Live Q&A: Achieving trust in procurement

When negotiating contracts, commissioners and providers hope their interests are being taken into account by the other party.

However, in reality, most parties will often take their own interests into account first. We know this to be the case in the NHS environment because all parties have a similar goal, which is to maintain the best possible share of a finite budget for their organisation, so they can deliver the best possible care.

In industry the same scenario exists but goals are based around maximising shareholder returns. If we propose that patients are the NHS’s shareholders, it means both commissioners and NHS providers have the same shareholders.

So when it comes to contracting with each other, commissioners and providers should actually have a good insight into each other’s motivations.

Using this insight, along with the other available information all the parties have about each other, judgements are formed about what to expect.

Consequently, a judgement as to whether to trust or distrust each other is formed and this sets the tone of future dealings.

‘Checklist’ culture

In reality we mostly distrust each other. If we always trusted each other we wouldn’t need detailed contracts, service level agreements, quality specifications, audits and so on.

However, the current austere, pragmatic and regulation-driven world leaves no margin of deviation, and consequentially we are often forced to abandon trust.

We have to prescribe expected behaviours and then monitor they are being adhered to. This is a multi-billion-pound activity delivered by the detailed contracts and service level agreements specifications, often overseen by a plethora of regulators.

Commissioners and providers take on a “checklist” culture because they have to. Once this culture is established it can polarise attitudes and consequently destroy trust: each party will do what they are asked to and possibly little more.

The cost of distrust

A good analogy, following the 2012 Olympics and the more recent Lance Armstrong revelations, is the use of banned substances in sport. In the beginning athletes were more or less trusted to compete fairly. Now to ensure a level playing field there is a list of banned substances. This can polarise attitudes: those who will use the substance if it’s not on the list and those who will avoid everything in a spirit of fair play. What is apparent is that reliance on the “list” has become inexorable.

To tackle the banned substance “arms race” current thinking is to ban the effect of the substance rather than each known substance specifically. Translating this into the commissioner and provider scenario, wouldn’t it be better to design agreements that work around the effect or outcome, not the specific mechanisms?

‘The more checklists we apply, or the less we trust, the more we drive up transactional costs’

Creating detailed contracts and SLAs, with their checklists and specified processes, can diminish trust. Compliance culture can seed alienation and disintegrate contracting parties’ relationships. Removing prescribed detail and replacing it with outcomes might benefit all parties and create a relationship based on interactions of trust rather than transactional compliance.

But why do we need to think about trust?

The management time and resources needed to set up complex agreements, monitor and audit them, travel to and fro and support all the ancillary processes all have a tangible cost. For each complex agreement these costs could be a significant amount. Translate this to hundreds of thousands of agreements and the cost could be in millions.

Redefine our relationships

Thus, the more checklists we apply, or the less we trust, the more we drive up transactional costs.

If we get it right, using “professional” trust can be used as a tool to make informed decisions around how we do business with each other. We can make more agreements based on the desired effect and trust everyone to deliver the best way they see fit, in the process saving significant amounts of money.

The NHS has the twin challenges of restructuring and cost saving.

Restructuring will change the relationship between commissioners and providers. Instead of being apprehensive about this it can be viewed as an opportunity to redefine relationships: relying more on the element of trust, and subsequently moving towards cost saving.

Mike Mayers is the head of business processes at NHS Stockport, mike.mayers@nhs.net