Archive for March, 2012


Clinical Commissioning Groups (CCGs) must find ways of developing ‘buyer power’ over Comissioning Support Services (CSS’s).  The seminal article on buyer and supplier power was written by Andrew Cox in the Journal of Supply Chain Management in Spring 2001, ‘Understanding Buyer and Supplier Power: A framework for procurement and supply chain competence’ (37, 2).  Every CCG leader must read this article!  He contests that the traditional model of organisations confirming their core competencies and concentrating on these; outsourcing to others competencies that are core to another firm (suppliers); concentrating resources on a limited number of suppliers; and improving supplier and supply chain performance through proactive supplier development activities is fundamentally flawed.  This is because all buyer and supplier relationships operate in an environment of relative buyer and supplier power.  Success in the traditional model is predicated on buyers’ dominance over their supply chain partners.

We see this at play in the supermarket industry.  Buyers such as Tesco are able to exert great leverage over their suppliers  because they have multiple suppliers for each product, because switching between suppliers is easy, and because they can determine the terms of business upon thier suppliers.  Supplier power exists in other industries such as the oil industry where suppliers work together, set prices collectively, and ensure they get the best deal from their buyers.

In 1776 Adam Smith in, ‘The Wealth of Nations’ argued that the best defence of a buyer’s interest was to ensure suppliers are forced to operate in highly contest markets, with perfect information for the buyer about the suppliers’ respective offerings.  Supplier power comes about when the number of suppliers is limited, or when there are ‘opaque supply markets’, where the buyer lacks the information or resources to leverage benefit over the selected supplier.

What does this mean for CCGs? Where will the power lie in relationship with CSS’s?  As it stands things do not look good.  There will be 20-30 CSS’s and 220-240 CCGs.  The CSS’s will all be hosted by the NHSCB, and therefore have the ability to share information effectively with each other.  CCGs will have no obvious mechanism of sharing information, or understanding the relative benefits of the variuos offerings of different CSS’s.

CCGs need to act now to ensure that the model that prevails is not one of supplier power.  There are 4 actions that all CCGs should be taking now:

1. Increase the number of suppliers.  Each CCG should work to ensure they have a number of different suppliers, and not limit supply to only the NHSCB hosted CSS’s.

2. Network and share experiences of CSS’s.  Buyer power will come to CCGs where they act as a collective not as 240 individual organisations.  CCGs are not in competition with each other.  Collaborative working between CCGs is critical to success.  CCGs need to find an online mechanism of sharing experiences of CSS’s with each other, that is rapid and leads to collective action.

3. Develop the ability to switch suppliers.  One of the key facets of buyer power is the ability to switch between suppliers.  Where a service is not good enough CCGs must switch suppliers and develop competence in switching suppliers.  If CCGs are stuck with a local monopoly CSS, then the suppliers will control the market.

4. Keep the build/buy decisions under review.  Cox argues that it may be necessary for organsiations to develop in-house competencies that it continually improves as a preferable situation to operating in an environment of supplier power, where there is no incentive for the suppliers to improve.  There may be functions that are not the core competence of CCGs today that may need to be developed in future.

For what it is worth, this website is committed to making Clinical Commissioning Groups successful.  We will do whatever we can to provide information about CSS’s and provide reviews and reports on them as they develop.  These next few months are critical in developing this new market, and we will be encouraging and supporting CCGs to work together and doing whatever we can to ensure that it is CCG power and not CSS power that drives commissioning in the new world.

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According to the Health Services Journal, 60% of CCGs are planning to have a manager as Accountable Officer, with a GP as Chair.  While the logic of this appears sound (managers have the expertise to take on the responsibilities of Accountable Officer, and having a GP as Chair can ensure the organisation remains clinically led), it creates a whole set of potential pitfalls for those taking on the GP Chair role.  Below are listed the top 5 to watch out for:

1. The GP Chair becomes distant from the member GPs/practices.  Front line GPs view the GP Chair as one of ‘them’ rather than one of ‘us’.  The key role of the GP Chair is to be the representative of the members and their wishes, ensuring these are driving the organisation.  GP Chairs need not only to be doing this, but to be seen to be doing this.  A significant amount of time needs to be invested by the GP Chair in being visible and listening to member practices.

