What are the CCG’s doing about value?

Monday, June 10th, 2013

What are the CCG’s doing about value?

The ill-informed fail to recognise that occasions arise where there is no precedence for a solution.


One special challenge facing Clinical Commissioning Groups right now (June 2013) is the policy being ‘driven’ by people from the healthcare sector. Defining value for money includes facets of clinical, financial and social value. The intangibles and qualitative aspects – and how to measure them – doesn’t make it easy.  CCGs now raise many procurement issues where a robust audit and review can deliver benefits that directly relate to community benefits and Value for Money. The changes, explained below, also raise other significant considerations, not least the potential conflict of interests for doctors and consultants.

Clinical Commissioning Groups (CCGs)

In 2010 there was a White Paper, “Equity and Excellence: Liberating the NHS”.

Subsequently, the Health & Social Care Act, 2012, created the CCGs of which there are 211. They are now accountable for commissioning and buying Health and Care Services including:

*        Elective hospital care

*        Rehabilitation care

*        Urgent and emergency care

*        Most community health services

*        Mental health and learning disability services.

Procurement Issues

This paper focuses on procurement issues, recognising that procurement cannot be the sole consideration.  Nevertheless, if procurement actions are insufficiently robust, not only will service charges drain financial funding of the NHS, but community care will deteriorate.

Formal Contracts

A Wolverhampton City CCG report[1] at Item 3.1 states, “An agreement has been reached with RWT for a management service for bookings as well as to ensure monitoring of the service and quality reporting. An SLA has been put in place. In addition formal contract is being created for the service currently provided as initial procurement resulted in service being run with no contract in place. An agreement was reached to continue with the planned re-procurement of the service dependant (sic) on procurement capacity going forward.”

If we were invited to provide a view, what points would such a report’s item raise?  For example:

Agreement reached

Does this mean that there is now a formal contract in place with RWT that carefully sets out the respective obligations of the parties? If invited to extrapolate the logic for all CCGs it could raise the next question. “Prior to the existing of CCGs how many ‘arrangements’ existed between the Primary Care Trusts (PCTs) and providers, but no formal contract was in place?” Returning to the CCGs more generally, the next question is “Whose contract terms and conditions will apply in future?” There is a danger that the supplier’s terms and conditions will be accepted, thereby potentially exposing the NHS to financial claims for non-performance and the risk that some suppliers will be dramatically under-insured.


It is professional practice to have a SLA in place. It raises serious concerns for all CCGs regarding their plans for effective contract management. We would welcome all CCGs presenting their comprehensive contract management plans and the resourcing strategy. Then the next piece of the logic could be raised which is, “What provision is there in the contract for the recovery of damages for non-performance?” Our prediction is that this provision will be lacking in many contracts. If the history of contract performance in the PCT context was probed the obvious question would be, “What is the total amount of damages claimed by PCTs from non-performing service providers?” A more fundamental question would be, “Does anyone know?”

No formal contract in place

There are additional considerations here, in addition to those raised above. If there is no formal contract in place between the NHS and a supplier does it matter? YES, and Value for Money will raise its head. The cost of external services is an issue for the NHS at a time when budgets are being seriously challenged. There are NHS Tariffs for specific services and one measure of Value for Money has been the discount offered by service providers. Whilst this is positive thinking the logic is flawed. A review could be initiated to probe how many PCT contracts with third parties, have real time cost data to demonstrate that service providers are recovering generally incurred costs, overheads and making a reasonable return on their investment. There are four questions that could put to CCGs:

  • “How many of your contracts require the service provider to give you a cost breakdown?”
  • “Does your contract provide for ‘Open Book’?”
  • “Does your contract provide for a ‘Right of Audit’/”
  • “Who has the accountability for obtaining and reviewing the financial performance of service providers?”

Procurement capacity going forward

There is a heavily qualified comment in the Wolverhampton report referenced above that the re-procurement of services is dependent on procurement capacity going forward. Herein, lies a matter for all CCGs, we suspect. Among the concerns would be the ability and resources of CCGs to motivate (the transfer of PCT contracts to CCG) contracts (when they exist). The novation of contracts is not a simple matter. The first consideration is, “For what length of period will the new contract be for?” There is, for example, a huge difference between a 4 year term contract and an annual contract. The procurement capacity going forward will require, supply market research, negotiation resources, legal and financial inputs, clinical guidance and so on. Most procurement operations are under resourced and unable to adequately define its resource requirements with any degree of certainty.

Equality, Impact Assessment (EQIA)

It is essential that a CCG has a commissioning policy that underpins the CCG priority setting for allocating resources. The NHS Central Midlands Commissioning Support Unit[2] has devised an ethical framework. They point out that “The proper strategic application of resources will ensure that scare (sic) healthcare resources are distributed fairly across the population for which the CCGs are responsible.” Quite so! There is, in consequence, an onus upon procurement at the Pre-Qualification and/or Tender stage to probe the service provider’s compliance with Equality practices. It is one thing to produce a ‘Tick Box’ for completion but quite another to audit the existence (or otherwise) of Equality compliance at the service provider. It is another example of where a contract manager has a relevant role to play in the continuing scenario. The detail of whether the policy affects one group or more favourably than another on the basis of race; ethnic origins; nationality; gender; culture; religion or belief; sexual orientation; age; disability has a profound impact on service provision.

