Outsource Magazine

Healthcare in the United Kingdom is provided by the government through its healthcare provider, the NHS.

 The NHS is one of the largest employers in the world. In England alone, it employs 1.4 million people (just under half are clinically qualified) and caters for a population of 52 million. Around three million people are treated in the NHS in England every week.

My previous article on the NHS articulated the fiscal imperative and need for innovation and change, presenting the opportunities for both the NHS and the commercial sector in partnership.

 Once bitten, twice shy

To date, commercial service provision to the NHS has not resulted in positive outcomes. The major commercial service provisions have been through PFI (Private Finance Initiatives); a mechanism to create public-private partnerships by funding public infrastructure projects with private capital. Many such services have resulted in the closure of front-line clinical services to meet the resulting debt and interest burden.

Amidst public outcry, audit reviews have concluded that the commercial agreements were not in the interest of the NHS and identified the route cause as a critical lack of public sector commercial and contractual experience.

The Chair of the Public Accounts Committee said: "Local public sector officials taking forward PFI projects such as hospitals or schools are often painfully lacking in commercial experience. Staff negotiating the fine print of refinancing clauses in contracts, where the risks to the public sector can be high, must be trained so that they are not outwitted by their commercially-sophisticated private sector counterparts.”

Dr Neil Bentley, CBI (Confederation of British Industry) director of public services also commented: “The poor level of commercial skills and experience in the public sector is a real concern.”

The suppliers and contracts will invariably come under significant public scrutiny; not a successful outcome for any of the parties involved.

Redressing the balance

To successfully provide commercial services to a public sector organisation, particularly to the NHS, a successful outcome mandates an “Intelligent Customer”; one that understands what they need; the value of the service; how to commission and how to manage the supply to the benefit of the organisation.

“The NHS will have to become an Intelligent Customer” – Katie Davis (Director General and Managing Director, NHS Informatics), November 2011.

What is an Intelligent Customer?

Since the Nuclear Installations Inspectorate (NII) of the British Governments’ Health and Safety Executive (HSE) developed the concept of the “Intelligent Customer” in relation to licensee use of contractors, it has gained international acceptance. 

William Penn (founder of Pennsylvania; 1644-1718): “Method goes far to prevent trouble in business: for it makes the task easy, hinders confusion, saves abundance of time, and instructs those that have business depending, both what to do and what to hope”

Being an “Intelligent Customer” requires a structured approach and framework. Furthermore, it requires skills, experience and information to execute successfully.

A Framework for Intelligent Customers

Aspire

Vision: Clearly understand your organisation’s vision and objectives and what a commercial provider can provide to that mix. What will your new service provide?
Capability: Understand your current service delivery and the gaps in meeting your organisation’s needs.
Requirements: Establish requirements for the new service to be commissioned. Specify requirements in terms of business outcomes rather than deliverables and outputs. Innovation is a key driver for outsourcing; look for services that will meet your future needs, not a reflection of your current service.
Strategy: Develop a strategy on how you will achieve the outcomes. Seek approval and buy-in from all necessary stakeholders.

An Intelligent Customer: Louise Felstead – Head of Information and Technology for a leading London NHS Hospital that has successfully outsourced ICT: "Before considering outsourcing, take the time to understand your current issues. Too many organisations attempt to outsource problems and spend little time understanding their strategic needs. That's not intelligent."

Assess

Benchmark: Critically, measure your current service provision and validate expectations of service from the market place. Typical measures for success will include quality of service, innovation and value for money.
Case for Change: Develop a clear business case for the commission. Establish the case for change and ensure that the case articulates:

• Strategic alignment with the organisation
• Economic advantages (cost / benefit)
• Affordability
• Commercial benefits (e.g. risk transfer)
• Achievability (resources, schedule, risk)

Compete: There are likely to be many suppliers in the market place that can provide the services you need. Be clear on what your criteria will be for selecting your preferred supplier. Ensure compliance with legislation. Allow suppliers to be creative in meeting your needs.

Agree: Negotiate and Contract (an expertise in its own right)

"It's impossible to underestimate the benefits of assessment. As an organisation, we identified quality, innovation and value as measures of assessing successes. Assessment requires sector expertise, commercial acumen and scenario planning. It is all too easy to spend millions buying risks and assumptions and there are all too many commercial organisations that are willing to sell them to you. That's not intelligent."

Achieve

Govern: Establish appropriate governance, policies and procedures for the service supplier to operate within.
Transition: Ensure and assure well-developed transition plans. Business continuity and process operations are critical in the transition of service supply.
Manage: Establish capability to manage the new supplier (financial – e.g. invoice validation; service – e.g. performance to service levels; contract – e.g. commercial and contractual responsibilities and changes; relationship and innovation).
Transform: Plan for change and transformation in the business to ensure that the business achieves maximum benefit from the new service.