At Blenheim we have serious concerns about the commissioning, procurement, tendering, payment terms and the application of payment by results in the drug and alcohol sector. We also have great sympathy for the impossible funding environment that Local Authorities have been placed in by Central Government. This is not helped by the latest 6.2% cut in Public Health England (PHE) funding to Local Authorities, a £200 million in year cut. We share the growing concern that cutting £800 million from the PHE budget over the next four years will only be the tip of the iceberg, with some expecting the PHE budget to be decimated by the spending review in November or in subsequent years. Given that drug and alcohol treatment and indeed all PHE services provided by Local Authorities are subject to the NHS constitution it is outrageous that PHE spending, which is mainly invested in services for stigmatised and vulnerable groups is under attack.
It is right that local authorities now responsible for the provision of community based drug and alcohol treatment in England have a process for retendering the work provided to them by organisations such as Blenheim, however there needs to be a level playing field for charities of varying sizes, large private sector companies, NHS and local authorities. More importantly any recommissioning needs to be aware of the impact on service users.
Poor and frequent commissioning and procurement has a number of serious consequences not least of which is the cost. An exercise done by a provider to quantify the costs of tendering services over 10 years ago came up with a figure of £300,000 as the cost expended by all bidders and the commissioning authority per tender. Unintended impacts include deteriorating service provision, poor staff morale, and more importantly the fact that transitions between providers along with early exits from treatment are known factors in drug and alcohol related deaths. For example 1 in 200 injecting heroin users released from prison die within a month of release.
Increasingly charities like Blenheim seem to be in the business of tendering rather than in the business of caring for people in desperate need. In the last two years nearly 100% of drug and alcohol services have been through retendering processes according to a Drugscope survey.
A report, ‘Review of Alcohol Treatment Services’ published in August 2015 by the Recovery Partnership funded by the Department of Health into the state of alcohol services raises serious concerns about the impact of the current commissioning environment as did the ‘State of the Sector’ report, by Drugscope in 2014 into drugs and alcohol services.
Transfer of Financial Risks
The move from NHS to Local Authority commissioning has often seen a switch from payment in advance to payment quarterly in arrears. This has had a significant negative effect on cash-flow within many provider organisations. Many charities are facing increasing delays in Local Authorities paying invoices some waiting up to 6 months for payment in relation to money expended on delivering contracts. There is often little meaningful compliance with new regulations requiring payment of undisputed invoices within 30 days in the Public Contracts Regulations 2015.
Payment by Results (PbR)
Inappropriate poorly designed PbR schemes are a significant financial risk to charities. This is due to delayed payment of the PbR element for lengthy periods of time which impacts on cash-flow and because PbR is usually in our sector set against the cost of service delivery rather than as an incentive above this.
PbR is often set against stretch targets, which is appropriate where PbR operates as an incentive scheme. However almost all PbR schemes operate in our sector as repayment or non-payment schemes with funding deducted from core operating costs when often aspirational/stretch targets are not met.
When used PbR would be better to be clearly separated from core costs in contracts and be an incentive for excellent performance. Where non-payment or repayment conditions apply these we believe should be set in relation to under performance rather than against stretch targets and be clearly labelled as such and linked to processes in the contract related to under performance.
Procurement, tendering and contracts
All providers in the current environment need to accept that the tendering of services is here to stay and that charities like Blenheim will win and lose contracts, however we think there is a case to be made to increase from the standard 3 year contract to a 7-10 year minimum contract length or possibly longer to avoid regular disruption to the treatment of a vulnerable group of people. Such a move would allow providers to invest in equipment, staff training and buildings of the highest quality and build long term community links.
A recent ACMD report “How can opioid substitution therapy (and drug treatment and recovery systems) be optimised to maximise recovery outcomes for service users?” Published in Oct 2015 stated
“The ACMD has early evidence of the negative impacts of frequent re-procurement on local drug treatment systems and service users’ outcomes. It is very concerned that this ‘churn’ in the system, together with significant cuts in resources, is mitigating against stability in drug treatment systems, hampering quality and the implementation of evidence-based interventions (especially if they are deemed ‘expensive’) and may result in negative impacts on recovery outcomes. Furthermore, localism and the lack of ‘levers’ by bodies such as Public Health England and the Local Government Association may hinder government efforts to positively influence local systems.”
Local Authority contracts are often inequitable and allow cancelation by the local authority with three or six months notice, paying little regard to provider infrastructure costs and lease commitments. Often providers are asked to agree to contracts as a condition of being allowed to tender. We would like to see contracts that are far less easy for Local Authorities to cancel once signed with the expectation that any but the most major changes required are done via contract variation rather than retendering. We fully understand and support contracts enabling cancellation where there are clear performance issues.
Minimum Turnover Requirements
At Blenheim we are concerned about the minimum turnover requirements that increasingly limit the ability of even large and major charities to tender for contracts they currently deliver. This is where to bid for work you have to have a minimum organisational turnover of say £10 million or £15 million. Whilst we realise this is a way of assessing the ability of an organisation to financially manage large contracts we believe it unfairly discriminates against smaller charities many of whom can easily manage larger contracts and that more sophisticated and more appropriate methods of assessing organisations should be applied.
I am aware of many smallish and medium sized charities that have not been able to bid for their existing contracts in their own right. This forces them into shot gun marriages with other charities as sub-contractors. Partnerships have a lot to offer and Blenheim is in many great and highly effective partnerships but they rarely work well when they are marriages of convenience or haste.
At Blenheim we are deeply troubled about the many instances of poorly managed tendering processes which create huge wastes of time and effort both at commissioning level and within provider organisations. Issues of concern include;
- A lack of transparency about the process.
- The number of tendering processes which have to be suspended due to flaws in the process.
- A lack of knowledge about tendering and procurement within tendering teams
- A lack of understanding by many commissioners of TUPE rules
- A significant pension liability on incoming organisations where NHS or LA is the outgoing organisation particularly where down sizing is managed via a retendering process transferring liabilities for redundancy whilst often hiding cuts.
- Unworkable specifications
- Transfer of risk from Local Authorities to providers via Payment by Results with poor data to assess risk and often in relation to performance targets the provider has little control over.
Equally we would reflect that we have seen some excellent examples of commissioning regardless of whether we were successful.
If we want a thriving drug and alcohol sector we need to create a funding and commissioning environment where it can survive. Otherwise we face the risk of a choice of four or five mega charities as all but the largest go the way of the corner shop and the local butcher. Like banks and NHS Trusts these large charities maybe too big to let fail, but get into financial difficulty some will in the not to distant future as cuts in funding and huge public sector liabilities catch up with them.