Contract procedures for care often prevent
parties reaching satisfactory results. Home care director Nigel
Walker proposes a six-staged approach that is open to scrutiny and
meets the requirements of Best Value.
Current contracting developed in an era when
cost was king and the principle use of contracts was to buy
products rather than services.
Most contracting processes have been driven by
lawyers and accountants, while in the provision of care,
commissioners and service users have been somewhat peripheral to
the process. Commissioning policies usually reflect a process
driven by timescales and hierarchy with little emphasis on quality.
Many commissioners have not priced contract requirements and so
have little idea of what to expect by way of responses. Nor, if
prices are significantly different, have they always tried to find
out why, budgetary needs often being a key reason for commissioning
services in the first place.
Equally, providers of services have not often
challenged procedures, preferring to be compliant in order to have
a better chance of winning contracts. They have assumed that
commissioners know what they are looking for and understand pricing
structures and methods of service delivery. But commissioners’
understanding is often based on internal markets.
Small providers are sometimes content to quote
low prices to secure work and trim the margins of service delivery,
training and staff conditions to stay in business. Where this has
not been the case providers have had no desire to be transparent if
they feel profit margins are significant.
The secrecy of the process on both sides has
not led to user-driven or quality services, although some local
authorities and providers are using more informed methods now as a
result of past mistakes.
The creation of the National Care Standards
Commission changes the basis upon which service provision is made.
The bottom line for both providers and commissioners is that it is
easier to arrive at prices for services where the quality standards
are set and can be relatively easily priced by either or both
An earlier article in Community Care
(“Contracting for care”, 22 November 2001) suggested that new
national standards could be taken further with the introduction of
core specifications, contracts and pricing mechanisms.
There is no reason why new commissioning
processes that better reflect the Best Value and social care
agendas could not follow. With the increase in joint commissioning
between health, social services and housing departments and the
likelihood of far less local political involvement, now is the time
to consider the options. Here is a model of such a new system of
The new process should have six stages. The
first would entail a written specification of the sort of provider
commissioners would want to award a contract to. This could include
details of the size, stability, experience, financial viability,
health and safety record, employment record and the legal standing
of the company. Although this information is commonly sought in
tenders it is not prepared as a specification.
The specification should contain a statement
about what the commissioners hoped to achieve by the contract and
may contain preferences such as whether the providers would be
not-for-profit, local or national, already operating in the area
and so on. This gives a reasonable amount of information to help
providers consider whether to enter the tender – usually a costly
process. The writing of a specification in this way has the benefit
of enabling consultation with service users and carers too.
The second stage allows a pre-tender
assessment against the specification. Providers will, in making
their pre-tender submissions have an opportunity to show how they
meet the criteria and their record in delivery in service areas.
Pre-tender documentation can be transparently marked against the
set criteria in the same way job applications are. This would give
a short list of suitable providers for commissioners to take to the
next stage but has the benefit of cutting non-compliant providers
out of a more complex third stage.
The third stage aims to give commissioners a
chance to understand the quality of the provider. This is achieved
through a series of interviews and site visits, more detailed
examination of strategic, policy and other supporting documentation
and administrative aspects of service delivery, consideration of
quality assurance and audit measures and aspects of current staff
and user views of the provision made. The commissioners will decide
the level of quality, though it will affect price.
At the end of this process the providers that
are in the full tender stage should be evaluated using a scoring
system that is transparent. Potential users and carers of services
could also be involved as a matter of good practice.
As part of this third stage providers should
be asked to complete a spreadsheet showing the financial
assumptions and pricing of the contract. However, the pricing
should take no part in the initial prioritising that results from
stage three. Instead the examination of the pricing mechanism
should form a separate exercise – stage four.
This involves an intimate examination of the
costings and assumptions made by the listed providers. The provider
who tops the prioritisation list is considered first. During this
stage the provider has to discuss all their assumptions in arriving
at the price and be prepared to agree new assumptions with the
commissioner if agreement can be reached. This should be an open
and honest exercise on both sides and would lead into annual open
book accounting that re-examined those assumptions.
The assumptions would cover costs based on
local conditions, registration and administrative matters, staffing
issues and quality and management measures as well as surpluses or
profits and agreements about how they are used. This leaves
significant control with commissioners to detail quality as well as
cost, and ties providers to the result. If the most preferred
provider and the commissioner cannot agree, the process continues
with the next most preferred provider.
This fourth stage gives both transparency and
a statement of expectation. If assumptions are agreed the price
drops out at the bottom of the spreadsheet and no-one can disagree
as to how it was arrived at. This is a powerful weapon for
government-funded organisations needing to show the costs of care
and a good comparator of commissioning across the country for the
The fifth stage sees the final contractual
negotiation and the signing of the contract, and includes the
The sixth involves the implementation and
monitoring of the contract, including an annual examination of the
accounts and original assumptions. If a provider has been paid to
train 30 staff to NVQ Level 2 and failed to do this they would have
to account for this failure and may face penalties. Equally, if
local labour conditions altered significantly and the provider was
justified in seeking an increase to meet higher staff costs this
would be addressed, although the case would have to be made.
This process to deliver Best Value also leads
to a better assessment of the “soft” parts of a care product.
Although the focus is not initially on finance it becomes so once
quality is assured and assumptions agreed. Open-book accounting
will lead to a more open and honest approach to funding issues with
true partnership and ownership. The results, geared to quality and
flexibility, would be contractual agreements that give full control
to the commissioner while reassuring providers of a fair, shared
vision for service delivery.
Nigel Walker is director of home care
at Housing 21.