The Charity Insight Essay: beating Goliath

Unless you have been living on the moon for the past year, it has been impossible to miss the media storm that has been taking place over reforms to the National Health Service. Since the publication of the government's white paper Equity and Excellence: Liberating the NHS in July 2010, and the follow-up command paper Liberating the NHS: Legislative Framework and Next Steps in December 2010, there has been much debate and discussion about what impact the proposed changes are likely to have on our health system and its ability to care for the sick and injured. This has included criticism from groups representing the health service, such as the Royal College of General Practitioners and the British Medical Association, which have said that the suggested reforms would cause major upheaval in the NHS. Even a 22-year-old binman from Loughborough got involved.

^{Source: Sean McCallion/back up}

When a rap by MC NxtGen (aka Sean Donnelly) on Andrew Lansley's plans went viral on YouTube in March this year, the Secretary of State himself was forced to comment. A few days later, in early April, the minister announced the government would take advantage of a natural "pause" in legislative procedure to allow time for further consultation on the proposals.

Then, in June, came the pronouncement that major changes to the reforms would be made in response to recommendations made by the NHS Future Forum, a team of experts brought together specifically to review the proposals. These are currently being assessed (further) by the Health and Social Care Bill Committee at the House of Commons, ready for the bill's report stage, which is scheduled for 6 September.

One of the central points made by the NHS Future Forum was that the "wealth of talent and untapped resource in our country's third sector" should be acknowledged, given the sector's knowledge about local needs and the roles that many charities and voluntary groups already fulfil as health service providers. It is believed there is considerable additional potential for the sector to help the NHS deliver better, more efficient care in a reformed health system. In a similar vein, the ambitions for a Big Society, localism, and the white paper Open Public Services, published in July, consolidate the government's vision for opening up publicservices and developing society from the "bottom up". Arguably, this offers many exciting opportunities for the voluntary and community sector (VCS).

There are, however, several obstacles that could prevent both the NHS and the voluntary sector from maximising possibilities. The King's Fund and National Council for Voluntary Organisations have thus been working since last year to better understand the role of the sector in health care and to unpick the challenges that the Health and Social Care Bill posed for its survival. The report The Voluntary and Community Sector in Health: Implications of the Proposed NHS Reforms details the findings.

Although the implications for the sector as a whole were considered, our research showed the reforms are likely to hit the smaller VCS organisations hardest and fastest. Specific support, aimed at sustaining this part of the sector during this time of rapid change and cuts, would not go amiss.

Take, for example, the winning organisations from this year's GlaxoSmithKline Impact Awards, which celebrate the work of healthcare charities in the UK. They all had incomes of less than £1.5m a year but delivered hugely valuable health services. Despite these small budgets, they supported thousands of people, filled gaps in statutory services, were community driven and supported by an impressive number of volunteers. Step forward, from east London, for instance, has a turnover of only £300,000 but supports more than 2,000 young vulnerable people in the borough each year.

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However, many of these services are facing an uncertain future due to the funding cuts being rolled out across the public sector. The statutory sector currently spends around £3.4bn per year on health services provided by the VCS - money that is mainly channelled via primary care trusts. It is unclear how "secure" any historical streams of funding to the sector will be as the PCTs are disbanded and health service procurement moves to clinical commissioning groups and local authorities.

Additional financial vulnerabilities are also caused by the difficulty of recovering complete costs for work. Many charities are unable to ensure the whole cost of running a service is included in a bid, partially as a result of the downward pressure on prices from commissioners, and partially because many funders are reluctant to support organisations' full organisational costs. These factors can prohibit the development of sustainable business models for small organisations.

Quantifying "value"
Over the past decade there has been a move away from grants-based commissioning towards more formalized contracts. However, while many organisations will benefit from a longer-term higher-quality arrangement, it must not be forgotten that grants are useful for financing innovative new projects. Many commissioners still find it a challenge to strike the right balance between these two forms of funding.

In the new world, clinical commissioning groups and public health departments in local authorities will have the power to award grants, but there is uncertainty about how widespread this practice will be and whether the new commissioners will have the skills and expertise to assess proposals effectively. There is a risk that the new system will stifle innovation and severely restrict the emergence of new small VCS organizations which, unlike the private sector, are unable to raise high levels of investment to start up new services.

Smaller organisations are also at a competitive disadvantage to private companies, social enterprises and more established charities because it is harder for them to take risks, invest in marketing and carry financial losses. Although the government is keen to highlight that the British healthcare market is not being "privatised" but simply "diversified", this needs to be backed up with a commitment to developing and rolling out different funding mechanisms appropriate for smaller organisations, which allow for innovation and community-specific initiatives.

