Putting clothes on the Emperor: What do we know about high quality commissioning?

A few weeks back I wrote about how some of the conversations around commissioning in Australia tend to have a little bit of a sense of the Emperor’s new clothes about them.  But this scenario isn’t inevitable and here I add a few thoughts about how we might ensure that the Emperor isn’t naked as commissioning is rolled out across the country.

When talking about commissioning it is important to recognise is that there isn’t one model and the approach needs to be relevant to the context that it is being enacted within. This means empowering those who lead commissioning locally to really take on this agenda and understand what is important for that particular area.

The reality is that commissioning often has many different aims and drivers. It is therefore important that you are clear about what your priorities are and what it is that you aim to achieve  through your approach. Inevitably it will be difficult to achieve all of these aspirations at once. Research shows that having a clear sense of which you prioritise and formulating a clear plan in relation to realising these objectives, is far more effective than trying to achieve a whole plethora of aims simultaneously.

How you organise commissioning activities is important and there is no perfect size to operate your commissioning approach over. Again, the form needs to be appropriate to the function.  One important finding that is well illustrated in the recent experience of mental health commissioning in England, is that if you only focus on the procurement aspect of commissioning then you will miss the wider picture. Commissioning is about more than simply procurement practices when done well and yet this has been the main focus of individuals and organisations engaged in commissioning processes.  Just buying things in slightly different ways will not deliver the type of outcomes sought through commissioning approaches and it is important to pay attention to wider activities that support the procurement process.

Commissioning is a data hungry activity and requires a variety of different appropriate forms of data appropriate to the task. While it may seem like an obvious point, the skill set of commissioning staff is absolutely crucial. Yet this has often not been systematically planned for in practice. There are some obvious gaps often cited such as in terms of commercialisation abilities or particular forms of data analysis. There is no doubt that these are crucial, but it is often the case that there are also a broader set of skills and abilities that are necessary to high quality commissioning approaches.

One area that this lack of skill base is particularly apparent, is in respect to engagement. Although not all would agree with me on this, I would go as far as to suggest that engagement is possibly the most important activity in commissioning and one that has all too often been neglected.  Without engagement across a range of different stakeholder groups it can be difficult to identify just what the role and aims of commissioning are or should be, what appropriate data is required and what modes of working are most effective. Without engagement then commissioners can lack the legitimacy to act and this is of particular importance when it comes to making significant and sustained change.

In England, many commissioners found that having not undergone a careful process of community engagement they came across significant opposition when seeking to make changes to services. This was most apparent in terms of hospital services where attempts to move beds from hospitals or close down ineffective emergency or maternity services were met with large opposition from the broader community.  In many cases the public were unsure of who the commissioners were, although they had long standing links to institutions like hospitals. If commissioners are to be effective it is important that they find ways to explain to the general public who they are and why their function is important.

What is clear is that the evidence base for commissioning is not as clear-cut as we might expect given the enthusiasm for this concept. But are we surprised if one approach is unable to solve a series of complex and pernicious challenges that have long been central to public services?  How likely is it that one approach could ever resolve all of these issues in the short term? The likelihood is that we are setting up any approach for failure if we think that it will quickly and easily overcome these challenges.

One of the things that I often hear when speaking with public servants is the phrase – we know what we need to do, we don’t know how to do it’. What people mean by this is that the problems have been well defined and reiterated multiple times. The challenge is knowing how to deliver against these aims.  Commissioning can be, I would argue, one helpful way of starting to address these in the sense that it gives a framework and a vocabulary for reform in terms of the stewardship role of public services systems. This has arguably been lacking in many service systems around the world, which tend towards being provider-centred.

There is also the advantage at present that commissioning has a high degree of political salience, meaning there is at least central support for now. The irony here is that Australia’s commissioning enthusiasm is on the rise precisely at a time when the agenda is losing support in England.

However, if we are to enable commissioning to be more than a passing fad then we need to put some meat on the concept. As I have already argued, one of the key ways to do this is through engagement, having a clear sense of what consumers desire in terms of public services and what the important features of the specific contexts within the commissioning locale are. It also involves all of playing a role in critically analysing proposed changes and not simply going along with these for fear of looking stupid. Providers need to take a responsibility for these processes as much as commissioners and cannot simply note that they knew the Emperor’s clothes were missing all along but didn’t feel the need to point this out.




