Posts

Children’s Social Care: Do you want to get commercial arrangements out of the way?

New local partnership agreements are needed between purchasing authorities and independent providers.

  • Many local authorities find capacity in local independent provision to be unavailable, often due to places being in use by other local authorities from further afield.
  • Frameworks and Dynamic Purchasing Systems do not offer incentive to local providers to grant preferred access to the local authorities where the provider services are located.
  • There is commercial imbalance in parts of the children’s services sector that can result in prices and profit levels becoming inconsistent with a market “functioning effectively”. (CMA final report – March 2022).
  • Use of block contracts and soft block contracts remains at relatively low levels compared to the various forms of spot purchasing (both within and outside of formally procured arrangements).

Commercial and financial arrangements are too prominent and influential in this sector. They need to be moved out of the way of professional decision making around the needs of children and young people.

A new form of commercial model to bring purchasers and providers closer together.

Key elements of the model:

  • De-risking the fixed cost base of provider services through annual contributions from the host authority or region.
  • Preferred access to local services for local councils or regions.
  • Purchaser option to release capacity for other local authority use. Shared incentives with provider.
  • Compensation to the host authority if placements are made into the provider’s local service from an outside authority.
  • Overall profit/surplus-sharing mechanism between local purchaser(s) and local service provider(s) with escalating benefit to local authority for maximum use of the local provision.

The model has been built to allow purchasers and providers to try different permutations and to illustrate the results for their organisation at all possible levels of occupancy and use by the local council or region.

This allows parties to visualise the rewards and risks of the arrangements across all possible outcomes, and to alter parameter values to experiment with different levels of contributions and profit shares.

Facilitated use of the tool would allow local authorities or regions and their local providers to find out if there are values of contributions and profit sharing that would be acceptable to all parties. If there are such values these would form the commercial basis of new local partnerships that moves commercial arrangements out of the way of professional decision making.

Benefits

  • Closer partnerships at a local level between purchasers and providers to benefit children and young people
  • Removes the influence of commercial and financial factors from professional decision making around the child
  • Transparency and clarity of economic risk sharing
  • A flexible, adaptable model that can be developed through use and experience
  • Rebalanced markets with longer term sustainability

Are you interested?

We are in the process of introducing this model to the first region in England and would welcome contact from you if you are from a local authority, a regional commissioning team, a regional care cooperative or a provider organisation who would like to know more.

We will be running workshops to illustrate this model on 5th March and 14th March 2024 at 10:30am. The first 20 places are free to attend.

If you would like to secure a place please provide your contact details via contact@revolution-consulting.org

 

/by

State of the children’s residential care sector 2023

Today sees the release of the 9th “State of the sector” report by the Children’s Homes Association.

The results are based on a comprehensive annual survey of the association’s membership, a large majority of which are small organisations, often operating only one or two homes. The smaller providers make up a significant majority of the provision in the sector, a factor that is often overlooked by commentators who do not  look beyond the now out-of-date CMA market study that only considered a small minority of the (largest) children’s social care providers.

The dominant themes in this year’s report relate to the challenges of staff recruitment and retention and the rising costs of staffing and the impact of the highest cost inflation experienced since the studies began in 2015. Reduced profitability and reserves are anticipated by respondents as a result of the uncertainties around recovery of higher costs from local authorities. This situation leads to greater caution amongst some providers and therefore acts as a brake on further capacity investment. Given the clear and continuing evidence of increasing demand and the urgent need for additional capacity this should be seen as a warning sign for policy makers and commissioners.

The Government and Independent Review response to the CMA market study offers little other than a relatively undefined notion of regional care cooperative pilots in the next 2 years. With such a lacklustre and ponderous response from policy makers there is an opportunity for providers to take a more urgent and leading role in shaping the sector to better meet demand and needs. The survey report includes some non-partisan examination of the roles of public, voluntary and private sector in a mixed economy. It also examines both the operation of the current referral interfaces between purchasing authorities and providers and considers the appetite for alternative forms of contracting arrangements.

This is rich intelligence that has the potential to be developed into a set of pragmatic, balanced and sustainable models for purchasing bodies and providers alike.

The report can be accessed via the link below.

CHA Spring 2023 final

 

/by