Surviving in the new contracting landscape (NCVO Annual Conference 2012)

PM6 Surviving in the new contracting landscape• Aisling Duffy, Chief Executive, Certitude• Chris Sherwood, Scope• Jim Clifford, Baker Tilly

A dynamic force in social care!

Contracting for Personalised Outcomes

Aisling DuffyChief Executive5 March 2012


A little bit of background• Certitude is a social care group with a turnover of

circa £25M • 630 staff delivering a range of support options for

people with mental health needs and learning disabilities.

• Support individuals with complex needs and profound and multiple disabilities

• Currently operate mainly in Greater London with provider status in 14 local authority areas


• Income sources:

90% income from contracts

So what's personal about that?


Our Guiding Principles:• Choice and control on all aspects of one’s life

is the right of everyone we support now or in the future

• Coproduction leads to better outcomes• Deliver value for money; will include

restructuring services and delivery methods


What do we mean by Co-production?• Recognising people as assets• Building on people's capabilities• Promoting mutuality and reciprocity• Developing peer support networks• Breaking down barriers between

professionals and users• Facilitating rather than delivering

NEF and NESTA


Current Landscape – our perspective• Contracts are not outcome focussed• Spot contracts do not achieve personalisation• Financial necessity requires us to think and act differently -

cost cutting is increasingly the driver for change• We are well placed to offer solutions - commissioners need

and welcome ideas• Radical new approaches are needed by all parts of the system• If we can get it right for those with the most complex needs

then everything is possible


Why Current Commissioning and contracting doesn’t deliver on outcomes?•An over focus on needs

Joint needs assessments often focus purely on the need of a cohort often failing to identify their inherent or potential capacity and asset base•Lack of useful, reliable and up-to-date local intelligence

This leads to localised services being designed and evidenced using national data which often fails to identify with local needs and aspirations•Risk averse commissioning reduces opportunities for real innovation

Often due to a lack of useful dialogue between providers and commissioners about risk and unexamined anxieties•Commissioning and procurement as a reductive process

This leads to localised services being designed and evidenced using national data which often fails


Why Current Commissioning and contracting doesn’t deliver on outcomes? •Short-term and static specifications and contracting

Limited opportunities for services to change in order to meet shifting needs of cohorts and limited maintained dialogue between commissioners and providers•Collaboration is weak

This leads to a lack of effective working between commissioners and providers and between providers and providers•Orthodoxy to create economies of scale produces static markets

This leads to commissioning not shaping supply chains or creating overly dominant prime providers• “We already do co-production”

Misunderstanding of translation of the core principles of co-production often leads to a lack of meaningful engagement with people who use services, their carers and families


What commissioning approach is needed?• Assess needs, aspirations and assets

Engages with people in meaningful ways in order to gather localised intelligence of needs, aspirations and assets

• Outcomes and impacts are assessed dynamically, using diverse methodsMeasurements of the success of services is continually made using a range of touchpoints and feedback options to ensure that measurement is informed by individuals that include: people who use services, families, carers and front-line staff.

• Accountability panels to challenge and spread co-productionAccountability for upholding a co-production and collaborative led approach to commissioning will be distributed across panels made up to include: community members, people who use services, staff, service providers and commissioners.


What commissioning approach is needed?• Specifications are iterative and change over time to best meet the needs and

assetsBy ensuring better community intelligence, better processes of design and smarter governance, commissioning will drive the options for supply

• Co production principles define and assess all interactionsAll planning of processes and interactions are led by the 6 principles of co-production and success is assessed against these too.

• Actively shapes marketsBy ensuring better community intelligence, better processes of design and smarter governance, commissioning drives the options for supply.


What are we trying?

• Renegotiating Relationships• Piloting Individual Service Funds


Renegotiating Relationships - Contracts• Offering pathway solutions• Collaboration – alliance contracts• Specifications based on recovery outcomes• Agency to Agency time bank• Working Together for change – coproduction


Piloting Individual Service Funds• Tailoring support to people, including the money available;• Can be achieved within a range of contracting options

including block arrangements• Offering the greatest possible choice and control to people in

existing services;• Changing the relationship between budget recipient and

service provider;• Better outcomes for people that take managed budgets.


Key features of an ISF (DH, 2011)• All or part of a personal budget held by a provider on an

individual's behalf where the money is restricted for use on that person’s support and accounted for accordingly;

• No specific tasks predetermined so that the personal budget holder is empowered to plan with the provider the who, how, where, when and what of any support provided;

• Flexibility to roll money/support over into future weeks or months and to bank support for particular purposes;

• Accompanied by written information that clearly explains the arrangement and confirms any management costs to come from the personal budget;

• Portability so that the personal budget holder can choose to use the money in a different way or with a different provider.


