Smart Commissioning
Exploring the impact of personalisation on commissioning
This document provides an early framework for commissioners who wish to transform their existing contractual structures into a system of Self-Directed Support. It is a provisional discussion paper offering some ideas about possible steps forward. Any feedback would be gratefully received.
Simon Duffy
With thanks to the members of in Control’s Yorkshire & Humber Regional Forum Last edit: 4th February 2008
Summary
1. Introducing Self-Directed Support and Personal Budgets means being able to tell people how much funding they are entitled to and giving people meaningful choice and control over how that funding used.
2. Self-Directed Support is still contractual in nature. But it involves a new contract between the citizen and the state. In order to make this meaningful there need to be a range of possible types of contracts that can be used in different contexts:
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Model 1.1 - Individual Contracts - contracts with the individual person who needs support•
Model 1.2 - Representative Contracts - contracts with an appropriaterepresentative who acts on behalf of the individual and in accordance with the principles of Supported Decision-Making.
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Model 1.3 - Trust Contracts - contracts with legally incorporated Trusts that have been set up to act for the person who needs support•
Model 2.1 - Broker Contracts - contracts set up with a paid person or organisation that works to manage the person!s Personal Budget•
Model 2.2 - Individual Service Fund Contracts - contracts set up with a service provider who commits to manage the Personal Budget on their behalf3. Over time it is likely that the nature of the social care market and the current
contractual commitments will need to change to reflect the new choices and decisions made by disabled people and older people. However this does not mean that all
current commitments or forms of contracting are necessarily redundant. Particularly in the early stages of implementation it will be important to consider how the principles of Self-Directed Support can be applied in the context of these commitments.
4. Today local authorities are beginning to make the shift towards Self-Directed Support. There are early lessons are emerging and this paper offers commissioners a proposal as to some of the early priorities.
5. The urgent priority for commissioners will be to ensure that they can offer people a
price for any services that are provided or contracted by the commissioner. Pricing is not the same as costing. Where prices are already set by independent providers (e.g. in spot contracts) commissioners have only to ensure such information is freely available. However where services are provided or commissioned pricing will need to be generated by identifying what price or range of prices will enable the commissioner to cover their costs. Prices can be altered once they are set, but a failure to set prices will put the authorities own commissioned services at greater risk than necessary. 6. The second task will be to identify providers who can be converted over to the use of
Individual Service Funds.
7. Finally commissioners will need to review all their commissioning activity and ensure that it is not an unreasonable form of subsidy or anti-competitive practice.
Introduction
Currently most local authority expenditure on social care is spent through contracts with the private and voluntary sector. CSCI reported that in 20061
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13.3% of residential care and 32.2% of home care was spent under block contracts•
76.3% of residential care and 40.0% of home care was spent under spot contracts•
10% of residential care and 27.9% of home care was provided in-houseThese figures imply that nationally most funding is already individualised - even though it is rarely under the direction of disabled people or appropriate representatives. However at a local level there are significant variations in all these areas.
Under a universal model of Self-Directed Support the primary change is that everyone would have an Personal Budget - this is not just about individualisation it is also about transparency - in other words everyone would know how much money they had available for their support.
Personal Budgets are not the same kind of thing as Direct Payments (although they are highly compatible with Direct Payments). People can choose how to manage their Personal Budget in a wide variety of ways and, in exceptional circumstances, it may still even be appropriate for the local authority to retain control over someone’s Personal Budget.2 in Control’s model of Self-Directed Support builds on and extends the use of contracting within Social Care. But at its heart it involves a new contract between the state and the citizen, one where both have new rights and responsibilities.
1 See CSCI State of Social Care 2006, p. 74
Overview of Contractual Forms
In practice this means that local authorities will need to have a wider range of contracts available to them in order ensure they can offer the right approach for each individual. The full framework of possible contracts is set out in summary here:
Model 1 Contracts - Direct Contracts with Citizens
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Model 1.1 - Individual Contracts - contracts with the individual person who needs support•
Model 1.2 - Representative Contracts - contracts with anappropriate representative who acts on behalf of the individual and in accordance with the principles of Supported Decision-Making.
