Deal mediation – Neutral chairing for contract negotiation

A recent report announced that the NHS in England has just had its busiest year in its history with more patients than ever seeking help – over 23 million visits were made to Accident & Emergency in the 12 months to 31 March 2016, a rise of more than 500,000 on the previous year. It has also been my busiest year as a commercial mediator in the NHS sector, although for what I hope is an entirely different reason.

The growth in demand for NHS services can be attributed to adverse demographic factors such as an ageing, and increasingly obese, population.  And whilst many such factors can also play a part in fuelling the need for more mediation, particularly in areas such as medical accident and workplace conflict, the growth I am seeing in my mediation practice is coming from a more positive source, namely the emergence of a new area of application for an “old” concept.  This is the idea of working with a mediator to negotiate a deal for the future.

With hospitals and other NHS trusts in England overspending by a record £2.45 billion last year, the financial constraints under which commissioners and providers operate have never been tougher.  And by enlarge the commissioning process laid down by Government requires them to enter into service contracts that last for just one year.  Which means that the process of negotiating and working within contracts for issues such as the operation of a major hospital, or an entire region’s ambulance service, can become a never-ending spiral of complexity, with the Payment by Results regime involving a different charge for every single element of a patient’s treatment, huge scope for disagreement, and now not enough money to go around.  So teams of medics and accountants on each side of the process become engaged in a year-long battle of data audits, invoice challenges and debate, politely called contract management, in which the commissioners say they exercise financial leverage to secure efficiency improvements and better overall healthcare whilst the providers say they simply cannot keep the hospital doors open if they get any less money.

And this has become my world, particularly over the spring and early summer.   A few years ago I was occasionally called into the NHS to conduct a “traditional” mediation, usually about disputed invoices left unpaid at the end of a financial year.  Increasingly, however, my role involves working with parties who are struggling to even sign up to an agreement at the beginning of the year.   Closing the hospital is simply not an option, but commissioner and provider do have to agree a working relationship that they can both survive from a financial perspective.  Which mean that deals have to be done: where can services be restructured to save costs, what one-off investments can be made to save money in the longer-term, what risks can be shared, what performance incentives offered, and how can both sides keep their own stakeholders happy – the commissioners need to show that they are achieving efficiency gains and procuring better healthcare; the providers live under the scrutiny of local MPs and residents.

Using a mediator in this context works for exactly the same reason as it does in dispute situations. When unassisted direct negotiations between parties don’t work, the logical next move should be simply to get someone in to help with the process, whether you call them a mediator, facilitator or even a “neutral chair”, my favourite non-threatening, non-judgmental label.  The difference is that, because there isn’t actually a dispute, there often isn’t a simple pie that needs to be divided up.  Rather, the mediator’s role is to manage the complexity of the process and encourage collaborative working so that parties come up with creative solutions to what is nearly always a mutual problem, namely how to provide improved healthcare for the public from limited funds.

The NHS is currently seeing a lot of this sort of process simply because of their model of annual negotiations.  There is, however, a lot of potential for wider use of the neutral chair.  A few years ago I chaired the negotiations between the National Farmers’ Union and British Sugar about the future terms of trade of the UK sugar beet industry, and I have also run similar, but confidential, negotiations in a range of other sectors.  Often, but not always, the process is more drawn out, not least because of the multiplicity of issues involved in a complex deal.  Crowd control can also be a challenge, particularly when each negotiating team brings specialist experts for each topic, although lawyer involvement is often less than I usually see in a dispute context.  But the sense of satisfaction when clients get to a deal is even greater – in helping close deals worth over £1 billion this year alone, I get a real sense of satisfaction that goes far beyond knowing that I’ve helped parties get out of a hole of their own making, sometimes even knowing that one of my suggestions has made a difference – for the usual concern about not taking sides doesn’t arise when neither side knows how to address a particular problem.  And quite often it’s the move from adversarial to collaborative working that makes the difference – which is why, when I do get parties to an agreement I don’t heave a sigh of relief and get them working on the drafting before someone changes their mind. I say “now that we’ve got to a deal, let’s relax and then have a discussion about how we can make the deal even better”.  And we usually do.

 

 

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