2. The GP Chair and Accountable Officer roles are not clearly defined.  Without this clarity there are two ways this can go wrong.  The GP Chair may let the Accountable Officer make all the decisions about the operation of the organisation, and it will end up functioning no differently from a PCT.  Alternatively the GP Chair acts as the CEO and consistently undermines the Accountable Officer.  Kakabadse et al, in their article, ‘Chairman and CEO: that sacred and secret relationship’ (Journal of Management Developmnet vol. 25, no. 2, 2006 pp 134-150), where they interviewed a whole range of Chairs and CEOs, conclude that, ‘effective governance application is dependent on the Chair and CEO nurturing a supportive and transparent relationship and manner of interaction’ p148.

3. The GP Chair gets sucked into the operational detail.  It can be easy for GP Chairs who have been given two, three or even four days a week for the role to default to using this time to support the development of new clinical pathways, or the operational detail of the organisation.  This is not the job of the GP Chair.  They must spend this time ensuring there is a clear vision and strategy for the organisation, and that this is consistently and effectively communicated both to the members and to partners across the health economy.

4. The GP Chair develops poor or adversarial relationships with other Board members.  The Chair has to have a strong personal relationship with all of the Board members, in order to be able to discharge their role of creating Board cohesion and achieving consensus on issues under consideration that keeps all Board members intact.  If there are locality chairs on the Board, each with their own set of vested interests, this is going to be a significant challenge that GP Chairs need to be actively managing from day one.

5. Health economy CEOs do not know who to contact.  Clarity as to who is ‘in charge’ of the organisation from a stakeholder perspective is critical.  The GP Chair and the Accountable Officer need to work together to give clear messages to health and social care economy partners as to who should be contacted when.

The role of GP Chair in a member organisation that is a statutory body is a new one, and its complexity should not be underestimated.  The literature on Chair/CEO relationships, while relatively light, is helpful, but there is a unique quality to the GP Chair/Accountable Officer relationship in a CCG that requires the two individuals to work together both as leaders of the organisation, and in clarifying, developing and providing support for their respective roles.

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There are, broadly speaking, two scenarios that CCGs can play out in relation to contracting.  The first is where GPs take the stance they are good negotiators (after all, they did negotiate the GP contract) and decide it is time to ‘get tough’ with the acutes.  Practices apply pressure on the contracting teams to ensure that they stop being ‘ripped off’ by the acute trusts, something they all know has been going on for years.  They use their inside knowledge of what goes on at the hospital and use practice generated patient level data to drive payments down, and to turn the screw on their (already cash-strapped) local hospital.

The hospitals fight back.  They decide to take the contracting novices to the cleaners wherever possible.  They bring back issues that had been set aside years ago by the PCT.  They draw consultants into the contracting process, and dismiss the outlandish demand management claims as pure fantasy.  In the meantime they continue to actively pursue growth strategies to survive.

Contracts are generally settled by arbitration.  General bad feeling turns into a deep rift between the GPs and the consultants.  Initiatives to improve care are undermined by the ‘other side’, and none deliver what is needed.  As a result all organisations (CCGs and acute trusts) start to fail.

The second scenario is one where clinicians and organisational leaders from across the health economy commit to working together.  They develop a shared vision of the future, and agree a broad direction of travel.  These leaders follow through, and set their individual organisational paths along this route.

GPs, consultants and health and social care professionals from all disciplines work together to develop and implement changes to deliver the vision.  These changes are based on clinician to clinician conversations, and organisations share risks and rewards.  For each change a clear set of agreements is developed as to what needs to be done by whom.