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Model 1.3 - Trust Contracts - contracts with legally incorporated Trusts that have been set up to act for the person who needs supportModel 2 Contracts - Management Contracts with Intermediate Agencies
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Model 2.1 - Broker Contracts - contracts set up with a paid person or organisation that works to manage the person!s Personal Budget•
Model 2.2 - Individual Service Fund Contracts - contracts set up with a service provider who commits to manage the Personal Budget on their behalfVersions of all these contracts do exist and are in use, although it is still
early days and models may improve. Many models are published on the in Control
website and in Control is working to provide template contacts for all Model 1 and Model 2 contracts.3
None of this means that there will be no role for forms of contracting that have already been developed by local authorities. In particular some authorities already use:
Model 3 Contracts - Contracts for Services (on behalf or individuals or groups)
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Model 3.1 - Spot Contracts - an agreement to purchase a specific service for aspecific individual at a specific price
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Model 3.2 - Block Contracts - an agreement to purchase a specific quantity of a service that can be used by a number of people at a specific price•
Model 3.3 - Cost & Volume Contracts - an agreement to establish a particular relationship between price and the volume of a service (such a relationship can be more or less complex) - the cost of the contract determined by use of the service•
Model 3.4 - Grants - an agreement to fund or co-fund a particular service and where the relationship between cost and any service delivered may be weaker•
Model 3.5 - in-house Service Level Agreements - not strictly a contract, Service Level Agreements allow commissioners to conceptualize their own direct service delivery within the overall framework of contract makingThe Future of Commissioning
in Control has already explore at length the issues that surround he long-term future of commissioning in:
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Commissioners & Providers Together: the Citizen at the Centre•
Strategic Commissioning and Self Directed SupportFor these papers and more go to the in Control website: www.in-control.org.uk
As we are at the beginning of a period of change it would be foolish to imagine that there is any certainty possible about how everything will develop. In particular there are three important, but uncertain dynamics, that will need to be explored in the move towards Self-Directed Support in practice:
Shifting Control to the Person - It is not clear to what extent individuals, family
members or friends or other community members can or will want to take an active role in shaping and driving the use of Personal Budgets. People always want control - but they do not always want full responsibility. However early evidence suggests that Self-Directed Support does encourage many more people to use Model 1 type contracts than in the old system.4
Developing Intelligent Intermediaries - It is not yet clear to what extent a new class of ‘intelligent intermediary’ organisation will add value to the new world of Self-Directed Support. Models of brokerage and genuinely individual service provision are still at a very early stage and inevitably have transaction costs that are absent from Model 1 type arrangements. Nevertheless Model 2 type contracts may empower professional services to actually bring much greater value to their services by reducing the focus on top-down process control and enabling greater innovation and improved efficiency.5 Finding Value in Security - Nor is it clear what role local authorities should properly play in providing greater security to certain segments of the market. Some Model 3 contracts may be necessary simply because the infrastructure to support types 1 and 2 has not yet developed. More positively it may be that in certain circumstances local authorities can genuinely achieve better deals for local citizens by purchasing some services on their behalf - however this also risks compromising the level of control left with individuals or over-committing the local authority to the purchase of unwanted services.
4 Over 50% of people used Model 1 type contracts in Phase One. See Phase One Report. 5 This model will be discussed in greater detail below.
Early Progress
in Control has identified 3 broad strategies for moving the current system of social care onto a new footing. These strategies are:
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Strategy One: Integrating Direct Payments with Personal Budgets - Oldham, Rotherham and Hartlepool have all successfully completed Strategy One.•
Strategy Two: Building Resource Allocation into the Care Management Process - Oldham, West Sussex and Richmond have all started Strategy Two.•
Strategy Three: Converting Existing Contracts to Self-Directed Support - Oldham, West Sussex and Lancashire have all begun Strategy Three.This paper has been produced to explore this third strategy and to set out some of the processes that could be used to accelerate the shift to Self-Directed Support.
Seven Key Principles
Before considering the detail of this process of contractual transformation it is worth remembering the context. Self-DirePersonal Budgetcted Support is important because it better reflects key ethical principles:6
1. Right to Independent Living - If someone has an impairment which means they need help to fulfil their role as a citizen, then they should get the help they need - I can get the support I need to be an independent citizen.
2. Right to a Perosnal Budget - If someone needs on-going paid help as part of their life they should be able to decide how the money that pays for that help is used - I know how much money I can use for my support.
3. Right to Self-Determination - If someone needs help to make decisions then decision-making should be made as close to the person as possible, reflecting the
person’s own interests and preferences - I have the authority, support or representation to make my own decisions.
