UK Regional dissemination workshops
Taunton Dissemination Workshop 26th April 2007
THEME: 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 dissemination 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 TAUNTON WORKSHOP
The Taunton dissemination workshop was held on the 26th April 2007 at the Brewhouse Theatre, Taunton. The theme for the workshop was Health Markets and Social Enterprise Development. Speakers and delegates at the workshop included representatives 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 enterprises and health markets. Delegates listened to a presentation on the demand side from the perspective of the BEST Procurement Programme in the East Midlands. They also heard from a local representative who presented case studies of three social enterprises working locally within the health sector. Delegates were also informed of the research carried out by SDRC and presented with one case study from the East Midlands of a social enterprise working with the NHS. Delegates also watched a DVD showing in more detail the case study of a local social enterprise, that provides home care, which was introduced in the local representative’s presentation.
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 ENTERPRISES AND HEALTH MARKETS
The remainder of this report summaries the main issues that emerged from both the presentations and the group discussion at the Taunton workshop. Although the delegates were predominantly from the South West, 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 OPPORTUNITITES FOR SOCIAL ENTERPRISES WITHIN THE NHS
3.1.1 SUSTIANABLE PROCUREMENT AND OTHER GOVERNMENT LED INITIATIVES
Delegates from the East Midlands pointed out that there is scope for social enterprises to sell goods or services to the NHS. The UK public sector (e.g. local authorities, NHS, schools) spends £125 billion on procurement each year. Of this, £15 billion goes into the NHS and within the East Midlands alone, £1 billion goes to the NHS.
The Sustainable Procurement Taskforce has been designed to encourage public sector procurement to be socially and environmentally more responsible. If the NHS were to contract with local businesses, for example, this would result in more money being put into the local economy. In turn, this would lead to the creation of more jobs and ultimately to a better quality of life within the local area, with associated reductions in health problems. Therefore, local purchasing by the NHS could ultimately benefit the NHS in financial terms. There are opportunities, therefore, for social enterprises to put forward their added-value and highlight the benefits of buying locally within the context of sustainable procurement initiatives.
Workshop delegates mentioned that there are a number of agendas, such as the Social Care Act, which are statutory requirements to engage with stakeholders to ensure quality. Social enterprises are increasingly using these as a way of promoting themselves to procurers. Overall, delegates pointed out that there is an increasing need for social enterprises to become ‘policy aware’ if they are to succeed in selling goods or services to the public sector. If social enterprises are aware of policy and government-led initiatives then they can advocate the use of their own organisation as a means of achieving the goals of such initiatives. Therefore, it was felt by some delegates that social enterprises need to position themselves as key players within big service agendas, such as the drive towards sustainable procurement. Others argued that opportunities exist for social enterprises to feed into health and wellbeing issues across a wide range of policy agendas; for example, by demonstrating that they can deliver on the drive away from critical care and towards social and preventative care.
In relation to such strategies, social enterprises need to demonstrate that they are different from companies with strong Corporate Social Responsibility (CSR). It was postulated by some delegates that with the growth of CSR in private companies, the distinction between social enterprises and companies with strong CSR may become less distinct. It was also discussed, however, that whilst on the surface social enterprises and such companies may appear similar, they are very distinct from each other because their profit distribution is entirely different and social enterprises have clear underlying social principles.
3.1.2 SOCIAL ENTERPRISES – MEETING NHS DEMANDS
In relation to the ability of social enterprises to meet the demands of the NHS through the provision of goods and services, delegates considered the structure of the NHS within England and Wales. It was noted that at the local level Primary Care Trusts (PCTs) and acute hospitals provide at least minimal medical, surgical or obstetrical services for inpatient treatment and/or care, and provide a round-the-clock comprehensive qualified nursing service as well as other necessary professional services. Most patients require a relatively short stay in such establishments. PCTs and acute hospitals have freedom of choice in relation to the services and products they procure and the suppliers they procure from but their choices must represent value for money and adhere to EU Procurement laws.
Due to budget deficits, the main targets for the NHS at the moment were considered to be short-term cost benefits as most delegates viewed the NHS as being short staffed and under resourced. As a consequence of this, delegates felt that it was difficult for social enterprises to work locally with the NHS because of their focus on value for money in the short-term. The areas where contracts are most likely to be sourced locally by the NHS were identified as: construction and refurbishment; cleaning; maintenance and repair; grounds and gardens; security; window cleaning and pest control.
