Gap analysis – key factors

1. Gap analysis – key factors • Alignment with needs • Quality of services • Cost of services • Risks in existing arrangements • Relationship with providers

2. Risk factors • Political opposition • Local community/pressure group challenges • Service user dissatisfaction/harm • Staff dissatisfaction/harm • Provider dissatisfaction • Provider financial problems • Bad publicity • Increase in cost of service • Litigation • The Competition Act • Judicial review • Other legal challenges

3. Cost factors • Staff : user ratio • Direct costs • Salary rates • Locum coverage • Overheads • Administrative / management costs • Margin for risk/contingency • Monitoring requirements or other transaction costs • Cross subsidies or other income • Unit costs per week/hour • Charging policy

4. Value for money? • Understanding unit costs • Payment for enhanced quality or providing specialist services • Compare like with like • Benchmarking to establish ‘reasonable costs’ • Investigate unreasonable costs • Link to outcomes and outputs of the service to establish ‘value for money’ • Appropriate services

5. Good alignment with needs Poor quality Good quality Poor alignment with needs Assessing existing services – spectrum 1

6. Assessing existing services – spectrum 2 Low risk Poor value for money Good value for money High risk

7. Options for change • Disinvest or decommission services • Remodel services • Renegotiate or end contracts • Maintain contracts • Commission new services

8. 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.

9. Poor quality Good quality Assessing existing services – spectrum 1 Good alignment with needs Renegotiate or end contracts Maintain Decommission Remodel Poor alignment with needs

10. Low risk High risk Assessing existing services – spectrum 2 Renegotiate or end contracts Maintain Poor value for money Good value for money Decommission or remodel Remodel

11. Naming 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. • Procurement implications – required disinvestment or remodelling, redistribution of resources, contracting changes.

12. 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.

13. 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. • Vary 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.

14. Scenario building examples • Primary care CAMHS 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.

15. 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.

16. Procurement and market management plans • Procurement 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.

17. 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. • A relational market. • Professionals 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.

18. Traditional weaknesses of a quasi-market • Potential 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.

19. A 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.

20. Market management plan • Planned market configuration – areas of growth or contraction, balance between public, private, independent sectors. • Planned 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.

21. 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.

22. Consensus building issues • Stakeholders not prepared. • Meetings not facilitated. • Confusion between information, consultation, negotiation. • Pressure to respond quickly. • No framework for analysis.

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

24. Consensus building - summary • Plan 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 ‘honest brokers’ to facilitate.

25. 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.