Principles paper: managing provider failure

Source:
SCIE Social Care Online
Publisher:
National Audit Office
Publication date:
01 January 2015

Abstract

This paper explores the principles government departments should use to manage provider failure. A provider is defined as any organisation that delivers services to or on behalf of government and failure as any event which requires an intervention above and beyond normal performance management. The paper argues that while failure can be the necessary price of innovation or come from effective competition, keenly priced contracts and robust contract management, it must be managed effectively, in order to ensure continuity of services, and to protect the interests of people who use them. The paper draws on a review of previous work, a wide ranging literature review and interviews with stakeholders across the private, public and third sectors to set out the following principles: understand the appetite for failure; plan a delivery model which aligns to the appetite for failure; plan for how to respond in the event of a provider failure; put in place appropriate oversight to monitor providers, proportionate to risk appetite; agree with providers and service users what constitutes failure and its consequences; balance the need to be consistent with the need to respond to individual circumstances; assess the ways in which the response to a failure has affected the perception of the appetite for failure and therefore the incentives operating upon providers; reconsider the health of their providers; and share lessons about failure within and outside the department.