At the regional level there are resource hubs which all NHS Trusts pay a fee towards. The objectives of these are to make cash releasing savings, reduce the environmental impact of suppliers and improve patient care and public health. They also standardise costs so that local trusts are not all charged different prices for the same service or product. Regional opportunities for contracting are: estates and facilities (waste, patient transport and laundry service); agency (clerical and admin staff); office and IT (uniforms); purchased health care (mental health, learning disability, physical disability, elderly care, free nursing.) There is an overlap between NHS health care and local authority social services.
3.1.3 EXTERNALISATION
Delegates debated the benefits to the NHS, and the opportunities for social enterprises, in relation to the externalising of NHS work to social enterprises. It was pointed out that the NHS agenda of eternalising seems to be increasing. Externalisation could come in the form of the NHS saying that, for example, they have so many hours of domiciliary care that need to be provided and are looking for someone to supply this for them. There have also been instances of NHS staff deciding to set-up their own social enterprises, thus externalising from within the NHS itself. However, it was pointed out that some staff, such as NHS nurses, are not in favour of social enterprises doing such functions because they see it as a backdoor to the privatisation of the NHS. It must at least be considered, therefore, that NHS staff tend to be highly unionised. It was pointed out that, at the moment, the PCT is both the provider and the commissioner of services and there possibly needs to be a distinction between the two – that could arise within the context of externalisation.
3.2 BARRIERS TO SOCIAL ENTERPRISES SELLING TO THE NHS
3.2.1 GENERAL BARRIERS
At the national level, the NHS Purchasing and Supply Agency (PASA) is the national framework for contracts and supply medical equipment, clinical consumables, office supplies, agency staff, IT and telecoms, energy, waste, transport and food. Due to the large size of these contracts it is difficult for small firms to penetrate them. The contracts are advertised in different places depending on the size of the contract: for those over £90,000 they must be advertised in the Official Journal of the EU (OJEU); those worth £10,000 - £90,000 need to be advertised in local newspapers and websites and for contracts below £10,000 the local buyer needs only three quotes for the work with no need to advertise.
Delegates discussed that there is a general awareness of social enterprise within NHS procurement strategies but that there are also particular barriers that social enterprises face when trying to sell to this particular section of the public sector. It was noted, for example, that the NHS is increasingly bundling contracts into larger ones that are hard for social enterprises to compete for. It was also debated that NHS procurement officers may be unwilling to consider contracting to social enterprises because the service is currently over-stretched and consequentially risk adverse – it was thought, therefore, that they would favour large, well-established firms (and these tend not to be social enterprises). NHS procurement officers may also have the perception that social enterprises will be the more expensive option. The NHS is also wary of seeming biased towards social enterprises and local business because they do not want to break EU procurement rules. However, there are also instances of the NHS struggling to find local social enterprises when they would like to contract to them.
3.2.2 CONTRACT SPECIFIC BARRIERS
When social enterprises tender with the NHS they need to take into account the pensions and the Transfer of Undertakings (TUPE) regulations. It was felt by workshop delegates that tendering for contracts with the NHS can be daunting for social enterprises because they need to match the terms and conditions of the NHS. Delegates felt that the NHS needs to recognise that social enterprises are not the cheapest option but they do provide added value. Delegates worried that the Government might promote social enterprise as the ‘cheap option’, which would not be of benefit to the social enterprise sector.
Discussion also focused around the amount of time that social enterprises must invest in a proposal each time they wish to tender for a contract. There is usually a period of around one month from the expression of interest to the close of a tender. Social enterprises need to be aware in advance of possible forthcoming tendering opportunities, therefore, in order to prepare in advance. It was generally felt that one month is too short a period for most social enterprises to produce a response to a tender.
3.2.3 BUDGETARY CONSTRAINTS
It was recognised that the NHS and PCTs are faced with large budget deficits. There was discussion focusing on whether the NHS will therefore be able to support the use of social enterprises. However, delegates pointed out that the NHS should realise that many social enterprises provide preventative services. Such services often remove completely the need for many people to go to hospital and for many others reduce the time spent in hospital, e.g. the provision of home care by social enterprises. This impacts particularly on the elderly as it forms a safety net that identifies problems earlier than they would normally be detected.
Whilst investing in such preventative care may make deficits worse in the short-term, there would be tangible benefits in the long-term in the form of overall financial savings for the NHS. It was raised, however, that many of the social enterprises providing such services at the moment are being funded through grants etc., rather than contracted by the NHS. It was discussed that this is due to the financial risk that social enterprises are perceived to present to the NHS.
It was felt that the deficits have lead to a flawed budgeting process in the NHS in which the budget for the coming year is defined by the previous year’s spending. However, such high level problems need to be addressed within the NHS itself.
