Local authorities face growing demand for adult social care as well as pressure to reduce costs. So it's welcome news that one recent project for the West London Alliance has shown that working collaboratively reduces procurement costs substantially. Jon Ainger reports Local authorities face many challenges in providing adult social care. Most notably, significant increases in the 85+ and disabled adult population are set to create increased demand for care. At the same time, the ambitious agenda set out in the White Paper Our health, our care, our say requires innovation and modernisation in the provision of social care through empowering service users and closer working with health authorities. The challenges posed by this complex agenda are difficult, particularly the financial ones. Additional funding will be required to manage long-term trends in the demand for care. In the short-term, local authorities are attempting to meet shortfalls between funding and spending themselves. This has led to a growing need to generate efficiencies in the provision of care. Given the estimated annual local authority spend of £8bn on personal social care, there probably is scope for making efficiencies. However, councils are finding it hard to achieve savings acting alone. As a result, some local authorities have already recognised the value of working with neighbouring authorities. The West London Alliance (WLA) of six west London boroughs and three other boroughs achieved savings earlier this year by collaborating to offer a flat rate annual price increase to their adult care suppliers. The councils would otherwise have expected to pay a higher annual increase. Some of the boroughs estimated that they saved around £200,000 through the collaboration. Following this success, the WLA worked with my firm, iMPOWER, to undertake a more detailed analysis of its spending to discover how the authorities could expand joint working. The project focused on strategic procurement (high-risk expenditure over £100,000), analysing £160m expenditure. This figure is just a fraction of the total adult care spending - which is several hundred million pounds - but the analysis still provided valuable new insights that confounded many of the beliefs held by the WLA and other local authorities about the care markets in which they operate. Most significantly, the scale of local authority spending in this market undermines the idea that it is uniformly a suppliers' market in which authorities are over a barrel price-wise. The WLA analysis established that several suppliers relied on the WLA boroughs for a significant amount of revenue - in one case, as much as 38% of the company's published total revenue came from WLA boroughs. Some suppliers are evidently as reliant on the councils as the councils are on them, highlighting the collective buying power of local authorities. Local authorities are well placed to leverage this power to make savings and play a major role in directing the market, shaping the supply of care services by jointly identifying gaps and needs. Pro-actively engaging with suppliers creates a market that not only provides value for money to councils but is attractive to both new and existing suppliers. However, achieving these outcomes requires collaboration: individual councils acting alone do not have the power to influence the market in the same way that groups of councils can. It requires councils to radically change their approach to the procurement of care and the management of care markets. Regular data sharing on costs is critical to the development of the market intelligence needed to achieve further savings, while collective forecasting of future care needs will be crucial in developing and implementing a shared vision of long-term care supply. Strategic collaboration of this nature will also facilitate joint working in operational procurement. Developing shared services is difficult, but collaborating on strategic aims and sharing data should make shared procurement activity - such as standardising contracts, sharing contract monitoring and sharing contracts - easier to achieve. This offers local authorities the potential to streamline procurement processes and reduce wasteful duplication, for both authorities and suppliers. Those controlling the adult social care budgets in authorities need to look hard at the lack of attention currently being given to collaborative procurement by local government. It will take commitment, effort and time to reap the benefits, but the rewards are there for council leaders who make collaboration a priority. Jon Ainger is a director at iMPOWER Consulting