The reformed NHS landscape will be led by those organisations that can demonstrate quality, outcomes and efficiency. In some areas of provision, such as operations that take place within hospitals, defining value poses few problems since cost and outcomes can be fairly easily assessed. For others, including complex, community-based care for people with multiple conditions, quantifying "value" is a complicated task, and one that the system still needs to crack.

Social value is a prime example of this difficulty. The community benefits of health services, such as increased levels of well-being, can be difficult to quantify and fully account for, and there are concerns that when responsibility for commissioning moves to general practitioners, these values will not be recognised. Some forward-thinking GPs are already considering how best to collaborate with the voluntary sector, while others will need more time to understand how to work alongside the VCS, particularly with those small organizations about whom they may know very little.

While it may be difficult, it is vitally important that healthcare charities and voluntary groups find a way to measure their impact in all areas of their work. The NHS has been set a £20bn "efficiency challenge" over the next four years. Those wanting to win contracts will need to be adept at marketing their services to commissioners who will want to see evidence of value for money.
The sector would also benefit from working closely with commissioners, public health teams, and health and well-being boards to set standards at a local level that ensure social value is appropriately rewarded.

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Conversations with statutory bodies about tendering and funding arrangements should take place on a regular basis. Previously, central and local points of contact have been in place to keep the voluntary sector up to date and engaged. However, many of these roles have been lost during local authority cuts and reorganisations, resulting in confusion about who to talk to regarding the progress and implications of reforms.

One way around this is to develop relationships - or even stronger, contractual agreements with other VCS organisations, social enterprises, the private sector, and primary, secondary and community NHS organisations. Pooling resources develops economies of scale and allows the sharing of scarce expertise and knowledge of fast-moving changes. As well as helping more small voluntary sector groups to survive this period of upheaval, this will also support the better integration of services, which will ultimately deliver benefits to service users.

Indeed, there is a strong need for the VCS healthcare sector as a whole to pull together, with members co-ordinating with and supporting one another, and to develop a strategic voice that is both visible and representative for local and national discussions. Umbrella organisations are the obvious leaders, and they need to make sure the NHS and local authorities engage with them now. This will be especially important if, as predicted, a number of commissioners opt for leadprovider models of commissioning, which will see them working solely with bigger VCS organisations, which then sub-commission to smaller organisations.

Opportunities for small voluntary sector organizations lie not only within the provision of health services, but also commissioning. There is a refreshed emphasis on health and local authority commissioners basing purchasing decisions on the data and information provided in Joint Strategic Needs Assessments, and health and well-being strategies. Small VCS organisations are a vital source of this information, making them valuable commissioning partners. Using this knowledge to help develop needs profiles in their local areas allows these organisations to promote their expertise to decisionmakers and help shape local service delivery plans.

Maintaining a presence during this time of change will be vital if the voluntary sector is to play an increased role in delivering services. The government's challenge to the NHS to save £5bn each year from its budget over the next four years (aside from being unprecedented anywhere in the world) will require the continual redesign and reconfiguration of services. It will also involve redundancies and that some services are cut altogether. Those organisations not visible to commissioners will be particularly at risk of losing their contracts.

Overall, if the NHS reforms play out successfully, the voluntary and community sector will be empowered as a real partner to the "clinical commissioning groups" where GPs and the majority of the NHS budget will sit, and to the health and well-being boards where local health needs are assessed. However, there is also the possibility that the reforms will leave the sector struggling to forge new relationships and unable to survive in the competitive market. In this latter scenario, smaller charities and voluntary groups may either fall off the edges first or be left behind by their colleagues.

Our society will really notice the loss if they go. It is not easy to reach into communities and change vulnerable people's lives for the better. So many small organisations go beyond the call of duty to do just this, changing people's lives every day, as the GSK Impact award winners clearly demonstrated. There is a danger that, given their smaller size and lower visibility, they will not be given enough consideration by the individuals deciding what the future health and social care landscapes look like.

Have your say
Now is the time for umbrella organisations to work towards ensuring that the smaller organisations get the credit and support they deserve, and for commissioners to understand the role these organisations currently play in their local area and the potential they offer for the future. Quantifying the full value provided by these groups might be an ongoing challenge, but it won't take long to notice their absence if they are not supported during these reforms. The Health and Social Care Bill Committee is currently accepting written evidence. Charities and voluntary groups are advised to use this opportunity to have their say while they can - failure to do so could have far-reaching consequences.

Facts...

£100bn Overall budget of the NHS in 2008/09

£3.4bn Amount spent on health services delivered by the voluntary sector

£20bn Amount the NHS needs to shave off its budget by 2015

20,814 Number of health charities with incomes of less than £1m

2,213 Number of health charities with incomes of £1m and above

Claire Mundle is a policy officer at the King's Fund "The Voluntary and Community Sector in Health: Implications of the Proposed NHS Reforms" is available to download from www.kingsfund.org.uk.

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