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Welcome to

Business and Change Management – Session 7

Commissioning

We will start in a few minutes


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Insert image
of trainer here
A bit about me…

… and a bit
about logistics

How can we talk? Chat panel

3
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By the end of the session you will be able to…

 Discuss, evaluate and apply techniques to
commission services to bring about change and
achieve strategic outcomes

WB Ref: 4 4
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WB Ref: 4.1 5
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Commissioning Change
The strategic goals of many public bodies are centered on improving
outcomes for the segment(s) of the population for which they are
responsible. These outcomes are achieved by the provision of
appropriate services (from education provision to medical care).

However increasingly publically funded organisations do not actually

perform the services that will need to be changed if they are to achieve
their strategic goals. Rather they either

 purchase the services from other providers or

 ensure that there is sufficient, appropriate provision in the market
(where those using the service are provided with the funds to meet
their own needs).

WB Ref: 4.1 6
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Commissioning Change

Commissioning process

Integral part of commissioning is procuring:

WB Ref: 4.1 7
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Commissioning process
To achieve its desired outcomes a public body cannot therefore make
the changes itself but must bring together a suitable range of providers
(from the public or private sector) who between them can deliver the
benefits needed. The process of deciding what is needed, and then
choosing, appointing and/or coordinating these providers is known as
commissioning.

Integral part of commissioning is procuring

An integral part of commissioning is procuring the goods, works and
services needed in a way that maximizes efficiency and value for
money. However procurement is a vital business function in all
organisations, whether public or private sector. Known in the private
sector as supply chain management we will look at the strategic and
practical tasks involved in ensuring a successful procurement process
from the initial search for suppliers to the final contract monitoring
arrangements.

WB Ref: 4.1 8
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Outsourcing
Before looking at commissioning in detail it is worth looking at two other
terms often used in the context of commissioning: outsourcing and
privatization.
Outsourcing:
Contracting with an external supplier for the provision of a service or a
business process rather than providing it internally.
The term outsourcing is usually used to describe situations where the
organisation previously carried out the process or service internally.

A small firm which has always used an external accountant is unlikely to

be described as outsourcing its finance function. However if a large
company which currently has a finance department decides change to
an external provider it would be described as outsourcing the service.

WB Ref: 4.3 9
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The Need and Meaning For Commissioning

The need for commissioning
The need for a robust and effective commissioning process has come
about as a result of two key changes in the way public services are
provided.
The first is that, in many areas, public bodies have ceased to be direct
service providers:
During the last few years the roles and functions of public bodies have
been changing. Increasingly, instead of providing many services
directly, public bodies are now looking to external organisations and
companies to provide services on their behalf. Public bodies have been
moving in the direction of becoming purchasers, rather than direct
providers of services.
The second change is new and evolving and in the UK, most developed
in the provision of social care, where rather than direct provision, care
budgets are devolved to individuals to buy the care they need
WB Ref: 4.4 10
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The Need and Meaning For Commissioning

The meaning for commissioning
‘The process of achieving appropriate outcomes by assessing the
needs of people or users in an area, designing and specifying the
services to meet those needs, and choosing the delivery
mechanism to secure an appropriate service whilst making best
use of total available resources’

Achieving appropriate outcomes – commissioning is focused on

outcomes – i.e. delivering services which will make improvements to
the lives of people in need.
This might involve improving their skills, their behaviour, their
circumstances or their level of satisfaction with a service.

WB Ref: 4.4.1 11
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The needs of people or users – commissioning activities are directed

towards meeting the particular needs of an identified section of the
public, referred to as service users.
In an area – commissioning may be undertaken at a range of levels
from national or regional
Designing and specifying the services – at the start of the
commissioning process there may be no clear idea about how the
desired outcomes will be achieved.
Choosing the delivery mechanism – the organisation charged with
meeting the needs of the service users will not be the one providing the
service
Appropriate service – the commissioning role does not stop once the
service providers are appointed.
Best use of resources – finite funds and high demand for the services
provided will make it essential that the solution chosen and the
providers selected offer real value for money.

WB Ref: 4.4.1 12
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Joint commissioning:

Where two organisations or two parts of the same

organisation work together to deliver the required
outcomes.
Some outcomes will require a joint approach. For
example improving the outcomes for children with
special educational needs may require a coordinated
approach from partners responsible for the provision
of education, health care and social care.