Contractual implications• An ISF is not a contract – accountability and liability remains

between the council and the provider unless it is a direct payment;

• ISFs do not necessarily require different forms of contract, though there may be a need for contractual variations;

• Variations relate to issues around subcontracting, banking of hours and “cash conversion”;

• Spot contracts: the contract sum becomes the ISF;• Block contracts: the block is disaggregated on the basis of

people’s respective needs into ISFs for each person;• Direct payments and personal budgets: the allocated sum

becomes the ISF


What have we learned?• Working in partnership with supportive and innovative

commissioners and other partners is key• Start from a clear view of what success looks like• Concentrate as much on the practice as the money• Be Risk aware not impotent• Share stories of success especially with staff• Do business differently – breakfast meetings work!


Two Innovations for social ChangeChris Sherwood, Director of Innovation & Development

NCVO Annual Conference – 5th March 2012

Needs and drivers for change

External factors including cuts, localism, improved outcomes and public service reform are spurring us to action.

We are part of the sector wide Think Local, Act Personal initiative to promote personalisation.

Although our internal drivers are also strong. We have refocused ourselves as an organisation that is about social change.

We want to transform to meet the aspirations of our customers.

We see this as the innovation imperative.

Our services are undergoing significant transformation

Information

Support

Education

Care

Disability Works UK

Scope is a founding member of DWUK. We are one of 8 different specialist disability employment organisations who are working together including Leonard Cheshire Disability and MIND.

DWUK is a is a 2nd tier sub-contracting consortium Welfare to Work contracts.

DWUK delivers 11 Work Programme contracts across the UK.

Scope is the lead partner for a Work Programme contract in Sussex, Surrey and Kent working with Avanta.

Why does Scope need to collaborate?

Provides access to markets that we might not otherwise be able to compete in.

Maximises our power in those markets by working with like minded organisations.

National reach combined with local delivery.

Allows us to share risk through coordinated approach and shared resources.

Achieve economies of scale by maximising the resources and capacity within the consortium.

Share learning and insight to improve practice.

Why does Scope need social investment?

Investing in campaigns, advocacy and support services

•Whilst its impact on the lives of disabled people and their families is significant, our crucial support and advocacy work does not generate a direct revenue, so requires 100% grant funding.

Investing in new direct services

•Those services that need pump priming but can be sustainable in the long term. Could use a combination of donations, soft loans and commercial loans.

Investing in income generation and profile raising

•We need loans to fund areas of our work that can afford to pay a small return e.g. new retail outlets or donor acquisition.

•This an area where we think bonds will be most applicable.

The Scope Bond Programme

• A scalable, re-usable way of generating large amounts of social investment at varying yields and terms.

• £20M program (in practice limited to £10M outstanding debt).

• Listed on EURO (MTF) stock exchange.

• Unsecured.

Investment decision based on ‘Scope as investible proposition’ e.g.

• £29M fixed assets;

• £9M reserves;

• £4M surplus on £100M p.a turnover for last two years.

The First Tranche

• £2M

• 3 year maturity

• 2% yield

• Invested in income generating activities

• Subsequent tranches invested in direct service delivery e.g. our parent befriending service Face 2 Face and paying higher yield

Final thoughts

“Gentlemen, we have run out of money. It is time to start thinking.”

Sir Ernest Rutherford

Any questions?

Jim Clifford

Social Impact Bonds in Public Commissioned ServicesPresentation to NCVO Conference 2012

(…with thanks to CVAA and PACT…..)

[email protected]+44 7860 386 081

mailto:[email protected]

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Social Impact Bonds in Public Commissioned Services

• Payment by results models

• Social Finance and the emerging SIB

• Collaboration and Risk sharing

• Funder markets

Payment by Results

• Why PBR ?

• Economic trade

• Meaningful measures

• “Informed” Output

Inputs to Activities to Outputs to Outcomes to Impacts

Social Finance and the emerging SIB

•Issuer defines terms

•Multi-party funding; same terms

•Application for specified social purposes

•Investor reward balance

3-DTypology of SIB-style funding....

Bridging to PBR

Capital

Special donors

With profits

No interest

ListedPermanent capital

Regular or deferred

Variable interest

Fixed interest

Equity risk

Repayable (regular or bullet)

Collaboration and risk-sharing

•Risk dumping ?

•Risk trading?

•Risk arbitrage ?

...to those who can..

Funder markets

Match the project to the funder market:

• Public funds• Third Sector• Corporates• Individuals• Family offices

THINK......

• Project • Provider• Purpose• Presentation

Questions

Health & Medicine

Surviving in the new contracting landscape (NCVO Annual Conference 2012)