3.3 STRATEGIES FOR WINNING CONTRACTS WITH THE NHS
3.3.1 SOCIAL ENTERPRISE STRATEGIES
In the course of the presentations and workshop discussion, a number of ways for social enterprises to increase their chance of winning contracts with the NHS were discussed. It was suggested, for example, that social enterprises could contact their local NHS trust supply manager as well as searching OJEU notices and the local press. Other generic strategies that were suggested included entering business details in social enterprise directories, collaborating with other social enterprises in order to win contracts and approaching PFIs in order to be a sub-contractor to larger companies who win large contracts.
It was pointed out that if social enterprises cannot compete on price, then they must promote their overall benefits that stress their underlying social principles. This can include employing people with learning disabilities and taking people out of long-term care or unemployment. Social enterprises also need to promote the fact that contracting to them can increase the money flowing into the local economy and lead to local community regeneration. Overall, social enterprises need to highlight that they are socially and environmentally beneficial.
3.3.2 NHS STRATEGIES - TENDER SPECIFICATION
It was discussed that there needs to be transparency and non-discrimination in tender specifications. These need to be structured so that any supplier can compete with an equal chance of winning the contract. However, there are certain legal strategies that the NHS could adopt in order to give social enterprises a greater chance of winning contracts. It would be possible, for example, to ensure the use of local businesses by restricting certain aspects of the contract. This could be done by specifying a certain response time for the service that will be provided or specifying the provision of fresh and seasonal food. Procurers should also be encouraged to look at the whole life cycle of the product as locally produced goods and services may have a lower environmental impact.
With the nationalisation of contracts, the potential for small rural organisations, such as many of those social enterprises in the South West, to win contracts was a topic that was much discussed by the workshop delegates. The concern was raised that social enterprises are not economically competitive and there was a worry that procurement officers would not take added-value into consideration when awarding contracts. The response to this concern was that procurement officers should be encouraged to look at the whole life cost of a product. Social enterprises should provide them with evidence of their added-value from the very beginning of any tendering process in order to encourage them to take it into consideration. This will help demonstrate to the NHS that social enterprises can be more competitive and provide a better service than a private business. However, to achieve this there needs to be more communication between the NHS and local social enterprises. The NHS will support national contracts unless there is a good reason not to; therefore, social enterprises need to make the service aware that they are viable, local suppliers.
There is a need for NHS procurement professionals, therefore, to set up protocols for recognising the added-value from local suppliers. It was mentioned that there would be no benefit to the NHS trying to find local providers for items such as IT equipment, as it is unlikely that social enterprises will be able to compete on contracts of that type, but there are areas where they would be better placed to compete. The NHS should earmark such areas so that the PCTs and acute hospitals can look for local suppliers to provide best value. Hence a strategy that the NHS could use in order to engage more with social enterprises is to focus commissioning and the tendering process towards local suppliers.
The NHS could also build local, community needs into tendering specifications. It was suggested by delegates that doing so would give social enterprises an increased chance of winning contracts because the public’s priorities do not necessarily favour the cheapest supplier in financial terms but the one which can provide the best all-round service, and in many cases this may well be a social enterprise.
3.3.3 NHS STRATEGIES - TRIAL CONTRACTS
It was discussed that trial contracts can be awarded to companies by the NHS. The procurer is free to use any willing provider. A trial contract is not subject to the same procurement rules because the NHS is not considered to be entering into a contract with the providers and there are, therefore, no competition or monetary restraints. Therefore, it may be easier for social enterprises to use trial contracts as the first step towards a procurement relationship with the NHS.
However, delegates noted from personal experience that trial contracts can attract complaints from other interested parties who feel they have not been given the opportunity to compete for the contract. Yet at the end of the trial period, the contract will go out to tender. Whilst there is no guarantee that the current provider will win the contract, they are in a better position than they would have been before the trial contract. It was noted that more information about these trial contracts can be found under the ‘Trials Unit’ section of the Department of Health website.
3.4 SOCIAL ENTERPRISES – WORKING IN HEALTH MARKETS
3.4.1 WORKING PRACTICES AND LEGAL STATUS OF SOCIAL ENTERPRISES
During the group discussion, there was much consideration of the working practices of social enterprises within the health sector. Much of this discussion stemmed from the case study material presented earlier in the workshop relating to a social enterprise providing home care in the South West. Delegates discussed the benefits of the structure of this social enterprise which functioned as a workers’ co-operative in which all staff were self-employed and have equal status on decisions relating to the company. It was pointed out that many social enterprises function with such self-employed staff and the benefits and drawbacks were discussed.
