Commissioning Support Organisations
Towards a Broader View
For Commissioning Support Organisations, the challenge has started. Firstly to build capability to become established and then secondly be resilient to competition from both Private Sector providers and other Commissioning Support Organisations when their customers test the market.
MBI Health Group believe that Commissioning Support Organisations should look to consumer markets and intermediary roles as proof that benefits they provide can come through the provision of explicit and implicit services for their customers.
The consumer market intermediary role is one that we believe Commissioning Support Units should aim to develop across health and social care systems, providing equal value to CCGs and Providers alike, being encouraged to compete for intermediary contracts and showing clear transactional value to their local healthcare system.
Intermediary functions that benefit providers include creating and disseminating product and service information and creating awareness, influencing consumer purchases, providing information, reducing exposure to risk, and reducing costs of distribution through transaction scale economies.
Often the producer and the consumer interests are in conflict, suggesting that there is a need for an intermediary function to balance and integrate these sometimes competing needs.
How therefore can you take the traditional consumer intermediary model and translate that effectively into your local healthcare system?
Intermediaries are expert organisations that reduce transaction costs and increase quality and value for customer and supplier alike
For Clinical Commissioning Groups
Search and Evaluation.
A CCG choosing or benchmarking a Hospital Service over other local Hospitals implicitly chooses between two alternative search and evaluation criteria. In either case the CCG will delegate some of evaluation process to its health system CSU. The CSU would provide quality control and service evaluation. Importantly, this may not mean providing a higher level of quality, but rather providing an appropriate level and definition of quality.
Needs Assessment and Service Matching.
In many cases it is not reasonable to assume that individual CCGs will possess the knowledge needed to assess their needs reliably and identify the services which will efficiently meet those needs. Therefore, a CSU can provide a valuable service by helping CCGs to determine their needs. For example, many hospitals may explicitly present themselves as providers of “specialist clinicians” who help consumers or patients determine which procedures or interventions they need. By providing information, not just about the service, but also about the quality and efficiency of the service, CSUs should provide CCGs with needs assessment and provision matching services.
CCG Risk Management.
CCGs will not always have perfect information, and hence they may purchase services that do not meet their needs. Consequently, in any transaction the CCG faces a certain amount of risk. This risk may be the result of consumer need, uncertainty, communication failure regarding the characteristics of the service, or the intentional or accidental failure of the provider to provide an adequate service. Another service that many CSUs should provide is related to the management of this risk. By providing consumers with the option to manage variant contracts or providing additional guarantees on access targets, CSUs should reduce the CCGs exposure to the risk associated with provider variation.
If the CCG has the option for a contract variance notice, the CSU further reduces the CCGs exposure to the risk associated with their failure to assess needs accurately and match them to the characteristics of the services delivered. Thus, by choosing a CSU that provides these services, CCGs are implicitly purchasing insurance from their local intermediary.
Many intermediaries in consumer markets play an important role in the production, packaging, and distribution of goods. Distribution is a critical factor in determining the value of many consumer goods. For example, the value of a specialist procedure or community service visit one hundred miles from a consumer’s home and the value one mile from the consumer’s home are significantly different, primarily because of the distribution of services provided.
In some cases CSUs may start to develop services to consumers that traditionally have been delivered by providers themselves
Service Information Dissemination.
One class of provider service that could be developed by CSUs relates to informing consumers about the existence and characteristics of provider products or services. Providers rely on a variety of intermediaries, including traditional out post clinics, web sites, NHS choices and media outlets to inform consumers about their performance. The emergent CSU is a crucial one for Providers to influence and use.
Ultimately Providers are not interested only in providing information for consumers; they are interested in selling services and generating income. Thus, in addition to information services, producers also value services related to influencing CCGs purchase choices. There are many ways that CSUs can influence CCG purchasing behaviour. Commission compensation schemes are all ways that Providers could purchase and influence services from Commissioning Support Units.
Provision of Customer Information.
In addition to information and influence services, CSUs will also provide valuable information about customers. Increased use of IT in the healthcare industry has contributed to an increase in the importance of technology as sources of consumer information. This information, which could be collected by specialized CSUs and could be used by Providers to evaluate new services and plan the development of new service models.
Even in cases where providers do not receive explicit consumer information, CSUs will implicitly provide information processing services by aggregating demand information from a variety of local healthcare markets.
Provider Risk Management.
Like CCGs, providers face risks when engaging in commercial transactions. CSUs should provide services that enable providers to manage their exposure to such risks.
Transaction Economies of Scale.
Transaction activities provided by CSUs are subject to economies of scale, which are often achieved through the use of IT. The development of standard business case templates, option appraisal and evaluation methods and model contracts are all areas where CSUs can provide value to both parts of the system.
Integration of Consumer and Provider Needs.
CSU must deal with problems that arise when a CCG needs conflict with the Providers needs. In a competitive environment a successful integrated intermediary must provide a bundle of services that balances the needs of consumers and providers and is acceptable to both. For example, a provider may wish to inform consumers about the existence of a new referral threshold while CCG would rather cease procedures of limited clinical value or plan a service to go out to competitive tender.
Towards a Broader View-Integrating Provider and Commissioner Needs
It will be the role of a CSO to balance these needs
- When a competitive market for intermediary services exists, an important service provided by a successful intermediary is the integration of the producer and consumer needs. For example, there is a view that would argue that the ideal market for a CCG is one in which they are given complete, objective information about the services provided. However, for the providers, who prefer to influence the CCGs purchasing decision, the best market is one in which they can provide biased information about their services. Thus there is a tension between the CCGs needs and the Provider’s needs. Because providing information is costly there is an issue of whose needs should be served by that information. Though it is sometimes determined by law, the majority of the time in retail markets, intermediaries, determine a balance between the consumer’s need for information and a producer’s need for influence.
- Ultimately, in a competitive market for intermediary services, a firm which does not successfully balance these needs will lose their suppliers and/or their customers.