What Should Our Joint Commissioning Approach to the Third Sector Be?

Item 7 Appendix A

What Should Our Joint Commissioning Approach to the Third Sector be? An Initial Discussion Paper.

CONTENTS

1 Context And Purpose Of The Discussion...... 1 1.1 What is the Third Sector?...... 1 1.2 Why discuss it?...... 1 2 National and Local Considerations...... 2 2.1 National Policy...... 2 2.2 The Compact...... 2 3 What Do The Third Sector Do And What Could They Do?...... 3 3.1 Commissioner Thoughts On The Role Of The Third Sector...... 3 3.2 What do the Third Sector do locally?...... 4 3.3 What Might The Third Sector Do Locally?...... 5 3.4 Other Local Considerations...... 5 4 What Do We Need To Agree?...... 5 4.1 Joint Approaches...... 5 4.2 Market Development and Sustainment...... 6 4.3 Procurement and Contracting: Principles and Models...... 6 5 What Should We Do Next?...... 6 5.1 Extend the discussion so that the Third Sector and other relevant organisations can contribute to our defining of our approach in this area...... 6 5.2 Establish clear strategic principles for Joint Commissioning regarding its approach in relation to the Third Sector...... 6 5.3 Apply those strategic principles to all aspects of our commissioning...... 7 5.4 Identify and develop those particular opportunities and areas of value that the Third Sector is likely to best offer...... 7

088f09fc927e3f2d4d18181bd7ab8b30.doc 1 Item 7 Appendix A

1 Context And Purpose Of The Discussion

1.1 What is the Third Sector? 1.1.1 The ‘Third Sector’ is the term now used nationally to describe the range of organisations that are neither private nor public. This term therefore encompasses the full range of voluntary and ‘not-for-profit’ organisations and the associated new types of organisations such as Social Enterprises and other similar types of organisations 1.1.2 The following definitions are provided by the Department of Health: Third Sector: The full range of non-public, not-for-profit organisations that are non-governmental and ‘value driven’; that is, motivated by the desire to further social, environmental or cultural objectives rather than to make a profit. Voluntary and community sector: An umbrella term referring to registered charities as well as non-charitable, non-profit organisations, 1.1.3 In relation to care services it needs to be recognised that Third Sector organisations can function in a range of different ways. For example: . some may function in a similar way to the private sector by competing to provide mainstream care services at contracted prices in the same market as public and private providers, and some of these organisations will obtain most of their income in this way. . some may exist primarily to provide advice or to provide a voice for particular interest groups . some may rely on individual donations and fundraising or public grants for their income . some may rely on volunteers to deliver their functions 1.2 Why discuss it? 1.2.1 In shaping future commissioning strategies it is essential that we are clear as to what we believe the role of the Third Sector should be. The reason why it is called the ‘Third Sector’ is because it is different from the public and private sectors in a number of highly significant ways. We therefore need to know about how it is different in relation both to service commissioning and in relation to service provision. 1.2.2 We need to agree its particular role and function in the supplier market and our particular strategy in relation to the development of this aspect of the supplier market. We need to understand the nature of the particular areas of value that it can offer and we need to shape our strategic commissioning procurement approach accordingly. And we need to agree its particular role in relation to the users of its services, the carers of those service users, and in relation to the wider communities with whom we need to engage.

2 National and Local Considerations

2.1 National Policy 2.1.1 The role of this sector and in particular its relationship to the public sector is now a primary consideration in the key policy statements of the government concerning the future of health and social care services. 2.1.2 The Department of Health Paper ‘Our Health, Our Care, Our Say: A New Direction For Community Services’ has acknowledged that delivering health and social care services is no longer the preserve of the public sector, and that Third Sector as well as private providers have a valuable role to play in shifting the balance of provision closer to where people live, and the type of responsive services people want. And with regard to the role of commissioners it is noted that:

. Commissioners are more likely to secure cost-effective high quality provision if they encourage entry by new participants and growth from under-developed sources of supply, including social enterprises and the Third Sector. . Potential new providers, particularly Third Sector providers, may find it difficult to enter new areas without active support because the barriers to entry may be too high. . Commissioners should enable local people to exercise greater voice and influence. Third Sector organisations have an important role in this area, in helping commissioners to identify and access vulnerable groups, as well as providing advocacy where appropriate 2.1.3 The strategic significance of the Third Sector is also reflected in the local government white paper ‘Strong and Prosperous Communities’ where our approach to developing our understanding of and approach to the development of sustainable communities, community capacity, community leadership, and our development of our community strategy will in part rely on our success at working in partnership with the Third Sector. Our commissioning strategies therefore need to be closely related to these themes 2.1.4 The Office of the Third Sector in the Cabinet Office published its ‘Action Plan for Third Sector Involvement’ in December 2006 and more recently (June 2007) the Department for Communities and Local Government has published a “Third Sector Strategy for Communities and Local Government – Discussion Paper”. It is therefore most appropriate that in Hertfordshire we should be developing our own strategic thinking around this at this time. 2.2 The Compact 2.2.1 The ‘Compact on relations between Government and the Voluntary and Community Sector in England’ is a statement of principles and undertakings to enable better partnership working between the statutory, voluntary and community sectors, and provides a framework within which to build on and develop existing partnerships. Every area is now covered by a local compact, and the compact in Hertfordshire “Getting it Right Together” is currently under review. 2.2.2 Although the compact establishes some principles on how the public and Third Sectors agree to business together it does not attempt to answer the range of questions and provide the required steer to commissioning that is discussed in this paper.