4. Right to Accessibility - The system of rules within which people have to work must be clear and open in order to maximise the ability of the disabled person to take control of their own support - I can understand the rules and systems and am able to get help easily.
5. Right to Flexible Funding - When someone is using their Personal Budget they should be free to spend their funds in the way that makes best sense to them, without
unnecessary restrictions - I can use my money flexibly and creatively.
6. Accountability Principle - The disabled person and the government both have a responsibility to each other to explain their decisions and to share what they have learnt -
I should tell people how I used my money and anything I’ve learnt.
7. Capacity Principle - Disabled people, their families and their communities must not be assumed to be incapable of managing their own support, learning skills and making a contribution - Give me enough help, but not too much, I’ve got something to contribute too.
Seven Steps of Self-Directed Support
In practice these principles involve a significant innovation in the process of care management and commissioning. The planning and service design process is brought much closer to the individual in a way that also seems to lead to a more personalised and responsive service. The following 7-Step Process has proved an effective way of putting these principles into practice:
1. Instead of being offered one of a limited range of services (or even being offered a menu) people are told their Personal Budget which will have been calculated using the local Resource Allocation System (RAS).
2. Instead of professionals planning services for people it becomes possible for each individual to receive tailored support to develop their own Support Plan, which then takes the place that the Care Plan has within the old system. Some people (although not all) may need help to develop their Support Plan. This help can come from:
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Family & friends•
Community organisations & user-led groups•
Service providers•
Independent professional brokers•
Care managers or social workers3. Care managers stay involved, but their focus shifts to checking whether the proposed plan is safe and whether the person needs a representative to agree their plan on their behalf. Ideally the person should decide how their money is spent, but, if that is not possible, an appropriate Agent should be identified using the principles of Supported Decision-Making.7
4. Instead of being offered the choice between a commissioned service and a Direct Payment people have Six Contactual Options to choose from, depending upon both the degree of control that is right for them:8
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Disabled person controls budget•
Representative controls the budget•
Trust controls the budget•
Broker controls the budget•
Provider controls the budget•
Service commissioned by local authority5. People can spend some or all of their budget on all service types: they can use traditional services and in-house services; they can develop bespoke services for themselves and they can purchase any management, brokerage or coordination support they need from within their budget.
7 See in Control!s Guide to Self-Directed Support Guide Number Three
8 That is, the model contracts set out above. NB If a traditional Model 3 contract is to be used the
commissioner will still need to let people know their rights, including when and how they can terminate the arrangement that has been commissioned on their behalf.
6. In general, the Personal Budget can be spent with absolute flexibility. In most circumstances the person who controls the budget will know best how it should be spent. If there is a specific reason that justifies a particular a specific constraint upon how the Personal Budget is spent then this requires a justification that relates to that particular person and there must be no generalisation to other cases. To do otherwise is to artificially fetter the discretion of the individual and reduce the chances of their getting best value from their budget. The only general constraints should be:
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It should be spent for the benefit of the person! whose budget it is•
It should not be spent on anything illegal nor upon gambling7. The local authority continues to have a responsibility to ensure people are safe, well and as much in control as possible. However their needs to be a shift towards an Outcomes-Focused Review, instead of a focus on auditing.
The diagram below represents the process of Self-Directed Support graphically:
Fundamentally the shift to Self-Directed Support is best understood, not as an alternative to commissioning, but as smart commissioning: decisions about what services to purchase are shifted to the most appropriate point - within an effective and sustainable economic framework.
First Task: Transparent Pricing
In order to achieve Self-Directed Support two processes need to go hand in hand:
1. People need to be given Personal Budgets - this means applying the local RAS - and is the primary responsibility of the care management system. Details of how to
develop and apply a RAS are set out in other documents.9 2. People need to know what they can purchase and at what price
To date progress with Self-Directed Support has hinged on the first process and less work has been done to make existing prices transparent. To date, this has not been problematic, in so far as many people:
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Want to develop bespoke services from existing community resources•
Employ PAs where the price is primarily set by salary rates•
Purchase services from providers who already set explicit pricesHowever, as the pace of change increases, there will be an increasing demand for services where pricing is not transparent. For example:
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Services currently purchased by a spot contract•
Services purchased under block contracts•
Services whose funding is provided by a cost-volume contract•
Existing in-house services•
Subsidised or free community servicesAs with all of Self-Directed Support to date, it is possible to make significant progress without immediate major organisational change. Primarily what will be required of
commissioners is to work with in-house and commissioned providers to agree the price structure of the services on offer. This can be done without terminating existing
contracts.10 Using the RAS
In order to give someone an Personal Budget it is necessary to apply a Resource Allocation System. However sometimes it is possible to use the value of an existing service as a proxy for the application of the RAS (e.g. the price of a Spot Contract could be set as the value of the Personal Budget).11 However, when considering people using existing commissioned services it is possibly better to apply the RAS directly, for a number of reasons:
9 In particular see in Control!s Guide to Self-Directed Support No. 1 and background papers
10 Although, as we go on to discuss below, if the existing contract pattern does not reflect the optimal set of
commissioned services it will become necessary to make contractual changes over time.