Complaints by service users

It is inevitable and predictable that service users will make complaints. Procurement specialists must convince themselves that the service provider has a credible complaint procedure in place and that the procedure is audited from time to time. It is equally inevitable and predictable that complaints will be received by CCGs. They may delegate the complaint handling and investigation to a commissioning support unit (CSU). This raises the fact that CSUs are not legal entities in their own right and cannot be Data Controllers as defined by the Data Protection Act. Procurement have a major role to play in ensuring that contracts adequately provide for complaints handling, including service providers keeping accurate records of the treatment provided and the broad way in which service users have been handled.

Doctor’s conflicts of interest

The Guardian[3] has shone a light into a potentially dark corner of future CCG operation. It points out that overall 426 (36%) of the 1,179 family doctors on a board of the 211 CCGs in England have an interest in for-profit firms, including those providing common NHS services such as diagnostics, minor surgery and out-of-hours GP care. These findings are attributed to an investigation by the British Medical Journal. The Guardian asserts that six of the eight GPs on the Board of Blackpool CCG have an interest in Fylde Coast Medical Services, the local out-of-hours provider. There are relevant matters for procurement specialists who must ascertain in respect of contracts awarded to third parties:

  • The ownership and directors of the service provider
  • The financial performance of the service provider
  • How the doctors declare conflicts of interest
  • The risks arising from conflicts of interests.

The authors predict that conflicts of interest will become a political issue and, in the future, raise ethical questions about the doctors and Consultant determining CCG strategy, policies and operating procedures.

The final word on this topic can be provided by Southern Derbyshire CCG[4] who say “The important things to remember are that:

  • A perception of wrongdoing, impaired judgement or undue influence can be as detrimental as many of them actually occurring
  • If in doubt, it is better to assume a conflict of interest and mange it appropriately, rather than ignore it
  • For a conflict to exist, financial gain is not necessary.

Due diligence

Procurement requires the application of due diligence to fully understand, for example, the background of organisations who tender for work. This logic applies to the future engagement, by CCGs, of service providers. There will be operators who work nationally, others regionally and others who operate in a specific city. The operators will include registered charities, large corporate groups intent on dominating the market, and small-medium enterprises (SMEs). In the North West, as an example, there is a service provider who manages 40 General Practitioners practices. As an indication of future potential considerations for CCGs, the Office of Fair Trading issued an invitation to comment regarding some proposed agreements between the service provider and Liverpool PCT and NHS Sefton to respectively operate 22 existing GP practices in Merseyside. There is no allegation of wrongdoing.


World-class procurement decisions will be significantly influenced by stakeholders. There are complex stakeholder groups with whom to engage, including, GP member practices, CCGs with whom the applicant has collaborative commissioning arrangements, upper tier or unitary local authorities, LINKS or (shadow) local Health Watch and patient groups, NHS providers, other health professionals and commissioning support services. The process for engaging these groups and giving cognisance to their views could lead to a bewildering bureaucratic nightmare. Many questions could be asked of the groups. “How satisfied or dissatisfied are you with the way in which your CCG has engaged with you?” “To what extent do you agree or disagree that the CCG has listened to your view?” “Overall, how would you rate your working relationship with the CCG?” Stakeholders have an influential and strategic direction influence on CCGs. There is a key role for procurement specialists to allow stakeholders to impact on contracting strategies.

The Voluntary Sector

The voluntary sector will, we predict, play an increasingly influential role in the life of CCGs. The British Red Cross is a case in point. For example, a new service has been launched in Exeter, namely the ‘home from hospital service’. It is a six month pilot providing valuable short-term care and support in home for people after an accident or illness. The voluntary sector presents a unique challenge to procurement specialists who do not fully understand the role of ‘not for profit’ organisations. Fundamental research is required to effectively engage with national and regional charities, local charities, local community organisations, social enterprises and mutuals.


The ill-informed fail to recognise that occasions arise where there is no precedence for a solution. Government policy, making innovative changes to a national institution such as the NHS, challenges those who are immersed in institutions. How do they adopt a dispassionate stance, when, in some cases, their futures are threatened? The CCGs are a classic example of a policy change impacting on the ability of procurement to respond to a radically changed provision of clinical services. There are now powerful forces at work whenever changes are proposed to the NHS, including politicians, budget management, selfish interests and capitalist interests.

It could be argued that the stakeholders; the general public, will be the ultimate arbiters of success or failure of the CCGs.

Dr Brian Farrington and Stephen Ashcroft can be reached at www.brianfarrington.com and LinkedIn connections, and you can follow him on Twitter

If you would like to learn more about how we might be able to help you achieve your procurement goals, please contact me and we can have an informal chat to discuss your areas of interest.

Alternatively you can call me on 01744 20698.



PS For 6 key questions on ‘value’ for CCGS go here

[1] Report dated 9 April 2013

[2] Equality Input Assessment Tool for Collaborative Commissioning Policies v 1.0 – March 2013

[3] GPs’ links to private healthcare firms spark fears of conflict of interest.

Denis Campbell, health correspondent. Thursday 14 March 2013.

[4] Guidelines for the Management of Conflicts of Interest. (Undated)

South Derbyshire Clinical Commissioning Group.