More reasons to be wary of commissioning

Greens oppose Brighton & Hove City Council’s move to an ‘Intelligent Commissioning’ model, as I’ve detailed previously.

Commissioning creates a split between who buys a service and who provides it – which in the public sector is often rather artificial. Public services are not like the business sector and cannot be treated in that way. If I recall rightly, the council tried several times to outsource municipal waste collection before having to bring it back in-house after experiencing serious problems with managing the contracts with provide suppliers.

It’s much harder to manage and monitor contracts than many people realise. Which makes the House of Commons Health Committee’s March 2010 report on Commissioning [PDF] very interesting reading.

The report is fairly damning of Primary Care Trusts, the main NHS bodies tasked with commissioning. The committee also pulls no punches on the idea of commissioning itself. The report (which I highly recommend) finds that before introducing the purchaser-provider split (aka commissioning) the NHS had admin costs of about 5% of total NHS expenditure. Since then it has risen to be around 13.5% of NHS expenditure. That’s an absolutely huge increase.

A team at York University cited in the report note that old ‘Beveridge-type’ health systems have low transaction costs and that:
“In the English NHS, the purchaser-provider split, private finance, national tariffs and other policies aiming to stimulate efficiency in the  system and create a mix of public and private finance and provision mean almost unavoidably that the more information is needed to make contracts, hence transactions costs of providing care have increased, and may continue to increase.”

(It’s worth nothing that despite commissioning the York study, the Department of Health never published it, the Health Committee had to winkle it out direct from the academics over protests from civil servants. The same civil servants were also rebuked by the committee for failing to provide accurate figures for costs themselves!)

The committee’s report concludes that unless some convincing, rigorous new data shows benefits for the 20 years of NHS commissioning, it should be abolished as a costly failure.

I find it hard to believe that the city council are going to be able to somehow avoid these risks and pitfalls. Commissioning would need to deliver some immense cost-savings (which nobody has the evidence to prove it can) to justify almost trebled admin costs!

I have asked, and will keep asking, for evidence to justify the council’s leap into ‘Intelligent Commissioning’.

6 thoughts on “More reasons to be wary of commissioning”

  1. Interesting, but the NHS figures you give lack context.

    The jump from 5% to 13.5% was the cost of working in a new way, if the savings were greater then the cost is justified. Do you know how much was saved, or not?

    1. The Health Committee’s report tries but fails to find any figures to justify the increased expenditure. In other words, the NHS is unable to show any savings as a result of this working in new ways. Which is why the Committee concluded that unless reliable figures proving savings could be found, commissioning should be ditched.

  2. I see, thanks for sharing this and pointing this out.

    Who’s pushing for this in the council, and are they accountable to anyone for their decisions? Do they have to give evidence, or at least reasonable grounds for believing this is worth doing, in order to do it?

    1. These changes are being led by the Council’s Chief Executive and the Conservative administration who have approved various stages of the plans at their cabinet meetings. Cllr Mary Mears, the Conservative leader of the Council, has publicly supported the plans. As far as I know, they are not required to provide evidence to justify their proposals. Some of the reasoning provided can be viewed online here and also in the currently open phase 2 consultation.

  3. Right. I’m not familiar with how these systems work, thank you for the links and details.

    What’s the alternative to commissioning that you’d like to see the council adopt, and why would it preferable? What evidence would you give to support your view?

  4. Actually I’ve just read your post on keeping services in-house. On one hand, I can see the intuitive sense behind your points that staff would have better experience and morale, and that task-by-task we could expect this to cost less than external consultants. But conversely, there’s an argument that too much job security can result in staff complacency, over-hiring and inefficiency.

    I don’t know which would result in a better or more cost-effective service, or where the optimal balance might be struck. I’m open minded to both points of view, and interested in what the evidence might be around keeping services in-house.

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