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The variety of spot contract values and the differences for people with the same level of need seem significant and worth addressing in the way that the RAS enables in order to achieve a fairer settlement for all.12•
Early evidence from doing this work in practice suggests that, on average, the RAS level will be approximately 20% less than the current spot contract level. [This figure should be treated with caution as we are still in the very early days of workingthrough these systems - however it would be foolish to ignore this fact as this masks a significant level of funding which could be be used for people currently excluded from social care or to prevent people needing higher levels of social care funding in the future.]
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Delaying the application of the RAS will just delay a problem that will need to be faced anyway and may create an unnecessary level of fear or suspicion about the RAS itself.For the remainder of this paper we will treat the setting of Personal Budgets as a clear and distinct process, not one that is dependent upon the contracted or direct service the individual uses. However commissioners may want to identify circumstances where it may be reasonable to simply use current price for the value of Personal Budget. Making Spot Contracts Transparent
Spot contracts are already a form of individualised funding, but one where the funding itself is not transparent to the individual and where the form of the contract is usually process-based (not outcome-based).13 That is, a service that is deemed suitable is purchased and specified on behalf of
the individual and the contract typically dictates how that service is to be delivered. The individual has no direct influence on the contract (although they may have been
consulted) and if they feel the service should change they must ask the local authority to change it for them.
As spot contracts are already individualised and the service defined there is no technical challenge in providing a transparent price for a Spot Contract. So:
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Personal Budget will be set by the RAS•
Individual Prices can be read from the Spot ContractThe primary challenge will be to manage the change process for people who already receive Spot Contracted services. For those who want to keep their current provider (and that may well be everybody) or those who are offered the same or bigger Personal
Budgets than the price of their Spot Contract there will be no technical problems. The likely issues will include:
12 Evidence for this statement is set out within the in Control Discussion Paper: Economics of Self-Directed
Support.
13 Note the important principle: in conditions of uncertainty, if you want to achieve a certain outcome you
must leave the process open to flexibility and (conversely) to make the process rigid is to increase the risk of sub-optimal outcomes.
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Some people will have an Personal Budget which is lower than the value of their Spot Price.•
Some people will want to terminate or reduce their use of the current service provider.It will be important that the local authority and the provider set out clear periods for the termination of contracts and any transitional arrangements for reductions in funding in advance. It is also important that these proposed changes are explained well in advance to those concerned and that people have the chance to challenge, question and explore sensible solutions that meet their own needs.
If someone’s funding should be lower than it is currently then it is often appropriate to taper the difference over an appropriate period of time. A good strategy for dealing with such tapers is to convert the taper into a one-off grant that represents the difference in costs for the period of change. This then enables the person more flexibility in how they achieve any reduction in funding and a strong incentive, if there is no claw-back on the grant, to work within the given amount.
For example, Ann was assessed as being entitled to £60,000 per year, but those around her thought that, over time and with the right support, Ann would only need £20,000 per year. Rather than setting her Personal Budget at £60,000 her budget was set at £20,000 and she was given a one-off grant of £20,000 to help her reduce her support needs over time. Ann achieved this goal and was able to use the small surplus she had created to improve her life.
In addition the Individual may not want the service managed under a Spot Contract (Model 3.1) but may choose to use a different contract and commission the service directly or indirectly (using a Model 1 or Model 2 contract). However this contractual change is not an essential part of Self-Directed Support, for people can still choose to have the local authority commission the service through the Spot Contract - so long as they know their budget and their rights to terminate such an arrangement and use their Personal Budget in a different way, subject to due notice.
Making Block Contracts Transparent
Cost & Volume Contracts and Block Contracts both provide different ways of contracting on behalf of a numbers of people who use a particular service. In practice actual
contracts are often a synthesis of both types of contract. For this exercise the two kinds of contract will be treated separately.
