Cutting out a more effective way of doing business?
This blog was originally published on the Social Enterprise Mark CIC website, and is available here.
Public sector commissioners are coming under unprecedented financial and political pressure to make huge savings, particularly in the health service. Unfortunately, this type of pressure only leads to short-termism rather than more strategic, long term decision making. The tight timetable for the submission of STPs (Sustainability and Transformation Plans) by government also added to these pressures.
The reality on the ground is hard and is leading to irreversible outcomes. We have recently seen the closure of award-winning Social Enterprise Gold Mark Holder SEQOL, who had proved that they were adding great social value to their community as well as joining up health and social care (all the things that a great social enterprise can help to do). The services that SEQOL provided will now be brought back into the NHS and Swindon Borough Council.
We have also seen the effects on other social enterprises that were set up as former ‘spin outs’ from the NHS, for example Sirona in Bath and North East Somerset has recently lost its contract to Virgin Care.
A short-term solution?
It would seem that the bottom line has become of overriding importance, over and above what’s good for patient care and a joined up health and social care service. Those leading the STPs are looking for big savings – this often leads to ignoring the fine grain, and instead opting for the ‘big’ providers that appear to provide a more cost effective service on the face of it. Social enterprises (even those that spun out) are not big in NHS terms, they are just flotsam and jetsam in the grand scheme of things when you are dealing with one of the biggest employers in the world undergoing a serious financial crisis.
Unlike the NHS, all businesses also need to balance their annual books. The irony is that the NHS can carry a deficit and still operate and deliver on services that are loss making, as they are ultimately backed by the government. Handing back financially unviable contracts therefore may be an easier short term option. This approach is of course unsustainable, as even the NHS cannot sustain a deficit in the longer term and will require government intervention or the collapse of parts of the service (unless we all start paying directly for it).
The other option of contracting with a big corporate can also be seen as superficially attractive, as big savings are presented at the bidding stage. Savings are made, but at what cost? The profits for shareholders have to come from somewhere. They can only come through reducing the service and/or people delivering it (e.g. when SERCO ran Cornwall’s Out of Hours GP service).
Is there another way?
So is the baby being thrown out with the bathwater? I think so. It is too late after the act.
The health and social care services are delivered by people for people. Social enterprise offers a way to help those who delivered the service a chance to have a say and input their expertise and in some cases actually own it (where there is employee ownership). It also offers the chance for patients input too.
I am not arguing for a bad service to be continued, but people will not stay if they do not feel valued. We are seeing this currently with the shortage of staff and low morale in the NHS.
The added social value that the business can bring to its community, by joining things up that might not be healthcare related, is also lost. For instance, SEQOL had a policy of employing people who had been through their supported employment programme. It also provided savings that were not directly contract related, through prevention and partnership working. These things are harder to measure and all came from the spirit of innovation and ‘thinking outside the box’.
It is therefore even more vital for us as social enterprises to try to articulate all of this to commissioners at a difficult financial time. Social enterprises can provide part of the answer to the holy grail of outcomes based commissioning, but it requires a more long term, strategic, joined up approach and commissioners with ‘bottle’ who are prepared to take some risks despite the huge pressures to jump to the short term financial goals.
We have recently developed a set of new resources to support Commissioners in developing and embedding an outcomes based approach to commissioning public services. Please get in touch for more information.