WB Ref: 4.4.1 13
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When Commissioning is used

Commissioning is a response to the need to achieve specific outcomes.
These outcomes may result from national policies or locally agreed
targets. In the same way as a programme is devised to achieve a
strategic goal set by a private company, so a commissioning process
may be carried out to achieve the outcomes set as priorities by public
bodies.
 Commissioning is used where:
 There is a need for change resulting from:
 − a clear indication of growing need or
 − performance data which shows that current services are not
achieving the outcomes desired
 The services are provided by a complex market (i.e. private, public,
charitable and/or voluntary sectors offer a range of services) which
will need to be coordinated.

WB Ref: 4.4.2 14
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Commissioning organizations

Commissioning activities may be carried out by any public body which is

responsible for the provision of services to a section of the population.
However in some countries specific commissioning organisations have
been set up to manage the commissioning of particular services.

WB Ref: 4.4.3 15
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Commissioning Cycle – Four key stages

Analysis

Plan

Secure
Services

Review

WB Ref: 4.5 16
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Analysis:
Understanding the needs to be addressed and the environment in which
service providers must operate.
Plan:
Identifying the gaps between the current level of provision and what is
needed and planning how to address the difference. A range of service
models and options may be considered and evaluated to determine the
best approach.

WB Ref: 4.5 17
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Secure services:
Ensuring the services needed are delivered in accordance with the plan
to deliver the outcomes required. This may include:
− Direct provision
− Procurement from external providers
− Market facilitation to develop local markets.
Review:
Monitoring the service delivery provided and measuring achievement of
the outcomes. This will require the selection of suitable KPIs and the
setup of relevant data collection systems.

WB Ref: 4.5 18
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Stakeholder engagement and consultation

All key stakeholders must have an agreed and consistent vision for:

The efficiency
The services
The outcomes or effectiveness
needed to meet
to be secured improvements
users’ needs
required

WB Ref: 4.6 19
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Stakeholder engagement and consultation

One of the most important stakeholder groups too often left out of the
commissioning process is service providers. They, often better than the
commissioners, understand the market, what can be achieved and how
services should best be structured. They should be seen as partners in
the process rather than adversaries.

WB Ref: 4.6 20
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Now you try….Exercise 4.1

Who are the stakeholders who should be involved in the decisions being taken
by Colswell about future residential options for the elderly?

WB Ref: 4.6 21
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Exercise 4.1 Solution

 Members of the SCHOP

 Younger people who will be reach old age within the next decade
 Older people in care homes and their families and carers
 Older people currently managing in their own homes and their carers
 Doctors, hospitals, social care service providers currently providing
care to those at home and in care homes
 Charities with specialist knowledge of the conditions associated with
older people e.g. dementia care
 Current local care home providers (staff delivering the care as well as
managers)
 National care home providers without a presence in Colswell.

WB Ref: 22
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Commissioning cycle – the analysis stage

The analysis stage of the commissioning cycle is focused on gaining an

understanding of the issues facing service users and the possible
solutions available to meet those needs.
There are two key elements:
 A needs and demands assessment – to identify what is lacking in
the provision of services for users and what is it that they would like
to see.
 Service provision review – to assess the standard of current
service provision and research what could be made available

WB Ref: 4.7 23
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Needs and demands assessment

 Describing those whose needs should be met

 Detailing the extent of the need
 Clarifying the main factors that contribute to the need
 Predicting likely future demand for services.

This assessment is often referred to as a strategic needs analysis or

SNA. The term strategic here refers to the fact that it is the needs of a
segment of the population that are being analyzed

WB Ref: 4.7.1 24
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Needs and Demand

Needs:
 A judgement that individuals or groups lack something that they
ought to have, or that they have fallen below some minimum
standard.
Demands:
 Users’ wants or requests for service or support
Needs and demands may be identified in one of following ways:
 Population needs assessment
 Surveys of anticipated future need
 Information can be gathered via engagement directly
 Service user profiling
 Analysis of met but unsatisfied demand

WB Ref: 4.7.1 25
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Types of information

 Answer factual questions

 Profile current service users - demographics
 Identify trends
Quantitative  Draw statistical generalisations - population based

 Understand experiences
 Gather opinions
 Predict behaviours
Qualitative

WB Ref: 4.7.1 26
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Quantitative Information

 Answer factual questions

 Profile current service users in terms of their demographic
 Identify trends
 Draw statistical generalizations about the population based on
samples

WB Ref: 4.7.1 27
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Qualitative Information

 Understand experiences (such as the extent to which service users

feel supported or cared about by providers)
 Gather opinions (such as how the service could be improved or why
certain services are not used)
 Predict behaviours (such as the impact of introducing a smoke free
work zone on the smoking habits of smokers)

WB Ref: 4.7.1 28
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Stakeholder Involvement

Engagement
through

Shared
Input
contribution

WB Ref: 4.7.1 29
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Stakeholder Involvement

 Engagement through input – collecting information from service

users by directly engaging with them in workshops, discussion
groups, on-line forums, social networks etc.

