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11.04.18

A modular approach to procurement

Source: NHE March/April 2018

To support the ongoing national focus on driving up procurement standards in healthcare, NHS Shared Business Services (NHS SBS) is set to launch a new flexible services approach that can be tailored to the individual needs of trusts, explains its director of procurement, Peter Akid.

At the beginning of 2018 we set out our ambition as an organisation: to transform the way shared services are delivered across the NHS and help more provider trusts to achieve national efficiency targets. Central to this is the investment we are making in expanding our offer by launching new innovative products and, at the same time, making it easier for NHS organisations to take advantage of our services.

With this in mind, one of our key priorities has been to find new ways for NHS organisations to access our specialist procurement expertise. It is in response to the unrealised savings that continue to exist across the NHS – opportunities for greater efficiencies and improved purchasing processes that are still being missed two years on from Lord Carter’s report.

In the latest procurement league table from NHS Improvement (NHSI), for example, which evaluated the relative performance of procurement departments in non-specialist acute providers in 2016-17, over one-third of the 136 trusts assessed were considered to be performing ‘below expectation.’ Only 11, meanwhile, were adjudged to be at a level that ‘exceeds expectation’ when it comes to overall procurement process efficiency and price performance.

The league table also shows that if all 136 organisations had purchased products at the national median price in 2016-17, according to the national price comparison tool – known as the Purchase Price Index and Benchmark (PPIB) – the overall savings would have been in excess of £300m. If they had purchased at the minimum price, meanwhile, this would have risen to over £520m.

Whilst the figures from NHSI come with various caveats, the league table serves as a good indicator of the still-pressing need for many providers to vastly improve their procurement practices.

And it is here that NHS SBS has a huge amount to offer them. Our current comprehensive procurement service, Integrated Procurement Partnering, which involves an on-site NHS SBS procurement team, has delivered average savings of more than £1.2m per trust for those we have worked with this financial year. But we recognise that the full outsourced model can be a big step and does not suit every NHS organisation.

From next month, therefore, our new service provision will enable NHS trusts to partner with us on a more flexible basis. By separating our integrated approach into different modular services – and working to support existing NHS procurement teams – we hope to identify and deliver a number of improvements in terms of savings, efficiencies and governance, by finding more modern and effective ways of working for a greater number of NHS partners.

Focus on five

As part of the new offer, five different areas of procurement services will be available to NHS organisations depending on their individual requirements. These can be taken as discrete services or packaged together as needed.

The first of these, ‘Procurement Strategy,’ is the provision of senior leadership resource to help develop the organisation’s procurement ‘fit’ within a trust. It is based on NHS best practice, designed to comply with national initiatives (e.g. Lord Carter metrics and the NHS Procurement and Commercial Standards) and able to embed local organisational objectives to ensure a robust approach.

This will particularly benefit procurement teams that are very busy delivering projects and managing day-to-day demands, but perhaps lack the time and/or in-house experience to develop a detailed strategy with a clear vision, which brings the organisation in line with national imperatives set by the Department of Health and Social Care (DHSC).

We also see our new strategy service, which is built around our experience in procurement development, as being increasingly relevant and valuable to NHS organisations that are collaborating across local footprint areas, such as sustainability and transformation partnerships and accountable care organisations – where having an agreed, clear direction is fundamental to success.

‘Programme Management & Engagement’ is the second area that is available as a standalone service to the NHS. This support predominantly focuses on an organisation’s existing arrangements, developing a delivery plan and enacting a pipeline of work where there is opportunity for competitive processes to deliver savings and other benefits. In addition, our procurement experts can look at addressing any failing contracts or identify multiple agreements that can be potentially bundled together to deliver greater value.

At one of the mental health and community trusts we currently partner with, for instance, we uncovered a number of discrete projects with multiple contracts, which could be brought into a single, more easily-managed agreement. The negotiation led to hundreds of thousands of pounds savings for the trust.

Our new modular approach to procurement will also benefit NHS organisations that require support for ‘Bespoke Projects.’ If a trust needs assistance with a one-off piece of work, such as a project that needs to be scoped out and delivered, or market engagement and a plan on delivering a particular procurement, we can now provide the skilled procurement resource to help. In real terms this might look similar to the ‘No PO No Pay’ project we delivered for one NHS trust, which succeeded in driving up purchase order compliance within the organisation.

‘Supplier Contract Performance’ is another service that can now be provided to NHS trusts in isolation or alongside other procurement support. This means reviewing and understanding an organisation’s agreements to identify improvements in terms of supplier performance, getting better value and risk mitigation. It also means managing relationships with suppliers, in order to achieve better contract compliance, stability and increased efficiencies.

One area where providers can usually identify improvements is in their inter-NHS work. One of the community trusts we currently work with, for example, was spending £1.5m every month with its local acute hospital trust.

However, when we looked closely at its performance against the contract, we found activity was being recorded inaccurately, service specifications were out of date and hence not reflecting the service required, and the organisation was paying for things it was not getting. In addition, when we market-tested equipment maintenance services, the trust found it could save a massive 50% of the cost by using an external supplier.

The final strand of our new modular procurement offer is ‘Inventory Management.’ As part of the procurement transformation plans that NHS trusts are required to have in place, there must be a focus on Scan4Safety and GS1 compliance with the DHSC’s eProcurement strategy. Put simply, this involves an electronic audit trail to know what products have been given to which patients and when.

Our materials management teams use scan technology to receive and distribute goods around a hospital. This provides a detailed picture of stock levels and where products are within a trust at any given time. It enables good control over the selection of goods purchased and order quantities to ensure goods are not wasted.

In the complex – and sometimes undervalued – world of NHS procurement, our redesigned, more flexible service delivery model aims to better support procurement teams across the country, which are invariably dealing with increasing pressures and scrutiny, with often limited in-house resource and skills.

Our hope is that by extending our services in this way, more NHS organisations can take advantage of our proven ways of working – and related savings – and begin to move up the national league tables, one of the key indicators of procurement performance in the NHS.

 

FOR MORE INFORMATION
To find out more, get in touch with the NHS SBS procurement team at:
E: sbs.procurement.enquiries@nhs.net

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