Health Service Focus

01.06.13

Embracing social value in health commissioning

Source: National Health Executive: May/June 2013

Commissioners need to ensure they are aware of their duties and responsibilities under the Social Value Act – that’s the message of a new white paper for the NHS Alliance from its special advisor on co-ops and mutuals, Mo Girach, and joint head of the charity & social enterprise department at law firm Bates Wells & Braithwaite London LLP, Julian Blake.

The Public Services (Social Value) Act 2012, which affects NHS commissioners, came into force this year – but many in the health service aren’t fully aware of just how it impacts their job.

Julian Blake, joint head of the charity & social enterprise department at law firm Bates Wells & Braithwaite London LLP, told NHE: “I’d be surprised if most of them haven’t heard of it, but perhaps equally surprised if they’re all actively endeavouring to deal with this in the way the Act probably intends.

“There needs to be some very serious engagement with it, treating it as a major opportunity to deal with the commissioning process in a way that hasn’t been followed through in the past.”

From a power to a duty

Blake has co-authored a new report on the issue, ‘A new year of Social Value in public service delivery’, for the NHS Alliance, with Mo Girach, the organisation’s special adviser on co-ops and mutuals for the south east, and former chief executive of the South East London Doctors Co-Operative (SELDOC), one of the largest GP co-operatives in the UK with some 500 principal GP members. Girach is also a leadership associate at The King’s Fund.

Their paper explains: “In 2010 the European Commission published ‘Buying Social: a guide to taking account of the social considerations in public procurement’.

“This encouraged use of procurement to promote: ‘employment opportunities, decent work, social inclusion, accessibility designed for all, ethical trade and general compliance with social standards’.

“Public authorities have always had the power to do this, but it is rarely seriously employed.

“The Social Value Act adds to this power, an obligation: ‘before starting a procurement process to consider: how what is proposed to be procured might improve the economic, social and environmental well-being of the relevant area; and how, in conducting the process the Authority might act with view to securing that improvement’.

“This might be thought a weak obligation, unlikely to change practice, but it is a clear duty, making failure to ‘consider’ challengeable.”

Blake explained to us: “I suspect there may still be the sense [among NHS commissioners] that it doesn’t really mean much as it’s only a duty to consider, not a duty to actually do anything. But a duty to consider is a duty to do something and can even be enforced as such.

“It was always possible for public authorities to commission by reference to social value – it isn’t a new ‘opportunity’, it’s a new duty. To be frank, it was very rarely seen as an active consideration.”

Beyond ‘lowest price’

Commissioners of health services have been known to focus too much on headline price rather than long-term value and service quality, Blake said.

He explained: “The general perspective I have is that commissioning tends to be driven much more by reference to lowest price than it ought to be in a service providing area, particularly health services. The long-term cost savings of commissioning high quality services have not been properly investigated.”

He added: “The procurement experience has been to look far too much at the cheapest thing as opposed to what the appropriate balance between price quality and social value is.

“There’s been a longstanding issue in relation to public service providers and charities and social enterprises that provide services, whereby commissioners over the years have assumed that because they’re public benefit providers themselves, the price charged doesn’t need to be a ‘proper’ contract price.

“There used to be quite a widespread idea that a charitable provider would be assumed to be subsidising from its own resources – you wouldn’t have to pay the proper price for it. More recently, there has been a pretty major campaign to secure ‘full cost recovery’ pricing – the idea that a public benefit provider, a charity or social enterprise, would be providing essentially at cost, and should at least recover those costs in relation to the service provided and that that would be the base of price.

“Price is affected by the social value considerations; in very general terms you might say that a public benefit provider is quite likely to be scoring high on quality because it’s committed to the same purpose and has social value because of its nature.”

Type of services

The social value considerations can be different, Blake and Girach say, depending on whether it is direct clinical or care services being commissioned, or associated services such as cleaning or catering or back office functions.

Improving people’s health and wellbeing, Blake said, has an “intrinsic social value”.

“If you’re commissioning those,” he continued, “obviously a major part is the inherent social value of procuring a service that’s going to deliver the purpose in the most appropriate way. In addition you might look at the less direct social value elements – but they’re probably not going to count very high in relation to that mainstream commissioning. But with other types of commissioning [of non-care services], there’s a duty to think more broadly to investigate what other benefits can be derived from the commissioning process.”

These benefits can come at “no extra cost and no disadvantage”, as long as some thought and imagination goes in to begin with, Blake said.

That clearly goes beyond the ‘basic’ duty of a commissioner to procure best value, as required of them under domestic legislation (under the EU rules, the phrase used is the ‘most economically advantageous offer’).

“Particularly when your budgets are under massive strain, it can be easy to say ‘the cheapest thing is the best thing’ and not to do what you absolutely should do, which is to focus on quality equally (as much if not more).

“There are then the added benefits that come from commissioning quality, which may be more expensive on the front end but provide the benefits through time if you think about it more carefully.

“The Social Value Act is a sort of ‘statutory prompt’ to think more carefully. The very best commissioners would have that as one of the things they were focusing on and seeing the value that can come through considering social value factors.

“The Act is saying that all public authorities must think that way, and not just on price.”

Defining ‘social value’

Clearly ‘social value’ is not as easy to value as price, or to define as quality, and one of the key challenges for healthcare commissioners will be managing the tension between conventional ‘cost’ based approaches and the newer ‘value’ based approach.

However, the meaning of social value can be understood instinctively and developed into tangibility. There is a value to surplus being applied primarily to public benefit, rather than to private profit. This follows on from previous issues in the health sector around achieving recognition in the procurement process for full cost recovery (including a reasonable surplus).

Commissioning in the past has tended to undervalue actual financial cost, which has had a particular impact on charity and social enterprise providers. Social value takes us to the next stage, where the commissioning process is seeking to achieve recognition of intrinsic value beyond the purely financial.

To move this process along the next objective is a common currency in social value methodologies and metrics, which authorities and providers can use in specifications, assessments and performance management. Much work has been undertaken already in measuring social return on investment and impact assessment and more is required particularly in systemising social impact bonds and payment by results contracts. Social value, in this environment, can acquire its meaning.

Source: ‘A new year of Social Value in public service delivery’, by Mo Girach and Julian Blake for the NHS Alliance.

For More Information

The full paper – which also includes an assessment of the impact of the Localism Act 2011 on health service commissioning – is available at: www.nhsalliance.org/publication/ a-new-year-of-social-value-in-public-servicedelivery- nhs-alliance

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