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Shaping the supply structure

The fifth of our eight-part guide on the basics of PBC, produced by Michelle Webster and Beverley Slater of the Improvement Foundation looks at how to shape the supply structure in your area.

The fifth of our eight-part guide on the basics of PBC, produced by Michelle Webster and Beverley Slater of the Improvement Foundation looks at how to shape the supply structure in your area.

Official definition

The process of stimulating provider interest, deciding when to go to tender and placing contracts with those providers.

Put into layman's terms

Ensuring there is a choice of providers for PCTs to commission services from. Choice not only concerns the service itself but also the location of the service and how it is delivered.

What it involves

• Exploration of gaps in current service configuration and provision

• Working with current providers and potential providers to develop innovative solutions to service delivery

• Developing service specifications, focusing on health outcomes

Important because…

In order to provide greater choice for patients and to address inequalities in health, commissioners need to be proactive in stimulating and managing the local health market. They need to make it easier for potential providers to enter the market, while ensuring, through regulation and governance, that they drive up quality.

How to go about it

Knowledge gained through needs assessments (see part one of this guide at will mean PCTs should be clear in their minds about what they need from providers. Fairness and transparency in decision-making is an essential characteristic of good commissioning and is the basis for a productive relationship between commissioner and provider.

Commissioners should use levers for change including:

• patient and public engagement

• health needs assessment

• clinical engagement and leadership

• collaboration with key partners, including third sector

• effective procurement and contracting

• robust performance management

• investment and disinvestment securing value for money

• service redesign.

Background/relevant policy

The world-class commissioning competency framework includes ‘stimulating the market' (competency 7), ‘promoting improvement and innovation' (competency 8) and ‘securing procurement skills' (competency 9), which all relate to shaping the structure of supply.

Pitfalls to avoid

• Commissioners' lack of imagination about potential providers can sometimes lead to implicit exclusion of certain types of provider – for example, in the procurement process or the types of contract offered

• The ‘winner's curse', which happens when commissioners contract with providers who don't know the true cost of providing the service. If they have put in a tender that is too optimistic this can lead to problems with quality or business sustainability

• Commissioners may want to guard against providers wanting to cherrypick easier-to-serve client groups


• Welcoming social enterprise into health and social care: a resource pack for social enterprise providers and commissioners – Department of Health (gateway reference 7669)

• Hearts and minds: commissioning from the voluntary sector – Audit Commission

Beverley Slater is national knowledge management lead and Michelle Webster is national commissioning lead for the Improvement Foundation, which runs advanced commissioning courses.

Next month: Managing demand and ensuring appropriate access to care

Shaping supply is about making it easier for providers to enter the market

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