Election FactCheck: has the Coalition cut bulk-billing for pathology and scans ‘to make patients pay more’?

In their first term in office the Liberals … cut bulk-billing payments for pathology and diagnostic imaging to make patients pay more. – Shadow health minister Catherine King, media release, June 20, 2016.

The opposition has released political ads accusing the government of planning to privatise Medicare and warning of higher health costs in future – a campaign Prime Minister Malcolm Turnbull has called “extraordinarily dishonest.”

As part of Labor’s Medicare campaign, shadow health minister Catherine King said that the government has “cut bulk-billing payments for pathology and diagnostic imaging to make patients pay more”. Incentives worth between $1.40 to $3.40 are paid direct to pathology service providers to encourage them to bulk-bill.

Is King right?

Checking the source

The Conversation asked Labor campaign media for sources to support Catherine King’s statement but did not hear back before deadline.

Health Minister Sussan Ley has argued that bulk-billing incentives are not meant to be used to cross-subsidise other costs of doing business for large companies – some of which are owned by private equity firms – at a time when health care costs are growing.

From ‘Don’t Kill Bulk Bill’ to a deal on rent

In its December 2015 Mid-Year Economic Fiscal Outlook, the Coalition government announced a suite of bulk-billing changes aimed at saving $650 million over four years. It proposed removing bulk-billing incentives for pathology and diagnostic imaging services.

MYEFO 2015-16

Pathology Australia, which includes big players such as Genea and Sonic Healthcare Group among its members, has been central to how this issue has unfolded. Pathology Australia says its member organisations perform a majority of pathology testing within the private sector.

Pathology Australia collected nearly 600,000 signatures for its “Don’t Kill Bulk Bill” campaign, which warned that patients would face expensive pap smears and other costly tests due to government’s removal of the bulk-billing incentive for pathology services.

In May, Pathology Australia closed its Don’t Kill Bulk Bill campaign after striking a deal with the government, aimed at ensuring pathology service providers who co-located their collection rooms inside a GP’s building were charged “fair market value” rents.

The bulk-bill incentive removal is still going ahead, but the idea is that many pathology service providers may now be better able to absorb the cost if they’re getting a cheaper deal on rent – instead of passing the extra cost onto patients.

Nick Musgrave, president of Pathology Australia, told The Conversation that:

Decisions regarding billing practices are made by individual pathology providers … The regulatory changes announced by the Coalition to control excessive rents for pathology collection rooms will enable providers to more readily maintain current billing practices as would the maintenance of current funding. In the absence of either of these measures, providers had indicated they would not have been able to maintain current high levels of bulk-billing.

Musgrave said the deal to regulate rents for collection rooms will “more readily enable pathologists to maintain current billing practices” whether or not they are members of Pathology Australia. (You can read his full response here.)

But some other pathology service providers have said the deal with the government doesn’t take them into account.

Not all pathologists

Pathology is no longer a small industry, with the Sonic group reporting annual revenue of about $4 billion – but not all businesses are on this scale.

Catholic Health Australia is one of the service providers that says the deal doesn’t take them into account. This group also represents pathology service providers, including many in regional and rural areas.

According to its spokesman:

Independent and not-for-profit pathology providers may have to adopt co-payments simply in order for their services to remain viable … Turnbull’s deal with ‘the pathology sector’ was made without taking not-for-profit providers into account.

The group said that the rents deal will:

disproportionately assist the larger corporate providers and will not be sufficient to adequately offset the cuts imposed on smaller providers by removing the bulk-billing incentives.

You can read Catholic Health Australia’s full comment here.

So, whether or not you’ll pay more for pathology tests after July 1 depends mostly on who owns that practice or pathology service provider, and whether they can afford to absorb the cost of the changes themselves or choose to pass on these costs to patients.

Labor has pledged to reverse cuts to the Medicare Benefits Schedule pathology bulk-billing incentives – which it believes will improve access to bulk-billed pathology services, but would also drive up the cost to taxpayers.