In this scenario contracting is simply the end of this process.  It is the mechanism by which agreements already made are codified.  It becomes the technical end game, not the star attraction.  The contracts are agreed as part of the ongoing joint work to deliver sustainable health economies serving the needs of local populations.  Organisations change and adapt, but by working with each other, none fail.

The opportunity that the introduction of CCGs presents is the second scenario.  The risk that needs to be avoided at all costs is the first.  CCGs must focus on relationships first and contracting second.  Contracting must be an outcome of relationships, not define them.

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There is alot of noise in the press at the minute about Commissioning Support Services (CSS’s).  The NAPC/NHS Alliance have carried out a poll (that received a massive 95 responses!) whereby 80% said they were dissatisfied with the progress being made by CSS’s.  This is hardly surprising as they are brand new organisations, none of which have been properly formed, and the majority of which are still working out what size they should be.

The other message coming out from Roy Lilley and Charles Alessi (and others) is that CCGs will somehow end up working for CSS’s.  This is a very odd concept, and does seem to miss the point that CCGs will be the statutory bodies and that CSS’s will be the customers of CCGs.  That said, small CCGs that have to ‘buy’ the majority of their services from a monopoly CSS do have little option at present but to commission the way the CSS wants to commission (if the CSS won’t listen to them).  Of course this presents a peculiar conundrum: the majority of GPs are anti-competition in the NHS, but it is lack of competition in the CSS market (and therefore lack of ability of a CCG to move to a more customer focussed CSS) that makes the required customer focus less important to CSS’s.

So how should CCGs be managing commissioning support today?  I would suggest there are a number of ways:

Find a mechanism to exert buyer power.  The most obvious route for larger CCGs to do this is to deliver services in house, and threaten to increase the amount of in-house provision should service delivery by the CSS not improve.  Smaller CCGs should collaborate with larger CCGs and use the option of sharing in house provision with a larger CCG as a viable alternative to using the CSS.

Do not allow a monopoly CSS provider situation to develop.  Identify at least one service that you will actively procure from a different provider.  This could be something relatively small, but will send an important message to your main CSS that you are actively seeking alternative providers of higher quality.

Get CSS ‘skin in the game’.  One of the emerging issues is that CSS’s are not motivated by the same issues as CCGs.  For example CSS’s providing contracting support to a CCG have no real incentive to ensure that contracts are signed by the SHA Cluster deadline.  Where previously internal PCT performance was the ultimate marker of success for these services, now it is how much business the service can attract.  CCGs need to find ways of heading this issue off, and the main way is to find a way of making the success or otherwise of, for example, the contract negotiation as much a concern for the CSS as it is for the CCG.  This is likely to be based on the way that CCGs contract with CSS’s (for example payments are reduced to the CSS based on a sliding scale on the amount over a pre-agreed target contract value).

Decide the nature of the relationship you want with the CSS before you contract with them.  There is a temptation for CCGs to create very detailed SLA’s with CSS’s so that they can hold them effectively to account.  The issue with this is that the relationship can deteriorate into arguments about what is or is not in the SLA.  Ultimately the CCG will need the CSS to be flexible as requirements change in year.  At the same time CCGs will want to create an accountable relationship, with some contractual levers to fall back on.  It is important that CCGs establish a dialogue with their CSS and agree how they want the relationship to work, and then to ensure the contract with the CSS is developed to reflect this.

Recognise the point that CSS’s are at in their organisational development.  My sense is that it is too early to be writing any emergent CSS off.  CCGs will perform much more effectively if they are working with a highly effective CSS.  As such CCGs need to be directly involved in, supporting and directing the development of their potential CSS’s.  It is much easier to be shaping something into the way that you want it before it is fully formed rather than waiting until it is and trying to change it.  If there are only going to be 20 national providers there is not going to be much choice, and so supporting the 20 to be effective has to be a CCG priority.