Block contracts are, at their simplest, the purchase of fixed volume of a certain service, for a certain price. For example, we can imagine a block contract of £200,000 for a service for 20 people. Clearly the per capita cost of such a service depends upon the usage of such a service. Graphically the relationship between cost and volume might be represented as follows:
In other words, as the block contract is used up the price necessary for the contract to be balanced would rapidly fall to the point at which the contract was complete. If, for this exercise, we assume the local authority is happy to continue using block contracts of this sort, then the challenge is to identify the correct approach for pricing the contract for people using Personal Budgets.14
Clearly the price offered cannot reflect use. It would be unreasonable to constantly change the price depending upon the usage of the service. Instead, in order to set the price local authorities must determine the impact any particular price will have on demand for that services. Technically this is called the “demand curve” for the particular service. In general demand is negatively correlated against price - that is, people like to pay less. For this example we might find that while only 5 people are prepared to pay £30,000 the demand will grow as the price reduces. The relationship between per capita costs and the demand curve is set out below.
On these projections:
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The contract will make a loss if it is priced above £20,000•
The contract will cover its costs if it is price at £20,000 (break-even price)•
The contract will make a profit if it is priced above £10,000 - but lower than £20,000 Block Contract 0 10,000 20,000 30,000 40,0005 places 10 places 15 places 20 places
Block Contract Demand Curve
0 10,000 20,000 30,000 40,000
5 places 10 places 15 places 20 places
14 We will consider some of the factors that may or may not lead local authorities to try and alter the nature of
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The maximum profit will occur if the price is set at £14,000 (maximum profit-price)This is of course a simplified and crude example. But it sets out the challenge for commissioners and in-house providers clearly:
Commissioners must identify the range of prices that are high enough to meet the total cost of the contract and low enough not to reduce demand too much.
If any block contract does represent a value for money intervention into the market place then there will be such range of prices.15 This model of market intervention puts the local authority in the role of a ‘wholesaler’ - buying large volumes at lower prices to sell on to others.16
Making Cost & Volume Contracts Transparent
Cost & Volume (C&V) contracts, in their pure form, are not agreements to purchase
services. Instead they are agreements that define the relationship between price paid and volume of service used. In general they enable the customer to share in the benefit from the reduction in average costs that occurs when enterprises operate at greater volumes.17 The primary decision for local authorities to consider with respect to cost & volume contracts is whether they are acting as an agent of the service provider - i.e. selling on those services at a price calculated to ensure joint profitability. For example, if the commissioner agrees a Cost & Volume contract with a provider it must then define the local price at which the local authority sells on the service. On the figure below the local authority can afford to sell on the price if it is between £10,000 and £20,000.
Cost & Volume Contract Demand Curve
0 10,000 20,000 30,000 40,000
5 places 10 places 15 places 20 places
15 Conversely, if there is no such range of prices the block contract is not adding any value and the local
authority should not be investing in it.
16 Note that if wholesaling makes sense in this market it will make sense for others, not just local authorities
to intervene in this way. A more sophisticated version of this approach might be available through
technologies such as Shop 4 Support, where the "market manager! identifies economies which it can bring to market in lower prices for customers but which does not require wholesaling or agency.
17 It should be noted that while this relationship is unarguable for manufacturing industries, which involve
significant capital investment, it is more tenuous in human services where larger organisations can incur greater average costs as part of a "bureaucratic burden!.
Note that if a local authority is acting as an agent, within a C&V contract - then it has every incentive to maximise the volume of services sold.18 In particular it may be worth considering whether local authorities can and should also intervene in the market on behalf of citizens who are ‘self-funders’. In principle, market interventions by
commissioners are justified by the lower prices they may be able to realise. But there seems no reason to limit the benefit of these lower prices to publicly funded individuals. Moreover, including self-funders within a C&V framework will actually increase volume and therefore will reduce price for everyone.19
Finally it is worth noting that if the contract involves a combination of Block and C&V elements then the combined consequences of both models will follow:
1. The commissioner needs to identify the range of prices at which the contract will break-even or make a profit
2. The local price needs to be set and shared with people who have Personal Budgets, with appropriate administrative processes in place
3. The commissioner will then have a strong incentive to market all the pre-purchased services (wholesale role)
4. Furthermore, the commissioner will also have a strong incentive to market services beyond the level that were pre-purchased in order to maximise profit (agent role). Having said all of this, some local authorities are beginning to step back from such market interventions, as the potential benefits seems low and the risks greater. This will be a key issue to monitor as Self-Directed Support develops.
