NHS procurement – how can we do things differently?
Jonathan Edwards Senior Manager at Attain talks about the challenges the NHS Procurement teams in delivery of the Carter efficiencies.
Lord Carter’s NHS efficiency report in February 2016 set out procurement standards that acute trusts should achieve by October 2017. The procurement metrics set out ensure trusts operate efficiently and maximise the value that procurement services can offer. Procurement has consistently been identified as an area of savings opportunity. Procurement is attractive to senior leaders, especially within acute settings, as it perceived to have a relatively low impact on people and healthcare delivery whilst directly impacting on recurring non pay costs.
The challenge faced by trusts:
- The need to reduce the price of goods and services
- The cost of holding stock
- Collaboration with other trusts to drive volume/market share agreements
- Meeting the Carter procurement efficiency targets
I will now take a look at each of these in turn:
Reducing the price of goods and services
Albert Eintstein described insanity as “doing the same thing over and over again and expecting different results”. Procurement can sometimes feel like this, to use frameworks to deliver legally compliant procurement is one challenge but the push to reduce costs has intensified and procurement teams need to use different levers to generate savings.
Having a deep understanding of your spend allows you to prioritise your workplan, develop effective sourcing strategies and maximise the impact your procurement teams can have.
At Attain we have a Commercial Assurance Toolkit that helps us to identify opportunities and devise strategies to reduce costs and improve service levels.
Example of Attain spend review
Attain’s Commercial Assurance Toolkit
Collaboration with other trusts
Collaboration with other trusts to standardise product usage will enable procurement teams to commit greater volumes, or market share, to suppliers and help them share the savings generated from a predictable manufacturing process and maximised supply chain efficiencies.
This can only work effectively if clinical leaders are fully engaged and support changes in products used and challenge non-compliance. Trusts should look to collaborate with NHS partners who can standardise products across sites. Where STPs are looking for clinical staff to work across sites this would have added benefits as there would be a consistency of products, processes and outcomes.
Additional savings can be made by ensuring that only stock required to support the delivery of healthcare is stored on site. The right stock levels need to be in the right place for clinicians to deliver healthcare with a level of safety stock that gives confidence that spikes in activity can be supported.
For elective surgery stock levels can be planned in advance and the barcoding being introduced to improve patient safety by recording products to patient episode (Scan4safety) can be used to support cutting edge inventory management solutions.
Precise recording of products used will provide reliable information to give clinicians confidence they have enough stock available and help procurement teams give accurate usage requirements to suppliers.
The resulting lower stock levels will help end the expensive use of consignment stock and reduce wastage. The risk of products getting lost, becoming out of date or obsolete can also be minimised.
Carter – an efficient procurement service
Lord Carter set out the procurement standards a trust should achieve to create an effective procurement department. Each acute trust should now have a procurement transformation plan signed off by their board documenting how they are going to achieve these standards over the next two years.
Inevitably trust procurement teams have different starting points but the first steps should be to ensure that the majority of spend goes through trust finance systems and is ordered against an agreed trust catalogue to ensure compliance to contracts (ensuring lowest price paid).
Additionally trusts should look to increase procurement involvement in commercial decisions and informing board decision making.
Should trust procurement be outsourced?
The question of outsourcing is raised by many senior leaders to challenge the status quo. National contracting is becoming increasingly effective and in the future will reduce the need for trusts to contract direct to market for medical equipment and consumables.
Procurement collaboration across trusts could avoid duplication of service contracting where multiple trusts have similar requirements and need to go to market at the same time.
In future the contracts that will need to be sourced locally will be for bespoke local requirements. This will be mainly service contracting supporting specifications and contract awards whilst ensuring procurements are conducted in compliance with EU regulations (of which the principles are likely to continue after Brexit).
Trusts will continue to need an on-site presence to support implementation of product changes and coordinate training for new products. Across Attain’s team we combine extensive clinical expertise, commercial thinking and change management approaches to effect transformation.
Additionally Trusts will always need a dedicated supply chain team to manage the physical movement of goods and manage stock across the trust.
So is outsourcing a realistic option?
Yes, there are different solutions available to organisations from full outsourcing to partnerships with mixed NHS and Attain teams. The solution would still require dedicated on site teams. An outsourced model would require strict performance targets and monitoring as the service is critical to healthcare delivery.
Would an outsourced service reduce the need to pay VAT?
A question asked by many and there is a growing trend for trusts to outsource the supply of consumable products which can lead to VAT exemption in some areas. This model is worthy of consideration, it introduces risks and process inefficiencies that some trusts have concluded are outweighed by the savings that that can be achieved.
Jonathan Edwards is a Senior Manager with Attain. He has worked in the NHS for over 20 years in a range of national procurement and supply chain roles. Before joining Attain’s Commercial Team Jonathan was the procurement lead for the Working Together Programme in South Yorkshire and Bassetlaw. He has worked with several trusts to review and transform their procurement and supply chain processes.
He has worked with several procurement teams at both trust and regional level to build and deliver a transformation plan to meet the procurement standards.
If you need support in reviewing the options open to your trust or to develop and deliver your procurement transformation plans please contact Jonathan Edwards