Others, such as the Grattan Institute, argue that there are ways save money in pathology, saying that:

patient co-payments for tests should be abolished. Patients aren’t the real consumers of pathology tests – the doctors who order and use them are.

What about scans?

The rents deal struck between the government and Pathology Australia doesn’t cover scans.

Australian Diagnostic Imaging Association (ADIA), which represents private providers of radiology services, said the rents deal was “cold comfort for the millions of patients needing vital radiology services”.

The government plans to remove bulk-billing incentive payments for radiology services in January 2017. However, ADIA has secured a commitment from the government to “work with the diagnostic imaging sector on structural reforms to provide patients with certainty on affordable access to services”.

The review will happen before January 2017.

ADIA has also said that patient rebates for diagnostic imaging have been frozen since 1998, with patient gaps now averaging $100, and has voiced concern that Labor’s pledge to reverse the decision to remove the bulk-billing incentive does not go far enough. Labor has said it will restore indexation in January 2017 to all services provided by GPs, allied health and other health practitioners and medical specialists – but that scans are not included.

ADIA has called on Labor to expand its indexation election promise to include diagnostic imaging service providers too.


Catherine King was right to say that in its first term of office, the Coalition government cut bulk-billing payments for pathology and diagnostic imaging. That is scheduled to come into effect on July 1, 2016, for pathology services and in January 2017 for radiology services.

But the second part of her statement – “to make patients pay more” – didn’t tell the whole story. Pathology Australia’s deal with the government on rent regulation means some pathologists may be able to keep bulk-billing. Others, however, may not.

Whether or not patients will pay more as a result of the bulk-billing incentive removal depends on whether your pathology or radiology service provider passes on the cost to customers. – Helen Dickinson


This is a sound FactCheck. I would further note that the Grattan Institute reports that almost 99% of pathology tests for out-of-hospital patients are bulk-billed, an increase from 93% a decade ago.

St John of God, a large not-for-profit health group, is selling its pathology operations to Clinical Labs. The removal of the bulk-billing incentive payment may have put them in a position where they would have passed increased costs onto patients.

The unmentioned driver behind the rising cost to the health budget of pathology bulk-billing is clinicians practising defensive medicine – GPs and specialists reasonably ordering tests “to be sure” or “safe”, even where it may not be needed. – Bruce Baer Arnold

Have you ever seen a “fact” worth checking? The Conversation’s FactCheck asks academic experts to test claims and see how true they are. We then ask a second academic to review an anonymous copy of the article. You can request a check at checkit@theconversation.edu.au. Please include the statement you would like us to check, the date it was made, and a link if possible.

Helen Dickinson, Associate Professor, Public Governance, University of Melbourne

This article was originally published on The Conversation. Read the original article.

Explaining Primary Health Networks and commissioning

As Primary Health Networks approach their first anniversary a number of people have asked what kind of progress they have made to date and what’s to come over the next 12 months or so as they roll out their first commissioning strategies.

The Health Services Research Association of Australia and New Zealand recently hosted a webinar ably chaired by Associate Professor Suzanne Robinson (Curtin University, WA) and comprising a panel of me, Learne Durrington (Chief Executive, WA Primary Health Alliance) and Jason Trethowan (Chief Executive Officer, Western Victoria Primary Health Network Ltd.) to review the progress of PHNs to date.

The background to the webinar can be found below and if you want to view the discussion then you can find this here (due to some odd technical issue I am missing for the first 10 minutes or so!).

Health systems are challenged by pressures of increased demand and rising costs. The rise in complex chronic conditions means that the current system design that stems from an era when communicable disease was more prevalent than chronic is struggling to meet the changing health needs of the population. As governments look to ways to reform health systems we have seen an interest in the role of commissioning as a mechanism through which to reform many different aspects of public services. Primary Health Networks (PHNs) have been charged with commissioning primary care services in Australia. The essence of commissioning is to take a stewardship role with a focus on providing vision and direction for the health system, collecting and using intelligence, and exerting influence – through regulation and other means.

As PHNs reach their first birthday it’s timely to take stock of how commissioning is developing both nationally and internationally. The webinar incorporated research, policy and practice perspectives on the development and implementation of commissioning in Australia.