Making in-house services transparent
The same challenge lies ahead for in-house services as for contracted services - to set a reasonable price within the current market.
For in-house services the commissioner is the supplier and the supply and demand curves will set the context for decision-making. However the further, critical question, will be what level of subsidy (if any) should be applied to in-house services. Or, to put the question as it will more naturally arise, what level of infrastructure support should be excluded from calculations of cost.
The extra challenge for house services is to apply a cost-centre methodology to in-house services and to shift to a situation where costs are balanced against income and income is made up of IB contributions. The internal challenges in terms of management accountancy are considerable and commissioners would be wise to ensure Finance Directors are key allies in bring about the necessary infrastructure for Self-Directed Support.
18 Again this raises interesting questions as to the role of the local authority. If the authority is going to act as
an agent for certain providers, with an incentive to promote their services, this may not seem fair to other providers. Nor may it be consistent with rules on anti-competitive procedures.
19 Note that the Cost & Volume Contract, at its purest, is simply a transparent version of the Supply Curve. It
is unclear whether if the local authority is not acting as the provider!s Agent the C&V contract has any value as their should be a willingness to supply by providers anyway.
This time we will not examine the price setting in relation to the demand curve, as the same basic principles apply as in the cases above. Instead we will examine the dynamics of this process of price-setting:
1. It will be necessary for in-house services to set prices, if they do not they will not be able to attract business.
2. If the price is set higher there will be lower demand; if the price is set too high then the reduced volume will not bring enough income to cover the costs of the service.
3. If the price is set lower there will be greater demand; however if the price is set too low the price will not bring in enough income to cover the costs of the service.
4. However if in-house provision is an economic and sensible form of provision there will be a range of prices that do bring in sufficient income to cover costs or to make a profit.
Summary
In order that the local authority’s own services and contracts can be offered to people with Personal Budgets then prices needs to be set and communicated.
If prices are not set then these services will not be available. So far, this does not seem to have stopped people using the budgets and getting better outcomes. However there is significant risk if this failure to price continues for too long:
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Some people will find they can!t buy services they value, but which exist within a different economic framework•
Service providers within the old social care framework will, quite unnecessarily, see Self-Directed Support as a threat to their jobs.•
Commissioner won!t be able to "sell! the services that have been pre-purchased or which they are committed to providing or selling - this will create an economic risk.However, if prices are set then the very process of making the prices transparent will enable the commissioner to learn what price ranges are economical and which are not. There is no need for any price to be fixed rigidly. Prices should be set, as a matter of urgency. The price levels can change if they are not working - but if no prices are set there will be no feedback loop to help commissioners find the right price. The accountancy challenges that lie ahead must be tackled; but commissioners must not wait until the accountancy systems are in place before resolving the question of pricing.
Second Task: Developing Individual Service Funds
The primary task of providing a transparent framework of prices for services that are commissioned or provided is essential to Self-Directed Support - or at least essential to enabling people to be use any services that are essentially constrained by the old social care funding framework.The secondary task is to work with some or all service providers to explore whether they might change existing contractual arrangements with providers and shift towards the use of the Individual Service Fund Model - the Model 2.2 Contract.
Individual Service Model is set out in detail at www.in-control.org.uk in:
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Dreaming for Real•
What are we learning about Individual Service Funds?In essence the model is a change in the nature of the contractual framework that can be applied where any service provider already manages all or a significant portion of the funding for an individual. It involves a significant change in the defined role of the service provider:
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The provider is no longer commissioned to provide a defined set of services•
Instead the provider is commissioned to manage the person!s Personal Budget within an Individual Service FundThis change is not just semantic, it means that the service provider is empowered to work with the individual and their representatives to get best value from the budget and to achieve the best possible outcomes for the person. It provides a framework that:
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Encourages innovation and creativity in service design•
Focuses on outcomes, not process•
Makes best use of professional skills•
Enables meaningful family and community involvement in support arrangementsIn practice this means changing the nature of the contract between the local authority. The new Model 2.2 contract does not need to be complex:
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The service provider is responsible for supporting the individual to live the life they want to live, within the constraints of the law.•
The service provider has a duty of care to the individual and to the wider community.•
The money that the service provider receives is “restricted” - which means it can only be spent on things that will benefit person.•
The only exception are any management or other fees - but these must be set out in advance and agreed with the local authority.The diagram below provides a graphical representation of the the Individual Service Fund idea.
