Comment

Structure options for the ownership of Commissioning Support Units

Michael Boyd, partner and head of the healthcare group at business law firm DWF, examines CSU ownership.

The recent suggestion that NHS England could allow CCGs to take ownership of the Commissioning Support Units (CSUs) that provide them with support services has prompted two categories of response.

Those in the public sector, who believe the NHS is a vital public service that should be publicly owned, have welcomed the idea. But people from the private sector maintain that only investor-owned businesses focused on profit can deliver real efficiency and value for money.

Savings versus quality

Change in the NHS is being driven by the same forces at play elsewhere in the public sector. As it stands, the NHS is too expensive – but improving cost effectiveness has proved difficult, as saving money can never be the only consideration. Preserving quality in the NHS is key because of patient safety, and this introduces an additional dimension into the debate about optimum structures.

A big part of the solution to the savings versus quality dilemma was the introduction of competition tension within the healthcare economy, where both public and private sectors have a role to play. This is nothing new in the public sector – local authorities, for example, used compulsory competitive tendering and ‘best value’ to approach the value for money offered by the private sector. Typically, contracts were granted to the private sector, staff transferred across under TUPE, and better value was achieved. Alternatively, where a private sector transfer was unacceptable, a semi-public organisation was set up to make changes and come out with value for money somewhere in the middle.

The nature of ownership

Either as a stepping stone to an independent enterprise or in an attempt to establish a more commercial ethos, selected services were placed in a company wholly owned by the council. Some of these companies have been successful but others have failed spectacularly, particularly where the relationship between the company and the council was not carefully balanced and where there were no personnel changes to reflect the new commercial outlook. The company’s establishment just created more bureaucracy and less clarity on cost.

This shows that although the nature of ownership is important, choosing an appropriate legal model is not a solution in itself. Autonomy – the intended outcome of the restructuring of CSUs – is useful if it leads to better or cheaper service, but the real question is not which structure will make CSUs more autonomous, but which structure will make them more effective and successful.

Private ownership by investors or employees, where money operates as the main incentive, may be a good model. There is nothing disreputable about this if the position is clear from the outset. If significant capital or investment is required, private ownership is by some distance the easiest structure to adopt.

Many of the enterprises set up recently have wanted to maintain a public service ethos and have adopted a legal structure with a commitment to community benefit, rather than a profit-driven one. Ownership has often ended up, with support through the ‘right to request’ initiative or the Cabinet Office Mutual Support Programme, in the hands of employees.

In the best examples, this creates a sense of engagement and responsibility, and shared accountability for delivering the enterprise’s aims. But it is not a model that lends itself to large-scale enterprises, and there may be an inadvertent tendency for strategy to reflect the interests and beliefs of staff, not customers.Enterprises like these, not driven solely by profit, must have other ways of focusing people’s efforts and holding them to account for their performance.

Foundation Trust programme

The biggest move away from state ownership in recent years in the NHS has been the Foundation Trust programme. If hospitals were not to be owned by the state, then it seemed that their natural home was their local communities, with membership drawn from patients, staff and local people in a structure based on mutual principles. This meant building, through mutual ownership, an accountability to service users. This has not been universally successful but there are good examples, within the FT sector and elsewhere in public services, where enterprises have been structured to make the voice of service users effective in improving services. Success depends on an ownership structure that drives performance.

Applying this logic to CSUs, there is no obvious reason why private ownership could not work, but this would present CCGs (which would be in the position of contract counterparty as opposed to owner) with the challenge of effective contract management, an area where the public sector has not always excelled. If a structure other than private ownership is proposed, the proposal must explain how the structure will drive performance.

Taking ownership

It is hard to see how autonomy alone would have any direct and significant effect on performance. Employee ownership – either on a commercial basis or with a commitment to community benefit – could work, subject to the reservations already expressed. Another model is service user ownership – the challenge would be to harness the interest of a group of service users (most obviously CCGs) in a structure in which they influenced the direction and performance of the CSU and also to consider ways of linking direction and performance to the interests of users not of commissioning services but the services commissioned.

Whichever approach is taken to a particular CSU, there are potential advantages in a diverse market of providers if a market is to be created.

However, clarity about how ownership will support effective service delivery is a key requirement, which needs to be carefully considered and articulated.