 Engagement through shared contribution

– involving the users in the analysis of the data collected and the
assessment of future needs
– this should ensure a more informed outcome and at the same time
help to increase the buy-in for strategies developed to achieve the
outcomes sought.

WB Ref: 4.7.1 30
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Service Provision

Describe current model of service provision

Accessible to those who need them

Acceptable to those who use them

Determine whether current services aligned
Effective at delivering the aimed
for outcomes

Determine whether service provides value for money

Assess risk current service provision will not be sufficient in

future
Discover alternative ways to meet user’s needs
Difficulties inherent in performing a
service review
To overcome these difficulties is to
consult with a sufficient range of
stakeholders

WB Ref: 4.7.2 31
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Process Mapping

Areas
Wasted where
activities service is
poor

Duplication
Bottlenecks
of provision

WB Ref: 4.7.2 32
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Process Mapping
.
The mapping process should help to identify bottlenecks, wasted
activities, duplication of provision and areas where service is poor
because two parts of the system do not act in a coordinated way. It is
important that users, carers and providers are all involved in the
process, as there are likely to be significant differences in both
knowledge and perception between the different stakeholder groups.

WB Ref: 4.7.2 33
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Now you try….Exercise 4.3

Suggest the secondary sources of information which will be needed
to evaluate the current service provision for meeting the residential
needs of older people in Colswell

WB Ref: 4.7.2 34
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Exercise 4.3 Solution

 Current service level agreements / contracts with care home
providers
 Current spending levels nationally and locally on care home provision
 Available funding for providing financial support from budgets /
forecasts etc.
 Performance indicators on services currently provided
 Results of contract monitoring exercises / performance reviews
 / vetting activities
 Trends on relevant issues (demographics, health patterns, changing
perceptions etc.)
.

WB Ref: 4.7.2 35
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Exercise 4.3 Solution

 Solutions implemented by other councils with similar demographics

to determine best practice (in terms of split between types of
providers / types of care offered within homes / support services
offered to those wishing to stay in their own homes etc.
 Legislation and guidance relating to:
1 services which must be provided
2 standards to be applied
3 outputs required
4 outcomes to be achieved etc.

WB Ref: 4.7.2 36
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Planning phase

Agree and Design or re-design

Identify gaps
communicate service provision

WB Ref: 4.8 37
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Gap Analysis

At the end of the analysis phase, the commissioning organization should

have completed:
 An analysis of the needs of the relevant population, and how these
are likely to change in future
 An analysis of current and potential services and resources, and the
extent to which they are likely to meet future needs
 An analysis of additional relevant information such as:
− Legislation and national guidance
− Current research and examples of best practice.

WB Ref: 4.9 38
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Gap Analysis
The aim is to identify gaps between existing provision and identified
needs, looking specifically at:

 Gaps in the provision of specific services

 A failure to provide services to particular sections of the relevant
population
 Poor quality services
 Services which are inaccessible or delivered in inappropriate
locations
 Under-utilised or over-provided services
 The sustainability of funding for particular services.

WB Ref: 4.9 39
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WB Ref: 4.9 40
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Commissioning strategy

A high-level strategic statement about how an organisation intends to

specify, secure and monitor services to deliver future outcomes for
citizens.
It will be used to:
 Communicate the vision to stakeholders
 Provide clear, long term goals to provide a focus for future decisions
 Link service development with business cases and investment plans

WB Ref: 4.10 41
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Commissioning Strategy

Method of
Location Skills needed
delivery

Improving
Co-production Targeting
access

Integration of
services

WB Ref: 4.10 42
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Commissioning Strategy
The strategy is likely to identify changes needed in services such as:
 Location – e.g. facilitating care provision in user’s homes rather than
requiring them to move into supported housing.
 Method of delivery – e.g. medical care being offered using telephone
rather than face to face appointments.
 Skills needed – e.g. moving to multidisciplinary teams to provide a
comprehensive care package.
 Co-production (treating users as agents in their own care)
 Improving access – e.g. providing opportunities for self-referral, or
integrating services
 Targeting – e.g. redirecting attention towards early intervention by
targeting those with particular risk factors.
 Integration of services – e.g. ensuring that young people are moved
smoothly from child to adult care services without the need to be
reassessed and effectively ‘start again’.
WB Ref: 4.10 43
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Service Design
Once a commissioning strategy has been agreed, the commissioners
can begin to design a new service model to deliver the envisaged
outcomes.
Stakeholder engagement
It is critical that the process is not carried out in isolation from
stakeholders.
If it is to be successful, the design should be devised by the
commissioners in collaboration with all key stakeholders including users,
carers, referral agencies, partner organisations, current providers and
potential providers.
Collaboration is more than simply consultation – stakeholders should be
actively involved in all the stages of the design.