The possibility of shifting existing contracts over to Individual Service Funds opens up the possibility of another possible transformation for commissioners. Commissioners could work directly with local authorities to completely transform current service provision over to a series of Model 2.2 contracts. Individuals may of course choose to select other contract in the short or long-term, but a rapid switch to ISFs would have several advantages:
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Self-Directed Support would be established and used across a wide range of services by a much larger group of people.•
Service providers would be able to play a more positive role in the process of change and identify how their role will change, while also being able to see that they have a role.The following case study from Lancashire shows how powerful such a strategy can be. Service Providers embracing Self-Directed Support20
Lancashire County Council has pioneered one of the most important dimensions of Self-Directed Support for the last two years: converting service providers to the use of
Individual Service Funds. They have found that many service providers are keen to take advantage of an approach which lets them to offer more flexible and person-centred services that focus on the things people really want.
Castle Supported Living are a small service provider, originally developed by families, looking to provide person-centred supports for their sons and daughters in the Ribble Valley, Lancashire. The organisation was committed to doing the best for people it served, but was finding it difficult to balance the increasingly complex funding arrangements and
escalating expectations of families and care managers. The complex web of funding was causing the organization great difficulty and even beginning to impact on its viability. What was needed was a fresh approach that would enable Castle to do what it does best: focus on supporting people to get a great life.
In the summer of 2006 Kim Haworth, the local integrated commissioner manager (East Lancashire) and Clare Sherliker, the manager of Castle Supported Living, began the work of implementing Self-Directed Support. Firstly people supported by Clare and the team completed self rating questionnaire (SRQ) - the Resource Allocation System (RAS) As Lancashire was still testing its RAS they double-checked their results with care management assessments. Interestingly this process demonstrated that the RAS was largely reliable. Of the 12 SRQ there were 10 where there was agreement, of the
remaining 2 there were further factors that were not covered by the RAS that led to further discussion and agreement on the level of need.
Following this approach allowed Lancashire to set an Personal Budget for all 12 people. Interestingly the aggregate cost of all 12 services was actually somewhat lower level than the previous cost. The overall reduction in cost to the pooled fund was 23%. It also allowed Lancashire to clarify how much Supporting People funding should be used for each individual and to properly integrate Supporting People into the allocation.
Each person’s money is now treated as a ‘restricted fund’ so Castle must account for it individually and must use it to benefit the individual and any shared use of support must be part of an agreed plan. Castle charges each person a 10% management fee, but beyond that it does not take out any further money from the person’s fund. It is also now agreed that Castle can sub-contract with other preferred providers services if they are better able to provide specific aspects of a person’s support.
This process did highlight that some people were being over-supported and were therefore not reaching their real potential; but for people in that situation it was also possible to agree non-recurring funding that enabled Castle to taper down support over time in a planned and managed way.
Once the indicative allocations had been agreed Clare and the team alongside the
individuals and where possible their circles of support developed support plans within the Personal Budget. Each support plan reflected what was important to and for the
individual, how support would be delivered and described the outcomes that showed success as defined and measured by the individual themselves.
Gone were the old constraints of a commissioning system that focused on hours of support costed at different hourly rates; instead Castle were able to work with the person and their family to identify the best possible use of the money. Examples include Stephen who no longer uses paid support to go to his weekly drama class but is able to use part of his funds to pay for a taxi and experience the class without worrying about having his style cramped! Hazel uses her funds to balance the support she needs to stay healthy with pursuit of her first love – dancing. Robert uses some of his funds to pay for a gym membership for someone to support him to attend the gym twice a week – something he would previously not have been able to consider. Debbie with support is looking into the use of assistive technology to enable her to sleep safely at night without the need for paid staff to sleep in her home. There is a real sense of control, flexibility and innovation
Not only has this process been good for the people that Castle serve but it has also benefited the organization. Today Castle is actually able to better manage its finances: complex cross-subsidies, random changes in funding and multiple sources of funding have been removed or simplified. The financial future for Castle looks encouraging and they hope to develop their business in line with the learning they have made around Personal Budgets.
