Reverse auctions have slowly crept into how councils and other bodies commission services.
Reverse auctions sounds a great idea if you’re buying or selling a TV or washing machine. But when it involves individuals and meeting their care needs, the whole proposition takes on entirely another meaning.
"DPS has taken root in the largest council in England, Birmingham, as well as in Staffordshire, Somerset, Wiltshire and Dorset. There are others too."
The application of Dynamic Purchasing Systems (DPS) - which effectively represent reverse auctions - have slowly crept into how councils and other bodies commission services.
The approach is exactly as it sounds on the tin. The council or Clinical Commissioning Group will ask for providers to competitively submit their bid in real time to meet an individual care package (normally posted onto a website) and the provider with the lowest bid wins the contract.
There are variants on this approach - but the common feature is that these auctions are dealing with people and how their care needs are met.
How widely is this happening?
The extent to which councils are using DPS is still being gathered. Care England has been working with its members to chart its deployment.
Initial evidence suggests that there is a growing appetite among councils as they grapple with reducing resources and increasing demand.
Most councils are continuing with more traditional and generally more transparent commissioning practices of setting a fixed (and normally very low) price to meet care needs.
Examples of where DPS has taken root include the largest council in England, Birmingham, as well as in Staffordshire, Somerset, Wiltshire and Dorset. There are others too. It is noted that the DPS approach is strongly weighted towards meeting the needs of adults with a Learning Disability within community settings.
Care England argues that the issues of quality and continuity of care are paramount. Personalised care and support should not be commissioned solely based on cost.
Care England has been strongly opposed to the spread of DPS on the grounds that the approach treats individuals as commodities. It pays little regard to rights of choice and quality of care, and as such is at odds with the duties upon commissioners laid out in the Care Act 2014.
Statutory guidance in the Care Act 2014 specifies that price should not be the only determining factor when allocating care. The law outlines choice and personalised care as key drivers of care planning. The DPS process disregards this approach, focusing solely on obtaining the lowest price available.
When adopting the DPS, councils must consider their market shaping duties under the Care Act. These are designed to achieve a vibrant and diverse market that gives people real choice.
The focus upon achieving the lowest price, whilst many would argue is the best use of scarce public resources, can quickly destabilise the care market upon which thousands of vulnerable people and their families depend.
Over the last two years the number of nursing home beds has decreased by 4,000 and recent evidence is that last year 44 councils had providers handing back contracts for adult social care. The driver for these exits are predominately low fees paid by commissioners. The perverse impact of DPS is that the very notion of commissioners working with a vibrant competitive market is not realised.
Care England has long campaigned to address low fees paid by commissioners. Our argument was firmly endorsed by the Competition and Markets Authority's recent report into the Care Home Market. It identified that councils were paying up to 10 percent below the true cost of care.
The application of DPS will only further drive down the price paid for care. With many providers in the independent sector already struggling to run services on low prices, further market exits can be expected.
The sector really needs stability and assurances to meet increasing numbers and complexity of need. DPS does not give this. The message from Care England is that the use of Reverse Auctions need to be reversed in the interests of individuals who use social care services.
Jonathan Gardam is Senior Policy Officer at Care England.