Gap analysis ± key factors

× îlignment with needs

× Quality of services
× Cost of services
× Risks in existing arrangements
× Relationship with providers

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 Risk factors

× Ôolitical opposition
× Local community/pressure group challenges
× Service user dissatisfaction/harm
× Staff dissatisfaction/harm
× Ôrovider dissatisfaction
× Ôrovider financial problems
× Bad publicity
× Increase in cost of service
× Litigation
× The Competition îct
× Judicial review
× Other legal challenges
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 Cost factors

× Staff : user ratio

× Direct costs
× Salary rates
× Locum coverage
× Overheads
× îdministrative / management costs
× Margin for risk/contingency
× Monitoring requirements or other transaction
costs
× Cross subsidies or other income
× Unit costs per week/hour
× Charging policy
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 Dalue for money?

× Understanding unit costs

× Ôayment for enhanced quality or providing specialist
services
× Compare like with like
× Benchmarking to establish µreasonable costs¶
× Investigate unreasonable costs
× Link to outcomes and outputs of the service to
establish µvalue for money¶
× îppropriate services

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 îssessing existing services ± spectrum 1

Good alignment
with needs

Ôoor quality Good quality

Ôoor alignment
with needs

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 îssessing existing services ± spectrum 2

Low risk

Ôoor value for Good value

money for money

High risk

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 Options for change

× Disinvest or decommission services

× Remodel services
× Renegotiate or end contracts
× Maintain contracts
× Commission new services

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 Definition of options

× Disinvestment or Decommissioning is the process of

planning and managing the elimination or reduction
of service activity or investment in services in line
with commissioning objectives.
× Remodelling is the process of negotiating changes to
the service specification with existing providers to
ensure that they align with needs.
× Renegotiation is the process of improving
performance in delivering contracts.
× Maintenance is the process of ensuring continuity of
service provision, price and quality.
× Commissioning new services is the process of
securing services to meet new or changed needs.

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 îssessing existing services ± spectrum 1

Good alignment
with needs

Renegotiate or
Maintain
end contracts

Ôoor quality Good quality

Decommission Remodel

Ôoor alignment
with needs

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 îssessing existing services ± spectrum 2

Low risk

Renegotiate or
Maintain
end contracts

Ôoor value for Good value

money for money
Decommission Remodel
or remodel
High risk

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 |aming the priorities

× Strategic commissioning objectives ± usually

outcomes for the population, 5 years, 7-8 maximum
× Service development priorities ± specific changes to
meet the objectives, respond to original hypotheses,
specify where and for whom the changes are
intended. 3 years.
× Rationale ± why existing services will not meet
needs, why service development is needed.
× Ôrocurement implications ± required disinvestment
or remodelling, redistribution of resources,
contracting changes.

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 Service Design

× Once strategic commissioning objectives,

development priorities and implications are agreed,
move into design and testing, through:

× Exploring examples of research and good practice

elsewhere.
× Scenario building and testing.

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 Scenario building

× To ensure that they will actually meet the needs of service users
and will not have unintended negative consequences on the
overall whole system of service provision for the population.
× Scenario building can help to predict and prevent problems from
the beginning.
× Range of approaches to service modelling and scenario testing,
essentially based around the idea of a game which models the
scenarios likely to prevail in real life if a particular service were to
be introduced.
× Dary from the basic and simple ± for example, desk-based
activities looking at the financial implications of changes to
services to role playing activities involving dozens of different
actors more or less successfully acting out what they imagine
would be the behaviour of different stakeholders in a particular
new scenario.
× It can help all stakeholders test the feasibility of a proposed
service development, as well as identify additional guidance,
protocols or arrangements needed to make the service work well.

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 Scenario building examples

× Ôrimary care CîMHS service: how the system would

respond to the needs of individual children or young
people though individual case studies.
× Locality arrangements : how agencies in a locality
would organise their response to children with
emerging behaviour problems, including pathway
and protocol design.
× Joint commissioning arrangements: how a joint
commissioning team would manage an emerging
budget deficit problem.

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 Scenario building

× Involve all key stakeholders including service users,

carers, professionals and providers ± in different
fora if necessary.
× Genuinely test arrangements ± get testers to identify
strengths and weaknesses.
× Explore how weaknesses can be addressed ± for
example through resource allocation, protocols,
guidelines, role definition, referral procedures.
× Explore in detail transition implications and costs.

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 Ôrocurement and market management plans

× Ôrocurement plans - how resources will be

distributed, and what services will be expected for
those resources. Usually 1-3 years, specifying what
will be purchased or contracted, the volume of
activity, and the cost.
× Market management plans - ± identifying what
commissioners intend to do to ensure that services
are specified, tendered, and contracted
appropriately, including being clear about what
services will not be subject to competition ± and
why.

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 Managing a quasi-market

The characteristics of a quasi-market include:

× High degree of continuity in the personnel, and
long term relationships.
× Market-like mechanisms, including contracting.
× î relational market.
× Ôrofessionals often purchase services on the part
of both the organisation and the client.
× The market is often inward-facing, to minimise
services failure.
× Heavily regulated by central government.

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 Traditional weaknesses of a quasi-market

× Ôotential for inappropriately strong influence of

providers.
× Service users have very limited mechanisms
available to them to influence the market.
× Service users have very limited choice of services
available.

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 î mixed economy of care

× Most agencies support a mixed economy of

providers ± public, voluntary and private.
× Few agencies have an overall policy for developing
such a mix or have agreed targets for the balance
between sectors.
× Most agencies try to achieve a balance through small
incremental changes in commissioning.

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 Market management plan

× Ôlanned market configuration ± areas of growth or

contraction, balance between public, private,
independent sectors.
× Ôlanned contracting arrangements ± what kind of
arrangements for supplier registration, specification,
tendering and contracting will be used and where.
× Transition management ± how major changes in the
market will be handled, approaches to be used to
decommissioning or service transition.

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 The commissioners role

× Driving service change to meet needs.

× Managing change to minimise service breakdown.
× Managing the balance of interests of different
stakeholders.
× Managing the balance of power between different
stakeholders
× Managing the process of engagement with different
stakeholders.

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 Consensus building issues

× Stakeholders not prepared.

× Meetings not facilitated.
× Confusion between information, consultation,
negotiation.
× Ôressure to respond quickly.
× |o framework for analysis.

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 Consensus building activities

Options:
× Early information about the project and how to be
involved
× îctive information giving, consultation, involvement
activities throughout
× Service design events: multi-agency focus groups:
key stakeholder interviews.
× Scenario analysis.
× Feedback/response documents.
× Hypotheses/priorities testing.

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 Consensus building - summary

× Ôlan the process well.

× Involve stakeholders early.
× Ensure decision makers are involved at the crucial
stages.
× Give written and oral feedback of results and
conclusions.
× Give stakeholders time to think through and respond
to each stage.
× Individual comment and groupwork to work through
implications of the strategy.
× Consider µhonest brokers¶ to facilitate.

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 Exercise

× Go back to the earlier exercise where you planned

work on a commissioning strategy for a specific
population.
× Use the materials we have just reviewed to complete
an initial analysis of the market you are likely to be
dealing with, its strengths and weaknesses, what
you think your market management priorities are
likely to be, and why.

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