Healthier Together Conference 6th March 2013

1. Healthier Together
Conference
Is small still good?
The nature of cross
sector partnerships in
service delivery
Tony Bovaird
INLOGOV AND TSRC
University of Birmingham

2. Conventional wisdom for some years
(e.g. Beecham, Christie) has suggested that:
 Transactional services have big economies of scale, so should be
centralised at county, regional or even national level, but subject to
competition and regulation
 Personal services have few, if any, economies of scale, should be
‘commissioned’ (often procured externally) and increasingly co-produced
with users and communities (often through TSOs)
 Infrastructure-heavy services should seek flexible solutions, which can
be delivered with other services and partners to ‘sweat the assets’ in
service hubs (at different spatial scales) (so other assets can be ‘left to
the community)
 Regulatory services should be determined by ‘economies of scope’ – at
what scale can ALL specialisms be hired necessary for a function?

3. But the analytical goalposts have moved ...
 ‘Transactions’ are now seen to be holistic, with a ‘social
component’
 ‘Personal’ and ‘infrastructure’ services are seen to have multiple
outcomes and therefore ‘commissioning’ is multi-stakeholder
 Regulatory services can now be partly externalised
 Economies of scale can be reaped by partnerships, not just by
mergers

4. Organisational differentiation and integration
 Adam Smith: greater efficiency
through specialisation (‘division
of labour’), which allows more
expertise to be developed
 Differentiation can therefore lead
to economies of scale
 But then there’s a need to integrate
these differentiated units in some
ways – e.g. through reporting to the
same manager, joint staff,
joint meetings, shared targets, etc.
 Specialised providers can set up different units and :
– Exchange within a company – low autonomy, low risk
– Trade in the market – high autonomy, high risk
– Or form a partnership – medium autonomy, medium risk?
 Management often goes in a series of waves of differentiation and
integration (Lawrence and Lorsch, 1967)

5. So what does ‘scale’ now mean?
 Economies of scale: where an increase in
inputs brings a larger increase in returns ... (e.g.
handling all customer contacts in one system?)
 ... but an increase in WHICH inputs?
 Up to now, there has been major attention to
inputs made by or paid for by public
agencies
 This is misleading in terms of the ratio of
outcomes to costs in the community ... (e.g.
the extra time taken by housing clients to get
their repairs done through a multi-purpose
joint venture call centre)
 ... but we would need to measure user and
community inputs in the future if we wanted to
take account of this
 Warning: many empirical studies suggest
constant returns to scale, others also find
diseconomies of scale – but major problems
with data and functional form

6. What’s
going
on ‘out
there’?
Private and
third sector
market
outputs
Public sector
outputs
Value-adding
outputs in Informal economy outputs
market, public
Formal volunteering
and third sectors
and in civil
society – how Informal social value-adding outputs
Informal social value-adding
outputs
big are these
different circles?

7. Economic, Social, Political &
Environmental Value Added
REAL Value for Money is about the
OVERALL supply chain for outcomes
Source: Modelling Birmingham – the
conceptual brief

8. Why ‘user and community co-production’?
 After 10 years of Best Value and ‘Transformation’, we’re MUCH LESS CERTAIN
that we are doing things the best way – but still uncertain about what ‘better’ looks
like (the outbreak of ‘humility’)
 We now realise that service users and their communities know things that many
professionals don’t know … (‘users as thinking people, communities as knowledge
bases’)
– E.g. co-design of services, co-authors of user manuals
 ... and can make a service more effective by the extent to which they go along with
its requirements (‘users and communities as critical success factors’)
– E.g. self-medication, self-management of long-term conditions
 ... and have time and energy that they are willing to put into helping themselves and
others (‘users and communities as resource-banks and asset-holders’)
– E.g. peer support (Knapp et al, 2010); expert patients programme
 TSOs in the community are a key mediator of these relationships, often without
being appreciated by commissioners or providers