All of this depends on a real understanding of the co-dependence that exists between CCGs and CSS’s.  Most leaders of both of these organisations pay lip service to this, but at present it is surprisingly rare for this to be being translated into joint work to shape the development of CSS’s.  If the system is going to maximise the potential that CSS’s undoubtedly bring, it is this that urgently needs to change.

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Many GPs have natural antibodies towards non-executive directors, often largely driven by a desire for control and a lack of understanding of the potential value they can add.  However, for CCGs to be effective getting the non-executive component of the Governing Body right is going to be critical.  In an earlier post ( ) we highlighted the need for effective challenge on these boards.

CCGs have been given a relatively free hand (so far) in the set up of their Governing Bodies, but this freedom is creating as much confusion as it is opportunity.  The draft guidance on clinical commissioning group governing body members: role outlines, attributes and skills (which can be found via the NHS Networks website ) is important because it outlines the competencies that will be required of all CCG Governing Body members.  Below are 5 ‘top tips’ for appointing to CCG Governing Body non-executive roles.

1.       Treat the secondary care specialist and registered nurse clinical members of the Governing Body as non-executive roles

There is a strong temptation to fill an executive director post with a nurse to satisfy the requirement for a registered nurse.  There is also a temptation to treat the secondary care specialist post as one that can augment the GP knowledge and improve redesign ideas.  An effective Board needs effective challenge.  The number of GPs on the Board make the potential for GP ‘group think’ high.  A key role of these clinicians needs to be challenging any signs of this group think from a clinical perspective.  If you are the person setting up the Board you need to make sure that the Board will ensure the organisation meets its statutory obligations.  Two non executives will not be enough to provide the support for the Accountable Officer in bringing robust challenge where it is required to the GPs, particularly on clinical and primary care issues. 

2.       Treat the 4 non-executive posts (the two lay members, secondary care specialist and nurse) as a collective

The governance requirements of CCGs will need these 4 non-executives working together to support the sub-committees and ensuring that there is strong internal governance within the organisation.  Audit committees, finance committees, remuneration committees, quality committees (and there will be more) need to be led and supported by strong non-executive directors.  The individuals should be able to work well together and respect each other’s views.  Sometimes they will need to speak with one voice.  The CCG organisational development plan needs to include how these 4 will be developed together.

3.       Ensure those in post meet the requirements of authorisation

Many CCGs have moved quickly to putting individuals into these 4 positions.  One of the tests at authorisation will be on both the skills and competencies of all of the Governing Body members, and on the mechanism by which they were appointed.  If you have people that it is now apparent are not fit for purpose better to have that conversation now rather than leave it until later.  In particular, some of the patient representatives currently on CCG Boards do not meet the minimum requirements laid out in the guidance.  Some CCGs have also moved straight to the appointment of a practice nurse for the registered nurse post.  While there may be circumstances where this is appropriate, it is far more likely that an experienced nurse leader with acute experience is going to be needed if they are going to be able to provide a different perspective and challenge GPs effectively.

4.       Be creative in how you appoint to these posts

There is an obvious pool for the two lay member positions in the existing non-executive directors of commissioning organisations that will no longer exist post March 2013.  However, recruiting secondary care specialists and registered nurses with no conflicts of interest is much less straightforward.  The complaint of many CCG leaders is why clinicians with no conflict of interest will have any interest at all in these posts.  There is significant merit in this point.  Recruiting cold through adverts is unlikely to return the calibre of person needed for CCG boards.  Some of the more forward thinking CCGs are working together to identify potential board members from their own clinical community, and creating reciprocal agreements to find these clinicians for each other.

5.       Take your time

Finally, with all the uncertainty around the bill and the likelihood of changes (tightening) to CCG governance, the rules are likely to change from the guidance as it exists today.  If you have gaps in these positions, unless you have very strong, available candidates for them, it would be wise to wait for a few months to see how the dust settles before appointing.  Whilst you do need to be developing your Governing Body so that it can effective as a unit in time for authorisation, there is definitely room for a couple of months purposeful waiting to see what changes emerge before progressing.

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