Sunderland Research Dissemination Workshop 11th September 2007
HEALTH MARKETS AND SOCIAL ENTERPRISE DEVELOPMENT
- INTRODUCTION
The Sustainable Development Research Centre (SDRC) is the research partner to the Benefiting the Economy and Society Through (BEST) Procurement Programme, which is part funded by the European Social Fund under the Equal Community Initiative Programme. Action three of the programme is to disseminate the research undertaken through a series of workshops in each region of England, one in Scotland and one in Wales. Each of these will discuss one of five themes: Agents for Change; Health Markets and Social Enterprise Development; Influencing the Demand Side; Resource Capacity and Future Social Enterprise Development and Business Effectiveness. Each workshop will bring together BEST Procurement Programme development partners and local people involved in the supply and demand sides - providing a forum for them to discuss their experiences with social enterprises and procurement.
- THE SUNDERLAND WORKSHOP
The Sunderland dissemination workshop was held on the 11th September at the University of Sunderland Industry Centre in Sunderland Enterprise Park. The theme for the workshop was Health Markets and Social Enterprise Development. Speakers and delegates at the workshop included a representative from SDRC and various sections of the public sector, including local government. There was also representation from the voluntary sector and local social enterprises.
The workshop consisted of two sections – the first comprising a series of presentations on various issues pertaining to social enterprise and health markets. Delegates listened to presentations on SDRC’s research findings as well as the overall learning that has emerged from the BEST Procurement Programme. They also heard from a local representative who presented a case study of a social enterprise working within the social care sector.
The second part of the workshop comprised an open discussion involving all participants and focused on the theme: Health Markets and Social Enterprise Development. As a primarily participant led discussion, this provided an opportunity for delegates to share their good and bad experiences and discuss issues important to them.
- ISSUES RAISED – SOCIAL ENTERPRISE AND HEALTH MARKETS
The remainder of this report summaries the main issues that emerged from both the presentations and the group discussion at the Sunderland workshop. Although the delegates were predominantly from the North East, both local- and nationally-relevant issues emerged. The workshop highlighted issues specific to social enterprises that work within, or are looking to work within, the health markets. However, it was clear that these social enterprises face many of the same barriers to selling to the public sector as social enterprises working in other sectors.
3.1 OPPORTUNITIES FOR SOCIAL ENTERPRISE WITHIN HEALTH MARKETS
3.1.1 EXTERNALISATION
Delegates debated the opportunities that currently exist within health markets for the social enterprise sector. Delegates felt that since the social enterprise unit was set up within the NHS, the relationship between the two has started to change. It was felt that there are now large numbers of clinical staff interested in setting up social enterprises in order to get out of the NHS and many more already in the process of doing so. It was felt that these are the perfect people for social enterprises to employ and offer them the conditions they are lacking in NHS employment.
However, leaving the NHS and joining a social enterprise does also raise problems; for example, staff involved in externalisation can no longer access NHS pensions. Therefore, staff that move out of the public sector lose a large slice of the benefits associated with a public sector job. It was felt that if social enterprises can offer no solution to this then NHS jobs will be lost to the private sector instead. Externalisation to social enterprises, therefore, could be summarised as securing jobs but losing fringe benefits. It was mooted that NHS spin-outs in the form of social enterprises should be offered more support. One suggestion is to work with the social enterprise pathfinders to look at the issues and formulate solutions.
3.2 BARRIERS TO SOCIAL ENTERPRISES OPERATING WITHIN HEALTH AND SOCIAL CARE MARKETS
3.2.1 FEAR OF COMPETITION
Social enterprise practitioners discussed that one of the barriers to their selling to the public sector is a sense of fear within the public sector of competition from the third sector. However, some social enterprise practitioners felt that job loses are more likely when an NHS contract is awarded to a private company rather than a social enterprise. Delegates stressed that contracting from a social enterprise could be a better option for the NHS than a private company in situations where a decision to commission services has been made because, it was felt, a social enterprise is more likely to move staff into their organisation and prevent job loses on the winning of a contract.