WB Ref: 4.11.1 44
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Service design – Approaches to service design

Outcome focused

Pathways

Whole systems

WB Ref: 4.11.2 45
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Approaches to service design

Outcome focused – working to ensure the service provided improves an

individual’s quality of life and helps them reach their desired outcomes

Pathways – focused on improving an individual’s journey through the

service, ensuring it is accessible and easy to use from initial referral to
final discharge

Whole systems – cutting across professional disciplines and

organizational boundaries to pool resources, and avoid service gaps and
duplication

WB Ref: 4.11.2 46
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Service design stages

Undertaking a service design process is effectively a project for the
commissioners and should be run as such - properly planned and
managed at every stage. The four stages are:

Pre-design – agreeing the design principles and desired outcomes for

the service based on the principles outlined in the commissioning
strategy
Design – creation of a target operating model (TOM) which describes
how the new service will work. The TOM created should not be seen as
a fixed or perfect model.
Testing – much of the testing will be theoretical such as the use of
scenario testing
Implementation – The implementation of the design is dealt with in the
next section (secure services).

WB Ref: 4.11.3 47
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Commissioning cycle – Securing services

In the future, all individuals eligible for publicly-funded adult social care
will have a personal budget (other than in circumstances where people
require emergency access to provision); a clear, upfront allocation of
funding to enable them to make informed choices about how best to
meet their needs, including their broader health and wellbeing.

This means that those who need social care services have now become
the purchasers, buying them direct from the providers. The problem for
those responsible for health and social care commissioning is that, for
this to work, the market must offer the services required.

WB Ref: 4.12 48
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Market:
The total of service provision in a specific area including services
arranged and paid for by the commissioning organisation itself, those
services paid by the state through direct payments, those services
arranged and paid for by individuals from whatever sources (sometimes
called ‘self-funders’), and services paid for by a combination of these
sources.

Market facilitation:
Based on a good understanding of need and demand, market facilitation
is the process by which strategic commissioners ensure there is
sufficient appropriate provision available at the right price to meet
needs and deliver effective outcomes both now and in the future.

WB Ref: 4.12 49
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Market facilitation

What is needed?

How it will be paid for?

Aim: to supply
providers with
information about Work with them to
develop services required

Provide them with

support they need to
operate efficiently

WB Ref: 4.12.2 50
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Key points to note about the definition:

Sufficient appropriate provision

 Sufficient in this context does not mean simply enough, but requires that
there is a choice of providers, or where that is not possible, a choice about
the type of service that might be provided.
 Appropriate means that individual needs must be accommodated
The right price
To determine the right price requires striking a balancing between affordability
on the one hand and quality and accessibility on the other.
Now and in the future
In order to provide a consistent supply, and to encourage investment in service
provision, the market must be facilitated not just to meet present need but also
over the longer term.

WB Ref: 4.12 51
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Why Facilitation is Needed

 The high profile collapse of a private care home provider in the UK in

2011 left 30 000 older people at risk of homelessness. It was only
the intervention of public bodies such as local
 Where market forces are left to determine supply
 The majority of care purchases are made using state funding so
there is a strong case for public oversight of the value for money
provided
 Many service users cannot make purchase decisions for themselves
 To ensure provision is available in all locations and that service is of
a suitable standard even for those with limited funds, it will be
important that there is public sector support for the delivery of the
service.

WB Ref: 4.12.1 52
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Block and Spot Contract

 Block contract:
Where commissioners contract in advance to buy a specified amount of
service provision. Providers then have a guaranteed minimum income
and hence the security needed to invest in the service.
Payments from service users who use their personal budget to select
the service will effectively be recouped by the commissioning
organisation against the cost of the contract.