The panel session focused on broad areas relating to the following:

  • The current understanding of commissioning, and what it should achieve in PHN  localities;
  • The challenges and opportunities of the commissioning process in Australia;
  • Concepts and elements of successful commissioning;
  • How are PHN commissioners working with wider stakeholder groups?

What do the Liberal and Labor election health promises mean for you?

Health is always a key factor in deciding which way to vote. A recent survey found health is the most important issue for over-50s this federal election, moving past economic management for the first time.

One-third of respondents believe Labor is best placed to manage health care, with 14% preferencing the Coalition and just 8% favouring the Greens.

So what have the major parties promised in health? And what could these changes mean for consumers?


Labor claims that under the Coalition, Medicare will be “sold off”. Opposition leader Bill Shorten reminded the electorate that one of the first activities of the Abbott government was to privatise Medibank Private.


Prime Minister Turnbull has accused Labor of running a scare campaign, saying:

Medicare will never be privatised. It is a core government service.

Beyond Medicare remaining a public entity, there are some key differences in the parties’ election promises.

The Coalition has committed to extending the Medicare rebate freeze to 2020 and abolishing the bulk-billing incentives for pathology (blood and tissue tests) and radiology (X-rays and MRIs).

Extending the rebate freeze means doctors will be paid the same for consultations in 2020 as they were in 2014. They’re likely to eventually pass the difference on to patients.

Further reading: Confused about the Medicare rebate freeze? Here’s what you need to know

Removing bulk-billing incentives may mean patients have to pay a co-payment and some providers have stated this could amount to around A$30 per patient.

Labor has committed to ending the rebate freeze in early 2017 and will continue to fund bulk billing incentives for pathology and radiology. Ending the freeze is anticipated to cost A$2.4 billion in forward estimates and keeping bulk-billing incentives a further A$884 million over the next four years.

But Labor argues this is important to stop patients being charged co-payments and to encourage people to seek scans and tests to diagnose illnesses such as cervical cancer.

Labor and the Coalition are at odds on the Medicare rebate freeze and bulk billing incentives for pathology and radiology.
Tracey Nearmy/AAP

What do the Medicare promises mean for voters?

Under the Coalition, GPs, pathologists and radiologists may pass on some of the reductions in funding to the consumer. This could result in lower rates of bulk billing and higher co-payments.

Under Labor, costs of visits to the GP, blood tests and X-rays are less likely to rise, but these come with a significant cost to the public purse.

Private health insurance

Private health insurance is one of the few areas in health in which Labor has announced funding cuts, projecting A$3 billion in savings by freezing the private health insurance rebate for another five years and removing the rebate for natural therapies.

The Coalition argues Labor’s plans amount to charging those who use private health insurance to pay for the opposition’s other health commitments. The Coalition says private health insurance is a fundamental element of the health system, which is important to offer consumers greater choice over their care and take pressure off the public system.

The Coalition’s election promises for private health insurance focus on creating a more simplified scheme that it is easier to navigate and understand which company provides best value for money.

Rules will be introduced for plain English disclosures and there will be gold, silver and bronze categories of cover so that policies are easy to compare. Simplified billing will be developed, as will standard definitions for procedures so they are easily comparable.

What do the private health insurance promises mean for voters?

Under Labor, people with health insurance will face rising costs and some therapies that are currently covered will be removed.

Under the Coalition, private health insurance will become easier to navigate and use.

Hospital funding

Hospital funding has long been the focus of funding disputes between state and federal governments. Following the 2014 budget, when the Abbott government cut A$80 billion in health and education funding, hospitals argued they were significantly underfunded and that this would have implications for the quality of care.

The additional hospital funds are a drop in the ocean.
Blend Images/Shutterstock

The recent Council of Australian Governments (COAG) agreement to give the states additional funding for public hospitals has been welcomed, but hospitals have maintained it’s not enough to guard against increased waiting times for emergency and elective care.

Given this history, it’s no surprise to see both parties promise more funding to hospitals. The Coalition has pledged an extra A$2.9 billion to states for hospital funding and committed to fund 45% of the growth in costs. Labor has promised an additional A$2 billion – on top of the Coalition’s A$2.9 billion – and will fund 50% of the growth in costs.

