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by Kerry Hallard, CEO, National Outsourcing Association
Thursday, March 13, 2014

Does NHS have the toolkit to manage outsourcing?

By July 2014, we could see private sector providers step up from the back office and deliver some of the NHS’ most important and sensitive front line services. Tenders are on-going for £1.2bn’ of cancer treatment and care in Staffordshire. The government has given the go ahead for the George Eliot hospital in Nuneaton to become a fully outsourced hospital, a deal which will be scrutinised not just by the leftie media but by NHS Trusts up and down the land; more and more of whom are coming round to the idea that outsourcing is the best way to combat an expected £30bn NHS budget shortfall over the next seven years….

NHS ‘privatisation’ is of course, an emotive and political flashpoint, with the Department of Health quick to reassure its users: “The successful bidder will be subject to the same rigorous regulation from the Care Quality Commission as other hospitals. They must also continue to improve patient care, and will be accountable to the hospital board, staff and patients they serve for doing so.”
But are the hospital boards fit for and ready to be outsourcing governors? 

According to my sources, there will be no recruitment from outside the NHS to manage these outsourcings. So projects of immense personal, national and political importance will rest uneasily in the hands of people with insufficient commercial experience or skills. And some of them, it can be said, fairly I think, aren’t even very good at running hospitals: George Eliot currently suffers the worst mortality rate in the country.
Many hospital management staff will TUPE to the private sector as part of outsourcing, so their skillsets will be invested in, and therefore, improve. But from an NHS perspective, it’s vital to retain and develop internal management capabilities. An acumen gap is a dangerous thing for the long term success of an outsourcing - and it will only get bigger if it’s not addressed now.

Outsourcing governance skills remain elusive to most public servants. Despite the government’s 2011 pledge to reform public sector procurement, a recent survey of CBI members expressed grave concerns about the lack of commercial skills, with 61% reporting no evidence of change and 21% saying skills have actually deteriorated. The NHS was singled out for particular criticism: 35% of respondents are convinced that NHS commercial skills are actually getting worse.

Add to that March 2014’s National Audit Office report on Adult Social Care - which isn’t NHS, but culturally similar - which states: “Contracts for services that local authorities commission from the private and voluntary sectors are frequently time- or task-based rather than outcome-based. They generally do not incentivise providers to rehabilitate or improve user independence.”

This is a prime example of a lack of commercial nous. To achieve a shared vision, you have to get the strong relationship governance processes in place from the very beginning. Incentivise the right behaviours, measure them and pay for them accordingly. Before the NHS sets about spending billions, it should spend a few thousand on commercial skills training.

Decriers of NHS frontline outsourcing say it will make for a more fragmented NHS and flies in the face of Ministers’ goals to make patient care more integrated. What they forget is that in a heavily multi-sourced, contemporary business environment, suppliers are accustomed to working together on projects, and as long as the contract is modelled to incentivise collaborative behaviours, then true proactive collaboration will be the way to avoid financial penalties - and get paid for a job well done.

The NHS is a prolific outsourcer but not a masterful one. Traditionally, it has had no option but to pay a fortune for unrelenting handholding from advisories. If outsourcing is to bring maximum, sustainable long term benefit for sick people and their families, the NHS needs to get its skills in order, with immediate effect.

The NOA is here to help. We offer outsourcing training to both public sector and private sector organisations, helping develop the professional skillset to create maximum benefit and long term satisfaction in outsourcing. If you’re interested in finding out more, give us a call …. 

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