 Spot contract:
Buying a service at the point when it is needed

WB Ref: 4.12.1 53
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The Process of Market Facilitation

3
2 • Intervening
where necessary
to encourage
1 • Helping to shape
the market
innovation &
development
• Developing a
market position
statement

WB Ref: 4.12.2 54
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1. Market Position Statement

Contents of MPS

• Outcomes desired and commissioning strategy being pursued

• Predictions of future demand

• Strengths and weaknesses of current supply market

• Models of service provision desired

• Likely levels of funding

• Support to be provided by commissioning organisation

WB Ref: 4.12.3 55
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2. Shaping the market

Activities in Ensuring equal playing field
shaping the
market Agreeing structure for calculating price

Making tender process simple and clear

Sharing commissioning plans with providers

Working with providers to develop choice

Encouraging diversification to extend services

available
WB Ref: 4.12.4 56
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3. Market intervention

Examples
• Supporting planning applications
• Providing or financing training
• Brokering shared working
• Acting as information conduit for service users

WB Ref: 4.12.5 57
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Procurement and contract management

Securing services, whether block contracts offered as part of a market

facilitation exercise, or the wholesale purchase of the services to be
provided to users, requires the instigation of a procurement and
contract management process

WB Ref: 4.12.6 58
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Commissioning Cycle - Review Phase

Organisations can:

Make good on
Take action to contractual Learn lessons to
deal with poor obligations to inform future
performance reward good activities
performance

WB Ref: 4.13 59
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Performance measurement
The key points are to note about performance measures are that: They can be
grouped into two categories:
(a) Financial measures – traditional measures of monitoring performance used
widely to measure cost, profitability and efficiency.
(b) Non-financial measures – incorporating aspects such as motivation, brand
image, quality, competitiveness, user satisfaction, innovation and an ability to
respond to changes in demand.
The first stage in measuring performance is any organization is the design of Key
Performance Indicators (KPIs).
A mnemonic for the quantification of KPIs is that they must be SMART:
 Specific – unambiguous
 Measurable – quantifiable
 Achievable – within reach
 Relevant – focused on stakeholder satisfaction
 Timebound – with a completion date
WB Ref: 4.13 60
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Performance measurement

How much was done?

How well it was done?

Skills / knowledge
Whether anyone is actually better off? Attitudes / opinion
Behaviour
Circumstances

WB Ref: 4.13.1 61
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Outcome measurement

To ensure that the services provided

are being delivered

Strategy
as envisaged by the commissioning strategy
and achieving the broader outcomes
set for that segment of the population

Operations
To ensure services are accessible
and efficiently provided and delivering
outcomes appropriate to users’ needs

to ensure services are meeting the

needs of users rather than jus
t delivering in accordance with the
Individual
contract specification

WB Ref: 4.13.1 62
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Managing poor performance

Development
approach

Traditional
Punitive
approach

WB Ref: 4.13.2 63
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Traditional Punitive Approach

The principles of the punitive approach are:

 Performance should never fall below agreed standards.
 Links between performance and payments should be explicit from
the outset.
 Punishments such as fines, restrictions on new business or removal
from preferred supplier lists should be built into contracts and used
to prevent recurrent failures

WB Ref: 4.13.2 64
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Traditional Punitive Approach

Where there have been serious breaches of contract terms, this may be
the only option, but:
 Identifying a failure in performance does not explain why the failure
occurred.
 To address poor performance it will be necessary to first understand
the causes.

WB Ref: 4.13.2 65
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Developmental approach

 Service provision is a partnership between the commissioning organization

and the service providers
 Mistakes are inevitable
 Both parties should investigate to agree what went wrong
 An action plan should be jointly developed to ensure the mistake cannot
reoccur
 No immediate action will be taken against the provider. Ideally the
developmental approach should be adopted in the first instance
 Denies the problem, offers excuses or fails to investigate
 Has a poor track record
 Is failing to supply a service putting users at risk.

WB Ref: 4.13.2 66
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Decommissioning
The process of planning and managing changes in service, usually either
a reduction or a termination, in line with commissioning objectives.
Consideration must be given to factors such as:
 How the transition between one service model and another is to be
carried out to ensure that vulnerable users do not suffer when a
service is decommissioned
 Maintaining good relationships with providers during the transition
 Ensuring all stakeholders are kept fully informed at all stages of the
process.
Review
The review phase has one other important purpose - to review the
activities carried out during the commissioning process and determine
how efficient and effective they were and the extent to which they
successfully achieved their goals.

WB Ref: 4.13.3/4 67
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Lessons learned
Aim:
To identify lessons learned and so inform and improve future
commissioning activities

Consideration factors:
 How transition between one service model and another is
to be carried out

 Maintaining good relationships with providers

 Ensuring all stakeholders are kept fully informed at all

stages
WB Ref: 4.13.4 68
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Areas we covered

1 2 3

Meaning and need of commissioning

Stakeholder engagement in commissioning

Commissioning cycle and phases

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Homework

 Try Exercise 4.2 and 4.4

 Next session we will continue workbook 4 read

Sections 4.15 to 4.25

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