What do the hospital funding promises mean for voters?

Around A$42 billion is spent on Australian public hospitals each year. Although the extra funding promised by both parties may seem like it should improve access to emergence and elective care, the additional funds are a drop in the ocean.

There is also a growing case to suggest more money for hospitals won’t necessarily fix the challenges they face. Instead, hospitals need to work in a smarter way.

Chronic disease management through strengthening primary care

One in five Australians has a chronic and complex disease such as diabetes, heart disease, asthma, or cancer. All the major parties have recognised the need to do more to allow these people to stay in their own homes for longer and prevent unnecessary hospital admissions.

The Coalition has committed A$21million to trial Health Care Homes. These will introduce a more flexible payment structure for general practitioners, with the aim of better supporting the chronically ill to stay out of hospital.

Read more on the Health Care Homes trial

Labor has committed A$100 million to trial a new primary care model known as Your Family Doctor. As with the Coalition’s Health Care Homes, these focus on improving the relationship between GPs and patients, providing more integrated and preventative services, and developing more innovative ways to deliver primary care.

Good primary care is the bedrock of a strong health system.
Monkey Business Images/Shutterstock

The Greens have also made significant commitments in this space, arguing that primary care in Australia does not sufficiently meet the needs of those with multiple chronic diseases. The party has promised A$4.3 billon over four years.

Central to this plan is bolstering the role of Primary Health Networks (PHNs) to give them primary responsibility for improving chronic disease management. Of the $4.3 billion:

  • A$1.5 billion has been earmarked to give GPs A$1,000 per patient with a chronic disease to provide high quality care for one year
  • A$2.8 billion is to give patients access to allied health practitioners via PHNs
  • A$11.9 million will be used to develop standardised models of chronic disease management which will be used across the country.

These promises to strengthen primary care are in line with the international literature, which suggests this is the bedrock of high quality health services.

What do the chronic disease management promises mean for voters?

Although it may look like Labor and the Coalition are promising significant funds to improve chronic disease management and primary care, these pale next to the amounts promised to hospitals.

It’s unclear whether Your Family Doctor and Health Care Home will be able to make a significant difference to people with chronic disease. They have broadly similar visions for changes to payment structures, preventing hospital admission and making greater use of a range of professionals in the care of individuals.

Only the Greens have promised a significant injection of cash and seem to have developed a comprehensive vision for the future of primary care.

Long-term reform is still missing

All parties argue they are committed to maintaining universal health services. Labor, and to some extent the Greens, plans to do this through a cash injection to the system and making savings on private health insurance. The Coalition is committed to more limited investments but with a desire to better use existing resources – including the private health system.

But none of the election commitments will deliver the level of reform needed to ensure the health system performs as well in the future as it does now.

Helen Dickinson, Associate Professor, Public Governance, University of Melbourne

This article was originally published on The Conversation. Read the original article.


The University of Melbourne launched it’s own digital communication platform last year called Pursuit.  This carries a number of different pieces about the research that academics at the university produce and other more general commentary on key issues in an accessible format.  This week I have written or been interviewed for short pieces in larger stories that appear in Pursuit on two pretty disparate topics.

The first piece is a scene setting article for an upcoming podcast – The Policy Shop – which is hosted by Vice Chancellor Glyn Davis.  In this monthly podcast Glyn invites in academics and other prominent guests to discuss issues around public policy and its impacts on Australia and the world more broadly.  In the upcoming episode there will be a discussion on whether government are becoming too large.  In the scene setting piece Professor John Langmore (former Labor politician and now colleague in the Melbourne School of Government), Bill Forwood (former Coalition politician and now strategic counsel at government and public relations firm CPR) and myself offer our views on this issue.  In doing so I point out that small government is pretty tricky to achieve – even if you outsource various different functions and activities then this inevitably requires significant effort around market stewardship.

In the second piece a number of so-called “political junkies” are asked for their perspective on what the best ten TV shows are for campaign viewing.  It is a pretty funny piece all in all (and not just because it describes me as a political scientist).  It also gave me a chance to talk about the Sopranos, which I would have to say is hands down the best piece of TV ever made.



