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Topic 1 Reading How Purchasing Decisions Are Made In The Mixed Economy Of Community Care Notes

Accounting Notes > Accounting in the New Public Sector Notes

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How purchasing decisions are made in the mixed economy of community care - (Mannion and Smith, 1997)

HOW PURCHASING DECISIONS ARE MADE IN THE MIXED ECONOMY OF COMMUNITY CARE - (MANNION AND SMITH, 1997)

INTRODUCTION

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A new system of providing the social care services and support required by people who are affected by problems associated with ageing, mental illness, learning difficulties, or physical disability o Known as Community Care o Fully implemented in April 1993 o Give local authorities responsibility of assessing the requirements of those in need, of designing a package of care and of purchasing that care from a range of providers, many in the voluntary or private sector Two broad sets of influences on the purchasing decision: o The 'macro' environment which determines the broad framework within which any decision is made o The 'micro' environment, pertaining to a particular user

BACKGROUND

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Before 1993, social care service provided and funded by range of agencies o NHS, local government and Benefits Agency Those receiving residential care before the new arrangements came into force in general continue to receive care from the same source Only referrals since April 1993 have been assessed under the new system Older people are by far the largest group affected by the reforms A 'quasi-market' in community care therefore has been established along the lines of those already operating in health and education in the UK (Le Grand and Bartlett, 1993) 1990 National Health Service and Community Care Act o recommends social service departments obtain the necessary information in order to assess whether potential suppliers are reliable, commercially viable and share the values of the purchasing authority (Hudson, 1994) Principal mechanism for allocating resources and controlling activity is the contract between purchaser and provider o Open tendering - all providers are invited to tender o Select list tendering - providers are short-listed on certain criteria
? Competing mainly on price o Direct negotiation with suppliers - service specifications are developed jointly between purchasers and providers

MODELS OF PROVIDER CHOICE

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The standard model of choice employed by economists is based on the neoclassical critique Basis on marginal utility Strengths: rigour and internal consistency Weaknesses: criticized for unrealistic axioms which it is based (Earl, 1983) Sociological approach to the market: Traditional neoclassical economic theory overstates the role of price in regulating patterns of exchange (Bradach and Eccles, 1991) Purchasing decisions assumed to be determined less by costs and demand, but rather are socially constructed through a process of bargaining within networks of social actors

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