3 What Do The Third Sector Do And What Could They Do?

3.1 Commissioner Thoughts On The Role Of The Third Sector The following is taken from the report of the Department of Health’s Third Sector Taskforce (‘No Excuses’) describing a sample of commissioners’ views and expectations around the Third Sector. 3.1.1 What sorts of care services do you want to be able to commission in future from the Third Sector? . Potentially we would like to be able to commission from the Third Sector the full spectrum of the health, social care and housing support services that are required for people and for the carers of people.

. This includes those community based services which can support people living in their own homes and the services that prevent them requiring specialist/secondary care. It also includes inpatient, residential and specialist therapeutic inputs when required. . This also includes those services required to assess and care coordinate the diverse range of different inputs that a service user or carer may require and comprehensive brokerage services. . We want these services to be reliable and the provider organisations to be secure and stable. 3.1.2 What do you want to achieve through this commissioning? . A vibrant and sustainable range of care providers that are working together in a coordinated way at both organisational and service user levels. . An increasingly varied and flexible range of provision. . Services that promote independence and deliver defined outcomes. . Reliable services that users and carers can easily purchase and coordinate themselves. . Development, support for and appropriate use of volunteers in community support. . Service providers who see themselves in a wider well-being and community support role beyond that of the immediate service contract. 3.1.3 What competitive advantage would you hope the Third Sector could provide? . The Third Sector should be particularly able to be locally sensitive and to respond flexibly to the diverse needs of local communities and minority groups. . They should be particularly innovative and imaginative and be motivated to continuously evolve to better suit the individual needs of service users and carers. . They should be financially competitive in that their base costs should be reasonable and because profits made would be ploughed back into the services provided. . They should be able to contribute additional value through access to wider community resources when providing additional preventative and ancillary services. . They should be well placed to help to independently represent the views of users and carers to the relevant organisations as appropriate. 3.1.4 What specific things are stopping you from commissioning such services from the Third Sector and need changing or developing to enable you to do this? . Legislation prevents us commissioning mainstream social care assessment and care management services from the Third Sector. Until this is changed we are severely restricted from developing Third Sector services in the ways that we need to. . Tendering requirements are restrictive and do not aid the creation of evolving Third Sector partnerships. We need to be able to take a more flexible approach here. . Inappropriate regulation constitutes a serious threat to the small scale services that will be required to deliver “Our Health, Our Care, Our Say”.

. Current approaches to contracting are crude and service driven rather than outcome driven. An innovative and flexible approach to contracting is needed that encourages providers to promote independence and to work together. . Current market structures are almost exclusively cost driven and often destructively rather than constructively competitive in terms of service quality. We require a more sophisticated market model in future. . There are not sufficient Third Sector providers with enough of a track record for commissioners to feel safe to shift from many of their traditional ‘in-house’ providers. This ‘chicken and egg’ issue needs cracking possibly by support structures similar to those available to business start-ups. . Statutory reporting requirements require a level of infrastructure that it is hard for new entrants to the market to sustain. A more flexible approach to statutory performance reporting needs establishing so as to enable the Third Sector to flourish. . It is not only commissioners but also providers who subcontract who need to foster the Third Sector. 3.2 What do the Third Sector do locally? 3.2.1 Third Sector organisations involved in health and social care in Hertfordshire cover the full range of functions noted in 1.1.3 above. . We have strong and well established organisations representing service users and carers. . We have well developed advocacy and advice services. . We have a well developed supplier market in social care provider services and in substance misuse services. . We have a range of housing support and accommodation providers. 3.2.2 The Joint Commissioning Partnership directly commission a number of Third Sector organisations for mainstream service provision, for advice and support, and for other preventative and supportive care purposes. Our main public sector suppliers, Adult Care Services and Hertfordshire Partnership Trust in turn fund Third Sector organisations for a range of purposes. 3.2.3 When Hertfordshire Partnership Trust becomes a Foundation Trust it will in practice become a Third Sector organisation.