9. Different types of co-production
 Co-governance of area, service system or service agencies –
e.g. neighbourhood forums, LEPs, HWBs, school governors
 Co-commissioning services – e.g. personal budgets,
participatory budges, devolved grant systems
 Co-planning of policy – e.g. deliberative participation, Planning
for Real, Open Space
 Co-design of services – e.g. user consultation, user-designed
websites, Innovation Labs
 Co-financing services – fundraising, charges, agreement to tax
increases, BIDs
 Co-managing services – leisure centre trusts, community
management of public assets
 Co-delivery of services – peer support groups, expert patients,
Neighbourhood Watch
 Co-monitoring and co-evaluation of services –user on-line
ratings, tenant inspectors

10. Economies
of scale?

11. Importance of ‘economies of scope’
and ‘economies of learning’
 Only in 1980s did importance of economies
of scope become widely appreciated –
savings which occur when the RANGE of
activities undertaken by an organisation (or
partnership) increases (because they have
joint costs) – e.g. where the ‘meals on wheels’
staff check and report back on wellbeing of
meals recipients
 ... and importance of economies of learning
– where savings occur over time as staff AND
users learn how to co-produce the service
better – e.g. getting inquirers to have details
with them when they call the call centre,
getting ‘meals on wheels’ deliverers to respect
agreed time of delivery and users to wash
yesterday’s reusable tray and dishes
– means we should avoid disruption - ‘churn’,
‘initiativitis’

12. Implications of economies of scope
 Activitieswhich gain from being done together
SHOULD BE done together – either in a single
multi-purpose organisation or in a ‘seamless
service’ in a partnership
 May be daft to SEPARATE activities which
naturally have ‘joint outputs’ – transactions
costs of separating them may override economies
of scale – e.g. joint needs assessment rather than
single needs asssessment

13. Economies of scope in commissioning
and provision
 Synergies in processes, activities, outputs or outcomes?
– then economies of scope may be more important than
scale
 Commissioning: High synergy commissioning services
for people with complex needs?
– Move to specialisation and scale likely to be highly
cost-ineffective
 Provision: High synergy at all stages of providing
personalised services?
– Move to specialisation and scale likely to be highly
cost-ineffective?

14. What’s the unit of analysis?
 WHERE are we looking to achieve economies
of scale and economies of scope?
 At the level of the:
– service?
– organisation?
– service system? (E.g. all services for adults
with mental health issues in Kent)
– the local public sector? (E.g. all public
agencies working in Kent)

15. Where does this leave cross-sector partnerships
in service delivery?
 Average London Borough has 245,000 population and spends 50% of its budget on fewer
than 10,000 people (Barry Quirk) – 4% of population
 120,000 problem families said to cost nearly £8bn to public purse (Eric Pickles,
17.10.2011) – by spending £14,000 per family on a more co-ordinated service, the state
could save £62,000 on each. Should we let contracts one at a time to support these
families? Commissioner costs?
 OR what about 30 different services in 8 different public sector organisations?
 OR what about forming a FamilyRing network for every 10 families, taking the
families out of most public services – £140,000 p.a. per FamilyRing? How much
would a provider demand to run such a contract? Commissioner costs?
 OR one public sector organisation with all functions for families with multiple
problems?
 OR a partnership/consortium of service providers who can offer full range of services?
AND a partnership/consortium of all service commissioners?
 Don’t throw away your old partnerships just yet!

16. Conclusions
 All change …
– … with huge risks
– … but risks from both change and ‘non-change’
 Distrust all current statements about economies of scale – mainly based on
sectional interest
 Scandal of not including all costs borne by citizens in our ‘social cost-
benefit’ analyses
 Economies of scope not well understood – or even seen as important
 Economies of scope may be much more important than scale
– both in commissioning and providing of many public services
 Needs experimentation – none of the current relationships are well
understood, none can be regarded as ‘reliable’
 Experimentation needs resource – for design & evaluation but also for
resilience (e.g. ‘last resort’ intervention plans and contingency budgets)

17. Contacts
Tony Bovaird
Institute of Local Government Studies and
Third Sector Research Centre
T.Bovaird@bham.ac.uk