Commissioning: Background and evidence reviews

There are an increasing number of reviews that describe what commissioning is and review the evidence pertaining to this concept.  Some of these are written from particular vantage points (e.g. community sector, health or commercial sector view) or focus on particular types of commissioning approaches (e.g. integrated, strategic, intelligent).  Here I have summarised some of those which I think are most helpful in providing a good background and sense of the evidence around commissioning in a general sense.

I’ve done a few of these reviews myself in recent years.  The most recent of these was published by the Melbourne School of Government and this sought to extract lessons from the evidence base that are of relevance to the Australian context.  This review examines what commissioning is and what is important in developing a commissioning approach.  This built on previous work I had been involved in, such as this review of different commissioning models that was done for the National Audit Office in the UK in 2012.  The report focused particularly about the role that the third sector plays in these models (and was published by the Third Sector Research Centre).

The UK Cabinet Office hosts a commissioning academy and this sets out a short and very straightforward introduction to this concept.  It was published a few years back but provides a helpful overview before starting to delve into the detail.  For those with an interest in children’s services, this document can be a helpful companion, containing some case studies to exemplify these ideas in practice.  The Office for Public Management sets out a literature review of multi-level commissioning which provides definitions of this concept.

In 2015, the Irish Government undertook a ‘rapid review‘ into the evidence relating to commissioning in human, social and community services.  This is a pretty helpful introduction to commissioning in Ireland, what commissioning is, the different approaches and models and the benefits, risks, impact and cost of commissioning.  The report finishes with a series of key messages such as the need for a coherent policy rationale, the need for a clear definition of commissioning and that the outcomes of commissioning are hard to measure.

Back in Australia again, the Sax Institute published a rapid review of the evidence for the New South Wales Ministry of Health in 2015.  Again this report cycles through issues such as what is commissioning, what impact it has and the requirements for effective commissioning.  This is focused on the evidence with particular relevance to an Australian primary care context and a focus on supporting chronic disease management.  It finishes with  a series of tables that set out features of the Australian primary care context and the potential impacts and implications for commissioning, which are helpful in thinking through the future operation of this agenda.

There are a range of other reviews around but many of these don’t go beyond the sort of evidence and lessons set out here.  Next time around I’ll put some documents and examples up that deal with commissioning for outcomes.

The NDIS, markets and self-regulation: If we build it will they come?

I recently was invited to speak at an event hosted by the Victorian Council of Social Services on the topic of markets and human services.  I spoke about the need for more active market management in disability services and was asked to write up the talk for Power to Persuade’s current series on Social Service Futures.   The link to the piece can be found here.

The National Disability Insurance Scheme (NDIS) has been described as a once-in-a-generation reform that will benefit all Australians. The A$22 billion scheme is in the process of being progressively rolled out across most of the country.  
For many, the NDIS is an incredibly welcome scheme. For too long, Australian disability services have been underfunded, inflexible and built around the needs of the system rather than those of the individual. An OECD study found that Australians ranked lowest in terms of quality of life for disabled people. Other data sources echo these findings, showing that Australians with disabilities have low levels of income and labour force participation. People with disabilities experience social exclusion and significant levels of violence.  Given these trends something needs to be done to improve disability services and the outcomes and life chances of people with disabilities.Choice and control are at the heart of the NDIS, reflecting a belief in consumer-led reform supported by market forces.  People with disabilities have welcomed this in a context where services have traditionally been underfunded with little flexibility. The existing one-size-fits-all approach was built more around the needs of organisations and the system than people with disability.  This follows a broader international trend towards consumer-directed support, in the expectation that this should produce better and more relevant services for consumers through mechanisms of choice and control.   Others have also argued that these mechanisms are a more efficient way to spend scare resources.
The NDIS is in many ways illustrative of the sorts of changes that last year’s Harper review spoke of.  This spoke about the need to put consumer choice at the heart of government service delivery, through policies that will encourage diverse and competitive markets populated by innovative and responsive providers.  It argued that consumers are best placed to make decisions about their needs and the role of governments should be to ensure equitable access, minimum quality standards and the availability of relevant information to help consumers exercise choice.  Harper argued strongly for the separation of purchasing and providing functions as a way of ridding governments of conflicts of interest and to allow them to stick to their core business.  The role of government therefore is strategic – setting out the overall direction and then performance managing against this.  It is largely expected that the impending Productivity Commission report into human services will echo a number of these key themes.Of course, the use of markets in public services is not a new thing.  Indeed many in the community sector are presently grappling with the implications of moving from grant-based relationships to contracts.   We have seen reforms across a number of sectors that have sought to harness the strengths of markets but these have typically not had the impact that was desired.  We need only look at recent experiences around employment services, the VET sector or early childhood education to see that these have not always been a success.  These challenges are not confined to the shores of Australia and have also been experienced in other countries.  There are various reasons for this, but one of the key factors is that markets do not simply self-regulate.

