The alternative to spot purchasing | adam HTT

What is the objective?

People in need of residential or nursing care often have multiple, complex needs requiring round the clock care that isn’t possible in their own home. These individuals, and their families, want to have choice over where they are placed, ensuring they live with dignity, respect and belonging.

The objective for Local Authorities and the NHS is therefore to commission the most relevant home to meet individual needs. Providers are then tasked with delivering consistently quality care to meet these needs following an agreed care package.

Why are those objectives a challenge to achieve?

Care that centres around the needs of the individual is an output of 2014’s Care Act. In order to achieve its objective effectively, commissioning teams need complete visibility and access to all the available providers in their market. They also need to understand the specific needs of each individual before they suggest the most suitable providers to choose from. This relies on multiple factors. Perhaps most importantly, a sustainable market which very few commissions can say they benefit from.

Many believe that the reason these objectives are so difficult to achieve is due to the lack of available funding to match rising demand. However, with budgets unlikely to increase soon Local Authorities need to find new ways to get more from their existing finances.

Perhaps the first objective then, is to identify and remove any wastage that may exist and be unnecessarily increasing costs. Only when wastage has been removed, can departments really know where they require additional funding.

Experience indicates that much of the wastage in nursing and residential care home placements can be traced back to a commissioning process that is no longer sustainable in today’s market.

At the same time, the challenge is compounded further by overstretched teams trying to support individual needs that are becoming increasingly complex.

What’s clear then is that the task for everyone has never been greater. However, the reality is that calls for more funding is an uncontrollable factor. What is controllable, is how to evaluate and ultimately improve the approach currently in place. Those that decide to focus on what they do control, rather than what they don’t, tend to fair better over time.

What impact has this had on the market?

The ‘lagging indicator’ which appears to be the most obvious strain visible, is across the provider market where capacity is close to bursting at the seams. Just one look at an Age UK or CQC report will provide the data to show the decline in available beds and the variation in these across the country.

The ‘leading indicator’ to recognise, which continue to create issues with market capacity, is spot purchasing to fulfil requirements. The evidence showing the impact spot pot purchasing is having, can be found in the trouble commissioners see every day in sourcing care locally.

Beyond sourcing care, spot purchasing is also playing a key role in providers leaving the market. With Age UK also reporting that 31 councils between 2015/16 confirmed provider contracts were handed back to them.

The output for the individual is waiting times growing and bed availability diminishing, meaning needs are increasingly left unmet.

How have Local Authorities influenced this market?

The current market landscape appears to be an unintentionally neglected one. Those struggling to meet objectives set out in the Care Act will recognise several symptoms often masked as causes, which continues to feed the appetite for additional funding.

Due to rising demand and being forced to use an inflexible approach, commissioners have no choice but to spot purchase. This is causing costs to rise out of balance with available budgets. Leaving commissioners spending their time firefighting to fulfil placements, instead of being able to question the approach and suggest alternatives.

This approach has left many providers disengaged, not fully informed of the criteria needed to fulfil requirements and at worse, forced them to leave the market.

Forcing commissioners to spot purchase means they can’t feed choice, quality and value into the approach. Reducing commissioners to spot purchasing also means they can’t add layers of consistency to the process. Including how they assess availability in the market, identify an appropriate provider, agree the requirement, commission the service and manage the process in the back office.

Instead, when a requirement is needed, commissioners have to begin emailing and phoning the providers they know and have a relationship with to see if they have availability. This process continues until a provider indicates an available bed, regardless of whether that provider is suitable for the individual’s needs.

The informal nature of the process has created a market where providers often dictate the rates of care, rather than the actual market rate or required service dictating the cost. The money wasted here could instead, be used to fund more care and in turn create a more sustainable market for all.

As much of these issues are isolated in commissioning (the impact isn’t perceived as great for procurement in the short term), improvements are harder to gain buy-in for. Excuses are often re-laid back to commissioners suggesting the market is just tough to deal with and it will change when we receive more funding. By contrast, local authorities are far better placed when they do listen to commissioning and do identify the causes behind current challenges.

What is the cause of spot purchasing?

The symptoms felt by the commissioner, by the market and by the individual is a culmination of the existing placement process. Or more accurately, the lack of process which is the actual cause.

Currently 80% of local authorities have no dedicated model for commissioning residential care placements. Instead, they will use a variety of fixed framework agreements. Be they yearly rolling contracts, block contracts or pre-placement contracts with a fixed-number of providers.

Due to the informal nature of the process, coupled with the symptoms mentioned, local authorities frequently encounter provider uplifts and disputes on a yearly basis. As commissioning teams need to find their own means to fulfil requirements (due to rising demand) with spot purchasing, it’s now exposing them to a host of compliance, safeguarding and regulatory issues.

The output is a commissioner who can only be reactive to demand, when they want and need to be proactive in their approach. A proactive approach is the only method of meeting the demands of today’s market. This approach is about using data to forecast demand and market availability that is matched with the needs of the individual, at that point in time.

While the rest of the sector continues to spot purchase, and is facing a fear that market occupancy levels may run out by 2020; others are mitigating the risk by better managing demand and placements now.

These commissioners are now able to use an approach that is built for the conditions of today’s market. Which is ultimately more sustainable than restricting them to a manual approach.

How can you improve the approach too?

A number of other local authorities and NHS organisations have now removed spot purchasing and instead have embedded a formal, proactive approach to commissioning. It is improving market stability and is creating a sustainable market that benefits everyone.

They’re using Digital Commissioning technology with Supplier Engagement & Management.

It’s an approach that fosters an open, fair and transparent relationship with the entire available provider market.

Commissioners can be proactive in their approach, they’re able to send their requirements to their entire market and assess the offers that come back in one place. They’re then able to share and consult with families based on the insight of available and relevant homes best able to meet the needs of the individual.

Providers have more coverage of the type of service required, can see all the potential opportunities in one place and see which service agreements are being selected so they too have more chance of winning available requirements. This means providers can forecast with greater accuracy and create a more robust strategy for their business that ultimately helps create a more sustainable market.

The output is a more collaborative relationship between all parties, meaning the individuals’ needs can be met more effectively.

The result?

The approach, on average, increases (quality, compliant) provider capacity by 120%. Commissioners also average better-quality service delivery by between 2-18%. The same commissioners then pay providers with greater accuracy (99.9% on average) via the same technology.

These commissioners gain:

  • average savings in the region of between 7%-8%
  • an average of 5 offers per requirement
  • invoice consolidation to one weekly document

It means they can focus on supporting individuals, families and their provider market. While providers can focus on effective service delivery whilst ensuring a suitable environment in their homes.

The evidence?

  • See how Haringey Borough Council have developed a Collaborative relationship with their provider market
  • Understand how several CCGs across the Midlands and Lancashire have transformed their approach to commissioning Care Home placements.

Care Home placements will only become more challenging as we approach 2020. Technology is already reducing the complexities of the process, whilst ensuring a proactive and sustainable approach is embedded.

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