Reform examine public sector commissioning in new report

policy digest

31 / 01 / 2017

Faulty by Design
Reform, January 2017

The report ‘Faulty by design’, published by independent public policy think-tank Reform, examines the state of public service commissioning. It argues that the way services are commissioned ultimately underpins their success. 

The report looks particularly at commissioning of healthcare, criminal justice, employment services, housing and homelessness and suggests that if the government does not get the commissioning process right, it will not deliver value for money or meet the complex needs of service users which in turn has financial consequences. 

The paper evaluates the success of current approaches taken by central and local government and commissioning bodies like CCGs, through interviews with experts from the respective bodies and third parties as well as through a literature review and data evaluation. 

The report highlights the imperfect nature of public sector commissioning and suggests that recent reforms mean that instead of addressing interrelated issues like health and social care needs, homelessness and drug and alcohol addiction, they have instead led to complex and often overlapping commissioning frameworks which fail to address citizens needs effectively. 

Reform see three key areas in which commissioning bodies are not successfully delivering for the public: 

  • Devolution of commissioning to local areas is not happening in practice, which the paper argues is leading to a ‘postcode lottery’ across services, with services largely remaining centrally controlled with targets decided in Whitehall often dictating the actions of frontline professionals.
  • Failure to focus on outcomes that matter most to service users, and instead focussing on output measures such as the number and cost of operations rather than much less easily captured and more abstract outcomes like wellbeing. 
  • Siloed commissioning, which the report says leads to gaps and duplication in services that therefore do not most effectively meet user’s needs and add costs. It highlights the Treasury’s figure of £100bn, for the cost of duplication, giving the example of drug addiction services which are handled by the Police, A&E departments, GPs, community workers and voluntary organisations. 

Looking at healthcare, Reform suggests that siloed commissioning impedes the commissioning of preventative measures that are not the responsibility of the NHS and it highlights the cost of administrative duplication caused by the inability to share data across services. 

Furthermore, the report suggests that siloes in healthcare mean there is an “ambiguity of responsibility for providing intervention” which has undermined delivery of effective services. 
It argues that the current commissioning framework for health means that there is an inability to reap the rewards of intervening when they accrue elsewhere in the system, meaning that there is no incentive for commissioners to design preventative services that prevent problems within and across service areas. 

In particular, it says that the differing funding streams in healthcare fail to give responsibility for the whole care needs of patients to any one body.  In some cases financial incentives for different parts of the system work against each other. For example GPs are funded through patient list-based capitated budgets from NHS England with an incentive to reduce care needs whilst hospitals are paid by CCGs for activity, thus incentivising intervention. This, the paper says, means that “the intervention is being delivered at the least effective area”.

The paper also highlights the stark variances in health outcomes across different areas of the country and suggests that despite the established link between income deprivation and life expectancy and the agreed need to design policies that meet specific interrelated local health economy’s needs, clearly set out in STPs, this is not happening in practice and the centre continues to hold substantial control over commissioning. 

The control of regulators and government departments means that sustainability rather than transformation remains the priority, with one interviewee suggesting that ‘templatitis’ in STP plans locally means that short term, central aims of saving money were prioritised across local areas. 

Some interviewees went further and suggested that central control meant that CCGs were not commissioning but just passing money from the centre to trusts with no control over how it fits with local plans. 

Whilst the report does recognise the progress towards change made by some CCGs, factors such as the financial deterioration of providers, the power balance between commissioners and providers, local politicians often campaigning against commissioner plans to change or cut services and NHS England seeming to stand against local transparent discussions about service change all undermined commissioners ability to succeed. 

It calls on commissioners to learn from the past actions identified in the paper and says that Reform will set out a vision for a new commissioning framework.

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