Avenues Trust subcontracts work for a mid-size social care provider in and around London and South East. The care provider works on an extremely tight budget, employing 800 staff members to care for 900 people. They operate about 50 homes for those with learning disabilities and mental health issues. The program has historically been underfunded, and as time, inflation, and expenses rise, it becomes increasingly difficult to recoup full operating costs for the services rendered.
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Attempts to Recoup Full Costs of Operations
Avenues Trust contracts to serve about 90 of the patients from the social care provider. These people have recently completed an extended hospital stay. The initial service contract was for five years.
The five-year period has expired, and now Avenues Trust negotiates the contract with the social care provider annually. The two parties meet twice each year to go over quality control issues, costs, and other related issues.
As Avenues Trust attempts to negotiate full cost, the social care provider feels a tremendous sense of responsibility for keeping costs low and making the most out of the public funds that go toward the care of the patients. The budget is currently around £4.6 million per year. The two parties send operations specialists, finance specialists, human resources representatives, and quality control officials to attend the meetings.
Because Avenues Trust has held this contract for so long, they have developed a trust and familiarity with the representatives of the social care provider. They have done so by being completely transparent with their books. Over time, Avenues Trust has learned that the only way to get additional funding approved to cover costs is by submitting clear evidence of their expenses.
Transparency in Negotiations
Even with full transparency, getting the funds approved is difficult. The two are working in a heavily regulated industry, but work hard to prevent negotiations from becoming unpleasant or overly hostile. Avenues Trust presents detailed activity reports and financial reports for the social care provider to examine.
At the end of the meeting, Avenues Trust was able to negotiate a 1.5 percent increase for inflation. It was granted because they were able to present a fully documented case for their position, and because they have worked hard over the years to foster a dependable, reliable relationship with the social care providers.
How the Issue Was Resolved
The 1.5 percent increase will not be enough to sustain operations at the full level, but the two parties were able to reconfigure certain services which were not profitable to help offset the lack of additional funding.
In final analysis, officials with Avenues Trust determined that it becomes harder to get additional funding after several years of a contract, but with good relations between the two sides, a compromise is almost always possible.
Avenues Trust further determined that it is important to focus on what the company does best, and let other, non-related services go when funding is particularly tight. The best time to negotiate additional or higher funding is at the beginning of a new contract. Negotiations become increasingly difficult over time, even if every effort is made to establish a good working relationship. [/show_to]