3.3 What Might The Third Sector Do Locally? 3.3.1 The Joint Commissioning Partnership Board (JCPB) have in their commissioning intentions for mental health declared their interest in market testing the full range of community based services for possible alternative providers. 3.3.2 At present there are many mainstream public sector health and social care services for which there is not a developed local Third Sector or private sector supplier market. However a number of national organisations are increasingly interested in moving into these markets. 3.4 Other Local Considerations

3.4.1 The future role of the Third Sector in relation to individual budgets and direct payments, in terms of both service supply, service brokerage and coordination services, is a particularly appropriate area for further development. 3.4.2 Our work on carers and advocacy strategies and on our approach to the future supply of these services is closely related to our Third Sector approach. The historic development and provision of these services in Hertfordshire has been dependent on a proactive nurturing approach rather than a market driven competitive approach. Our experiences around this can help shape our future thinking on our approach around the Third Sector. 3.4.3 In envisaging what the Third Sector might do locally, rather than just looking at the existing types of services that we commission, we should take the opportunity of thinking about innovative and fundamentally different approaches to meeting local care needs and in particular to more organic and flexible configurations of Third Sector organisations that can both build and exploit community capacity.

4 What Do We Need To Agree?

In determining our strategic approach to the Third Sector we need to consider a range of questions related to the commissioner thoughts listed above (3.1). Below are noted some such questions for discussion. 4.1 Joint Approaches 4.1.1 Should we bring all areas of joint Third Sector funding into the joint commissioning arrangements? 4.1.2 What should be our approach to building community capacity (including the developing and supporting the role of volunteers)? 4.1.3 To what extent is the Third Sector a provider, to what extent a partner, and to what extent a ‘challenger’? 4.1.4 What potential synergies might there be in partnerships between the private and voluntary sectors?

4.2 Market Development and Sustainment 4.2.1 What might the Third Sector do better than the public or private sectors and how? 4.2.2 How proactive should we be in nurturing the development of Third Sector organisations? What are the best ways of doing this? 4.2.3 How do we apply the principles of the compact and secure stable funding for Third Sector organisations? 4.2.4 What is the role of smaller Third Sector organisations? Should they be protected and promoted?

4.2.5 Where should Social Enterprises fit in? Should we encourage ‘spin-offs’ from public organisations in this way? 4.3 Procurement and Contracting: Principles and Models 4.3.1 How should we measure and monitor the value delivered by the Third Sector? 4.3.2 What are the best models of value to apply when procuring for and contracting with Third Sector care related services. 4.3.3 In what ways might models of risk and benefit sharing differ with the Third Sector? 4.3.4 What degrees of competitive tendering and competition should be employed in relation to potential areas of Third Sector activity? Are there areas of activity that should be only open to the Third Sector? 4.3.5 How should we incentivise organisations and ensure that maximum value and efficiency is delivered by Third Sector?

5 What Should We Do Next?

5.1 Extend the discussion so that the Third Sector and other relevant organisations can contribute to our defining of our approach in this area 5.1.1 Organise a conference/workshop with Third Sector organisations to debate the questions raised by this paper. 5.1.2 Agree with Primary Care Trust, Children Schools and Families, Adult Care Services, areas of common interest and shared approaches. 5.1.3 Link into related Hertfordshire strategic discussions including those around community strategy, community leadership, community capacity (including volunteers etc).

5.2 Establish clear strategic principles for Joint Commissioning regarding its approach in relation to the Third Sector 5.2.1 Map and analyse current Third Sector spend and provision related to areas of joint commissioning. 5.2.2 Consider extension of partnership arrangements to other areas of Third Sector joint funding. 5.2.3 Describe the market we require, and what we need to do for it to be created and sustained. 5.2.4 Review Contracting and Procurement approaches and models so as to incorporate more sophisticated notions of ‘value’.

5.3 Apply those strategic principles to all aspects of our commissioning 5.3.1 Apply agreed principles in relation to reviews of advocacy and carer service strategies and to subsequent procurement and contracting approaches in relation to these.

5.3.2 Establish a market development plan according to the agreed strategic principles and structures. 5.3.3 Publish a medium term procurement plan along with the principles that will be applied.

5.4 Identify and develop those particular opportunities and areas of value that the Third Sector is likely to best offer. 5.4.1 Conduct opportunity analysis across all community services so as to identify areas where Third Sector can offer greatest potential value. 5.4.2 Engage Practice Based (Joint) Commissioners in the development of Third Sector opportunities. 5.4.3 Explore opportunities with potential existing suppliers and through creation of new supplier organisations such as social enterprises. 5.4.4 Develop ‘incubator’/‘business angel’/‘innovation fund’ type approaches to explore entrepreneurial opportunities offered through the Third Sector.

088f09fc927e3f2d4d18181bd7ab8b30.doc 9