It was pointed out that such self-employed workers are essentially unprotected workers and have no pension, holiday entitlement or sick pay but that this is the same as any self employed person. However, the workers do have a decision-making voice within the co-operative and are offered the freedom to choose their own hours and the amount of work that they would like to do. It was pointed out that having self-employed workers has benefits, therefore, to both the social enterprise and the workers themselves. The case study showed that there are now some tax issues that have arisen, but at the beginning, the decision to be a co-operative was thought to be the best for the business.
It was pointed out by other delegates with experience in the social enterprise sector that employing workers also has benefits for a social enterprise, particularly when they are looking to sell to the NHS or within the wider health care sector. It was particularly noted that employing staff would reassure doctors and the public that the workers were accredited and had all been trained to the same level. However, the disadvantages for social enterprises employing people are that they need monetary reserves for redundancy and need to have employment contracts.
3.4.2 SOCIAL ENTREPRENEURS
Delegates discussed the role of social entrepreneurs in the success of social enterprises looking to function within the health markets. Some thought that the key to a successful social enterprise was having a social entrepreneur within their ranks with the ability to spot the opportunities for the organisation within their local area. Although delegates felt that social entrepreneurs were particularly important in spotting geographically specific local opportunities within health markets they also felt that the replication of such successful social enterprises would be consequentially difficult in other areas. It was concluded that in order to be successful, social enterprises need to open up their business so that others are aware of what they supply but also that they provide added benefits to the community.
3.4.3 LEARNING FROM THE VOLUNTARY SECTOR
Delegates also discussed the similarities between the upsurge in the voluntary sector providing health and care services in the 1990s and the current upsurge in social enterprise engagement with health markets. It was raised that in the 1990s the Voluntary Sector took over community care contracts but performance, quality and clinical standards, along with insufficient infrastructure, lead to problems in which voluntary sector organisations took on more work than they were able to cope with. It became clear that providing health services is not cheap and cannot be done cheaply.
The concern was raised that a similar situation could now arise with social enterprises being unaware of the scale of work they are undertaking when applying for contracts and subsequently finding they are unable to cope with the workload. It was suggested that the social enterprise sector needs to learn from the over-idealism of the voluntary sector in the past.
Delegates also discussed situations in which social enterprises were treated in a manner that they felt was less favourable than the treatment of private companies. It was also felt that this happened to the voluntary sector in the past and that social enterprises need to follow their lead towards a situation where they can defend their position and not be ‘trampled on’ by the public sector. It was suggested that the social enterprise sector is working towards this situation by professionalising.
It was explained that after the initial period of financial problems, the voluntary sector brought their care provision expertise and costs to the level of Primary Care Trusts, and demonstrated that if they did not do the work there would be no one else to do it. The feeling was that social enterprises are much further ahead than the voluntary sector was in the 1990s and is therefore in a stronger position to stand-up for their rights.
3.5 SOCIAL ENTERPRISE – FURTHER OPPORTUNITIES IN HEALTH MARKETS
3.5.1 FINDING OPPORTUNITIES
Workshop delegates also highlighted the areas in which they felt there was potential for social enterprises to develop within the health markets. It was suggested that social enterprises should look at local public health reports and public health observatory reports as these will show where opportunities for them may lie – the main areas mentioned by delegates were providing services to those with drug and alcohol problems. The discussion of social enterprises involvement in such areas mirrored earlier discussion of the wider benefit of social enterprises to the local population and the NHS. Delegates pointed out, for example, that the provision of services to addicts would help prevent people needing to be taken to Accident and Emergency at hospitals.
Another way in which social enterprises can identify the opportunities available to them is to look at local authority websites that show contracts in their region and also the national government website ‘supply2gov’ which advertises low value public contracts. Delegates from the East Midlands described the ‘Nearbuyou’ website which shows contracts that may be of particular interest to social enterprises in their region. The delegates at the workshop felt it would be beneficial to have a similar website for the South West region. It is uncertain, however, how permanent this resource will be in the East Midlands because the funding for it is nearing an end. The website is very resource intensive to maintain due to the fact that a member of staff is needed to look at all advertising sites with contracts that may be well-suited to social enterprises and pick out those that are most appropriate. Therefore, it is unlikely that such an expensive resource will spread to other regions unless further funding is secured.
It was noted by some delegates that the development of a trade association is currently in progress in the South West and that once this is in place it could promote relevant social enterprises to the health authority. There is also a local procurement hub for South West, which could be a good contact for social enterprises, although this does not necessarily provide NHS contracts.