It was felt that social enterprises have to ensure that they are not viewed as privatisation by the backdoor by, for example, stressing that they are doing something different – reaching the people and the places that the NHS and other public sector service cannot, and do not, reach. Therefore, social enterprises are seen as an additional, rather than a competitive, service. However, social enterprise practitioners are still left feeling wary of competing for public sector contracts because they feel that procurement officers see them as a threat to public sector jobs and, therefore, will not be willing to award a contract to a third sector organisation.
3.2.2 LACK OF UNDERSTANDING OF SOCIAL ENTERPRISE MODEL
Some delegates felt that the public sector is only now beginning to understand and appreciate social enterprise. It was felt that there is still some way to go to prove to the public sector that social enterprises can be large, viable, sustainable businesses. It was suggested that this may be connected to the training of public sector commissioning officers and educating them about social enterprise.
It was mooted that social enterprises should be winning public sector contracts because the third sector and the public sector share similar values, interests and motives. It was felt that social enterprise and the public sector have more in common with each other than either does with the private sector. However, the public sector needs to understand that it shares a lot with the third sector – particularly that organisations such as social enterprises not only compete on price but provide added value. It is also necessary for more joined-up commissioning in order for social enterprises to highlight their multiple value propositions.
Delegates also felt that it would help all those involved if the public sector became more involved in building social enterprise capacity on the ground. Doing so would lead to greater development of the social enterprise sector over the long term that in turn would then enable the public sector to contract out to successful social enterprises. However, it was considered that this would involve the public sector recognising the real value of social enterprises and not just seeing them as a cheap option.
3.2.3 EVIDENCE AND INNOVATION
Much discussion focused on the fact that social enterprises find it difficult to sell new or innovative services to the public sector in general and the NHS in particular. Social enterprises, for example, offering alternative therapies had found it difficult to sell to the public sector. It was felt within the social enterprise community that PCTs are innovation averse.
However, representatives of the NHS and other public sector bodies stressed that they require evidence of success because they are spending public money and have to do so wisely. They admitted that evidence is the biggest problem when it comes to commissioning innovative services but to remove the requirement for evidence would not ultimately be a benefit because it could lead to the public sector wasting taxpayers’ money on things that are ineffective. Therefore, the PCT is reluctant to invest in something unless it has already been proven as successful. To social enterprises, therefore, the PCT seems risk and innovation averse.
Some felt that the requirement of evidence for every service commissioned leads to a limitation in the choice of services available to patients. Some delegates believed that smaller social enterprises are at a disadvantage because they have limited training in how to carry out research and, therefore, cannot do it themselves or afford to pay another organisation to do it for them. It was felt that the PCT may not accept the forms of evidence that social enterprises are able to provide. As a result, it was felt that private companies have a better chance of securing tenders because they have the research behind them.
However, this is a problem common to other SMEs offering new or innovative services because they too do not have the financial resources to put into research in order to give them a track record. It was suggested that such organisation could provide evidence that they can help meet the specific targets of the local authority of the NHS, such as sustainable procurement.
3.3 STRATEGIES FOR WINNING CONTRACTS IN HEALTH AND SOCIAL CARE
3.3.1 SELLING ADDED VALUE
Delegates agreed that one of the most effective strategies for winning contracts is to market the added value that comes from contracting social enterprises. However, they also felt it was important to market the fact that social enterprises offer quality services and often good working conditions for their staff. Social enterprise should be recognised as a powerful way of working – because the people working within them are truly given the chance to participate in how the organisation is run. Working within such an environment gives people self-confidence and empowerment – particularly when they are offered the chance to use their initiative and suggest ways the organisation could be improved. The favourable working conditions and feelings of empowerment give the people working for social enterprises great satisfaction.
Therefore, when applying for contracts with the public sector it is important to try and get across the benefits of social enterprises – in particular their added value. Social enterprises in general, for example, have good staff retention because their workers are happy with their working conditions. This, in turn, leads to the delivery of a better service. Many social enterprises operate with the core belief that if an organisation offers its employees good jobs and good conditions, the organisation will get a really good service in return.
