impact of any new procurements. It allows the CCG, for example, to ensure that there are net financial benefits of shifting more activity into the community or of re-designing/re-commissioning a service. It allows the finance team to set realistic annual forecasts for those activity based services and focus upon them throughout the year.

3.     Procurement and contracts – here we turbo-charge the system by “bringing it all together”, where the broader programme is finalised and agreed. This step involves formally assessing, at least once a year, the status of every contract with respect to aligning CCG commissioning plans, co-ordinating integration, whilst ensuring procurement compliance. This requires some preparation – completing and documenting steps 1 and 2 and may take a few hours of executive time but it is a great investment for the future. By placing commissioning at the heart of the process to drive the discussion we ensure that the population needs are the dominant consideration with the other functions aligning their activities to bring commissioning intentions to life in a controlled, structured, and measured way.

Healthy contracting news article diagram

For every contract – in conjunction with finance, commissioning, procurement Executive leads, we jointly ask the following questions for each and every contract:

  • Commissioning – how and when do we intend to change this service, (new provider, new service, integration) and when do we envision doing it.
    • We will already have mapped out the financial and contractual impacts
  • Procurement – do we have to change this relationship due to procurement/competition guidelines and when should we do this.
  • Contracting – what freedom do we have to change this relationship (contract length, extensions) and who/when do we have to communicate this to.

And if we are really on the ball…

  • Finance – do we have to change this service (provider/price/activity) as expenditure is unreasonably high, the services is perceived as inefficient, or simply to meet overall CCG financial targets.

With agreement reached, the summary recommendations can then be taken to the relevant committees and eventually the board for approval.

Much of the above can be simplified by using simple templates that map and value changes and it is advisable to use them – commissioning intentions to contract, contracts to finances, and procurement to contract. Owned by the Contracts Team, they can be re-visited to track changes and updated for in-year fine-tuning.

At the same time, to transition to this approach, any CCG has to already have a fit for purpose contracting  system – up-to-date, populated, and detailed, database, substantive and compliant contracts, an appropriate contract meeting planner, documented national/in-year variations, and a well-led, trained, and motivated team. A due-diligence check of contracting arrangements can provide a useful assessment of the current state of affairs and act as a pre-cursor for change. Equally good benchmarking information – locally and nationally – can enhance all stages of the integrated process outlined.

Benefits generated

  • Commissioners confidently using contractual tools and processes to drive health improvements rather than being constrained by them.
  • A procurement team energised with a vision as to how to plan their activities in a timely fashion that reflects the latest CCG priorities.
  • A contract team pro-actively shaping partner discussions in year to reflect CCG needs and using annual contracting round to solidify plans.
  • A finance team more confident that value for money is being sought, managed, and that financial forecasts are grounded.
  • Providers and partners informed and given due/timely notice regarding procurements, terminations, extensions, and service changes.
  • A Board making informed decisions that are compliant, follow due process, and have a realistic chance of being delivered on-time and in full.
  • A PMO having an overview of linked activities, able to manage risk, and more confident and informed on programme delivery.

Naturally, through this system approach a CCG becomes a more agile organisation – knowing where it is and having a coordinated and integrated approach to dealing with change.

Summary

By following a system approach to contracting and investing executive time in driving this integrated approach, a CCG can become a more effective and agile agent of change. Functional teams become more aligned, motivated, and confident of success, whilst a partnership approach with suppliers is fostered by transparent plans.

By empowering a contracts team you can energise another lever for change that will complement existing governance arrangements and checks. We all know that real progress in health outcomes occurs when SDIPs are thought through, aligned to system goals and systematically implemented, when inefficient and tired commercial relationships replaced, when old service specs are re-designed, and penalties/awards used judiciously.

Furthermore, when these changes are communicated in a transparent and timely fashion with partners, better commercial relationships are fostered across the system.

For further information about Attain’s Commercial offer please contact Chris Spark.