3.5.2 PRACTICE-BASED COMMISIONING
Delegates also briefly considered the opportunities for social enterprises within Practice Based Commissioning (PBC). Within PBC, individual practitioners act as a legal entity devolved from the PCT which commissions services for their patients and the local community. By commissioning such services from social enterprises it is possible to pull in expertise into deprived areas that would otherwise have not received services from the NHS. Again this benefits the NHS in the long-term by providing social/ preventative care and consequentially reducing hospital admissions.
3.5.3 ASSISTANCE AND FINANCING
The utility of the ‘Pathfinder’ service was also discussed as a programme that aims to deliver support, including financial support, advice and training to social enterprises looking to sell to the NHS or be involved in the wider delivery of social care. Delegates felt it was useful to hear the experiences of social enterprises already operating within the health markets through the programme.
It was also pointed out that it is important for social enterprises within the South West region to be aware of the funding and financing opportunities that are available for them from sources such as the Future Builders Fund, the Office of the Third Sector and the Department of Health Social Enterprise Investment Fund (that will offer around £74 million over the next four years). Delegates discussed that social enterprise could apply to this fund for capital costs such as building community health centres or purchasing new vehicles.
The discussion ended with a number of ideas of how to get procurement officers and social enterprises communicating. It was raised that ‘meet the buyer’ events can be affective as social enterprises tend not to understand procurement officers, and vice versa, and these events provide an ideal forum for communication.
4.0 CONCLUSIONS
Many of the themes that emerged from this workshop are specific to social enterprises working in the health markets. However, it has also emerged that many of these social enterprises share the same aspirations and face the same barriers as social enterprise working in other sectors when it comes to selling to the public sector. It was highlighted, for example, that social enterprises working across all sectors need to be policy aware. A knowledge of policy agendas is a particularly powerful tool for social enterprises because they can position themselves more strongly as organisations with the potential to mean key policy objectives. In relation to selling to the NHS, delegates urged social enterprises to consider how they can demonstrate an ability to contribute towards sustainable procurement and the drive towards social and preventative care.
It is clear that social enterprises are better placed to provide some goods and services to the NHS and health markets than others. A successful strategy for social enterprise involvement in the health markets appears to be, therefore, to focus on selling the kinds of goods/services that social enterprises can easily provide, and provide to a high standard. This may mean not attempting to tender for the largest contracts or in areas of service provision where larger organisations dominate.
The externalisation of NHS functions appears to be an increasing trend. The workshop revealed, however, that there is a duality within the NHS relating to how this trend is perceived. There is both a willingness within NHS staff to externalise functions by setting-up their own social enterprises but also somewhat of a resistance to such moves by a highly unionised workforce that is not in favour of privatization.
Although, as the participants at the workshop demonstrated, there is a desire within the social enterprise sector to sell (or sell more) to the NHS there are some barriers that stand in the way of social enterprises doing so. The NHS are perceived, for example, as looking towards commissioning increasingly larger contracts that small, local social enterprises are unable to compete for. NHS procurement officers are also perceived as sharing many of the reservations towards contracting to social enterprises that have been observed in other sections of the public sector. Similarly, representatives from social enterprises discussed not being able to fill in tender applications because of their size and complexity – a common barrier that spans social enterprise sectors.
It emerged that there are a number of strategies that social enterprises could employ in order to increase their chances of winning contracts and selling to the NHS. Many of these strategies related to social enterprises being aware of where they can look for information on forthcoming contract opportunities. Another strategy is for social enterprises to promote the lower environmental impact of buying from them as local suppliers. In order to successfully sell to the health sector, the importance of a market-aware social entrepreneur within the organisation was also highlighted. It also emerged that social enterprises may do well to learn from the experience of the voluntary sector in the health markets in the 1990s.
Overall, it was identified that there are many opportunities for social enterprises to sell to the NHS and operate within the wider health markets. It emerged that social enterprises are particularly well-placed to provide social and preventative care that ultimately leads to savings for the NHS by reducing hospital admissions in number and length but that there are also many other diverse opportunities that exist for social enterprises to sell goods and services to the NHS.
AUTHORs
Sarah-Anne Munoz (MA, MSc, PhD), Researcher
Heather George (BSc), Research Assistant
Sustainable Development Research Centre
Horizon Scotland
The Enterprise Park
Forres
Moray, IV36 1FN
01309 678111
Sarah-anne.munoz@sdrc.uhi.ac.uk