Importantly this process has also helped to manage its relationship with the care
management system more effectively. All those involved understand the role Castle play in supporting people, expectations are agreed and the process is far more transparent. Unreasonable expectations - that can feed bad feeling - have been eliminated. Lancashire knows that each person is getting a fair level of funding and Castle knows that its job is to help the person get the best value from that funding.
This success also took time, energy and good leadership. In particular the following factors were important:
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Kim and Clare worked with the Board of Directors, taking time to explain the advantages of Self-Directed Support and how the process would work and how it fitted in with the ethos of the organisation.•
Many of the families were already connected to networks of other families and were beginning to hear more about how lives were improving.•
Lancashire had been working on Self-Directed Support for three years, had joined in Control and work particularly in East Lancashire had already begun working with providers to explore how to use Individual Service Funds in order to be prepared for this aspect of work•
Lancashire had also been working on promoting person centred approaches across service providers for several years with organisations such as Paradigm and Helen Sanderson Associates in order to drive up quality.•
Castle was set up on the foundations of person centred approaches and was therefore very receptive to this process.•
Lancashire was prepared to challenge and support its own care managers, helping them to see the advantages of working in respectful partnership with serviceproviders.
There are also challenges for the future. Lancashire is now committed to the roll out of Self-Directed Support, but this means that not only must it change how it contracts for services it must also change its in-house services. Work has already begun to support the internal Supported Living service to develop the pricing and accounts structure that will enable it to work like Castle.
The work undertook sought to rebalance the power relationship evident in the delivery of services to people. The prevailing culture has not always been one of mutual respect and this probably reflects insecurities on both sides. The essence of in Control is to put the individual in the centre and this piece of work clearly reflects that this has happened. There are still many challenges ahead for Castle:
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Castle are beginning to develop individual contracts with each person clearly defining how the budget is and can be used.•
Within this Castle are supporting people to take more control over their life plans and manage the risks they face.•
People say they want assistive technology to buy from their budgets.•
Castle want to develop more effective ways of monitoring spending on budgets – training for team managers and tenants.•
Finding more natural supports and real community connections.•
People from Castle want to tell people about what they have learned.•
Looking into measuring success and options for people to be their own brokers•
Clare needs a bigger calculator!Meanwhile Kim and Lancashire will:
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Continue the work with more providers in reprofiling to enable people to have Personal Budgets.•
Continue the work with in house services (PCT and LCC) to deconstruct the block contracts in order to offer Personal Budgets to people.•
Continue working and supporting providers to ensure that they are fit for purpose (SDS)•
To balance the budget!•
To enable people to lead happy livesSummary
The Lancashire experience, and other positive uses of Individual Service Funds, suggests that service providers might play a much more positive and dynamic role in the
introduction of Self-Directed Support. In fact some service providers are identifying strategies for introducing Self-Directed Support themselves.21 Commissioners should welcome and encourage such initiatives.
21 For example Choice Support and Dimensions have both made a public commitment to shift towards the
Third Task
The challenge of setting prices for pre-purchased or provided services has already raised a complex problem for which no simple or certain answer can be provided:
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Is it sensible and appropriate for commissioners to intervene in markets to subsidize or pre-purchase particular services?•
If it is, how and why should commissioners subsidize particular services?The role of subsidies
In the long-term, if there are significant numbers of IB users and self-funders purchasing services - or organising support in other non-traditional ways - these questions will become sharper. For any service that does not receive a subsidy will demand that the rationale for such subsidies is explained.
Some of the explanations that are offered for justifying the such subsidies are:
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Certain kinds of congregate provision require subsidies because they won!t survive if people have choice about the services they use - this seems a weak argument, particularly given that the rationale for such services is their supposed "efficiency.!•
Certain kinds of community support, advocacy or user-support services are neededfor people who either won!t be entitled to Personal Budgets or who haven!t yet got control of their Personal Budget - this must be an important consideration, the infrastructure for Self-Directed Support may require some support, particularly if it seems necessary to ensure that some of that infrastructure is "independent! of the service provision system.
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Certain kinds of specialised services require subsidies in order to survive - this may be true, particularly if innovative or specialised services are at an early stage of development. It may be important to the local authority to lend or subsidize such services. But any such argument must be well evidenced. If a need is so "different!that it requires a more expensive form of support then it is the role of the RAS to reflect this fact and any long-term support for otherwise unsustainable is effectively being subsidized to the cost of other disabled people and other services whose own competitiveness will be blunted.