The argument goes that separating the functions of purchasing and provision and giving more control to consumers will generate competition between providers will ensure that providers are responsive to consumers.  Providers will be incentivized to become more efficient and more innovative, finding new and different ways to deliver services.  Those who do not deliver what people want will receive no business and will disappear.  The market will self-regulate, with consumers getting what they want.

However, in order for this system to work there are a number of principles that must be in place.  These relate to the ability of consumers to be able to act with a degree of sovereignty to achieve desired outcomes, that they can do so rationally (meaning that there can be a judgment on the basis of sound evidence), there are few barriers to entry and all partners have a reasonable degree of intelligence and information about services.  Yet, as we start to apply these ideas to a public service context we find that they do not hold up.

Many of the kinds of factors that need to be in place to drive market forces are not present.  For example, consumers do not always use their own resources and can have limited sovereignty.  While it is nice to think about individuals having choice over a variety of services, people may not have full information over these, or a sense of what they should want or expect in terms of services.  Human services are often mediated by professionals who have significant influence over what people seek to choose.  We also need to remember that using human services is not always an option that is chosen for some but is chosen for them (e.g. child protection, some mental health services).  There can be significant informational asymmetries, substantial entry and exit costs and the ramifications of provider failure can be extreme.  We know that some areas will struggle to attract providers or the ‘right’ sorts of providers at least.  It is unlikely that large scale and widespread market failure will be allowed in a human service context in the way that we would see in a text book version of a market.

One the arguments that is often made in support of market-based reform is that government has failed in terms of provision in human services and should therefore leave it to the market to offer what government cannot.  But this seems to negate the fact that there is a far more active role that needs to be played by government in a context of market-based reform.

Markets need to be managed to ensure that there are sufficient providers, providing the kinds of services that consumers want and need and at the right price.  Recent evidence from the UK suggests that some with individual funding arrangements have found that they cannot afford the same sorts of packages of care that were previously available to them as care funding has been reduced in the drive to austerity.

The important point here is that a reliance on the existence of markets alone will not solve the challenges of the system we are currently faced with.  Although the logic of market-based-consumer-led forces driving changing is a compelling narrative, we would do well to remember that it takes a lot of effort to develop effective markets.  It is not, as Kevin Costner spoke about in the movie Field of Dreams, a case of ‘we will build it and they will come”.

If we simply think that by having a market and giving consumers some amount of control then significant reform will result then we are likely to be sorely disappointed.  If we are to see real consumer-driven reform we will need to see significant steps forward in terms of the ability of governments to operate a market stewardship perspective – which is also sometimes knows as a commissioning approach.  This is about more than simply contract management and involves significant engagement with a range of different stakeholders.

In doing this there are no magic bullets and it takes a lot of ongoing hard work in order to ensure that the appropriate sorts of systems and processes are in place for that area – and this will look different around the country depending on the particular characteristics of that locale.  Many of the lessons for government relate to providing clarity and transparency over systems and processes and constantly collecting intelligence to ensure that nothing significant has changed, that incentives are having the desire effect and systems are operating as expected.  For providers it will be more important than ever to be in touch with the mission and values of that organization and how these play out in business activities.  Workforce capacity and capability will need careful assessment, as will ways of working with consumers.  In navigating this kind of difficult terrain no one group or individual will have the answers.