3.3.2 MEASURING ADDED VALUE
Discussions surrounding the need for social enterprises to promote their added value led on to debate around how their added value can actually be measured. It was felt that ways need to be found for social enterprises to prove their additionality. Delegates pointed out that social accounting methods can be used but the time and resources that are required to carry out such activities are not built into contracts and, therefore, it costs the organisation money to carry out such activities.
However, other delegates pointed out that social accounting exercises can help social enterprise (re)focus on what they are doing and can be used as an effective management tool. Therefore, it is beneficial for social enterprises to carry out social accounting whether they are going to use it to try and win a public sector contract or not. Some felt, therefore, that social accounting has more use as a management tool than as a marketing tool and other ways of proving additionality need to be sought. This was felt particularly because the public sector has not set any benchmarks for what they are looking for from social accounting results. It was concluded that social accounting is not the magic bullet to sort out social enterprise and procurement.
3.4 SOCIAL ENTERPRISE – FURTHER OPPORTUNITIES IN HEALTH MARKETS
3.4.1 REPLICATION
Many delegates thought that when a social enterprise has proven it is a success and has a successful method of delivering a service, then replication should be considered. Therefore, when a strong social enterprise model has been built up it can be replicated in other areas generating a self-sustainable replication unit. The incubation of a social enterprise by an experienced social enterprise can be particularly effective.
3.4.2 RESPONDING TO PUBLIC NEEDS AND DEMANDS
It was pointed out by some delegates that new legislation should mean that PCTs will have to show that the services they offer have taken into account and respond to public needs and public demands. It will be necessary for the public to have a say in the way things are run and the kinds of services that are provided to them. There are opportunities, therefore, for social enterprises to start demonstrating to the NHS that they are well-placed to meet the needs of the community.
Some delegates sensed that there is a trend towards greater consideration of patient voices and that this can be used to change how, and what, the PCT commissions towards the kinds of quality services that are offered by social enterprises. Delegates debated whether patient voices and opinions could be used by social enterprises when they are responding to a tender as evidence that there is a demand for their service.
3.4.3 THE PUBLIC SECTOR AS COMMISSIONER
Most delegates agreed that it is now almost inevitable that the public sector will become a commissioner and not a provider of services across the board. This means that the number of opportunities for social enterprises will only continue to increase as the number of services being commissioned rises. Therefore, social enterprise, as opposed to the public sector, could be its salvation. Most social enterprise practitioners stressed that they did not advocate the out-sourcing of services but in instances when the decision has already been made to do so it is beneficial to all to try and level the playing field so that social enterprises can compete with the public sector.
- CONCLUSIONS
The major barrier to social enterprises selling to the public sector in general, and the NHS in particular, that was debated at the workshop was that the public sector view the third sector as a competitive threat and are, therefore, unwilling to award them contracts because they think it will ultimately lead to job cuts in the public sector. The public sector needs to realise that the third sector offers a supplementary form of provision in areas that are underserved by the private and public sectors rather than an alternative means of health care provision on a mass scale.
The public sector is starting to understand and appreciate social enterprise but there is still some way to go. One improvement would be more joined-up commissioning because it would offer opportunities for social enterprises to demonstrate their multiple value propositions.
Social enterprise practitioners agree that the onus is on social enterprises to market their added value and the wider benefits they bring to the quality of life of their staff, particularly in terms of wages and conditions. One way to do so is to carry out social accounting exercises – useful as both a management and a marketing tool.
There are further opportunities for social enterprises within the health and social care sectors. There is the possibility, for example, of the replication of existing strong social enterprise models that have already been proven successful. There are also opportunities in externalisation – to take on staff leaving the NHS, for example. There are also opportunities to show that social enterprises meet the needs and demands of the public in the context of new legislation. However, it is difficult to sell new or innovative services to the NHS and these are often the things that social enterprises offer.
AUTHOR
Sarah-Anne Munoz (MA, MSc, PhD, FRGS), Researcher
Sustainable Development Research Centre
Horizon Scotland
The Enterprise Park
Forres
Moray, IV36 2AB
01309 678111
Sarah-anne.munoz@sdrc.uhi.ac.uk
