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13.12.17

Strategic investment planning

Paul Turton, head of solutions development at NHS Supply Chain, looks at how trusts can unlock investment in medical equipment to alleviate financial pressures.

Having access to the right medical equipment at the right time is widely recognised by the NHS as of fundamental importance for the delivery of safe and effective patient care. This requires planning for investment in new technologies and regular asset replacement. However, budget constraints and a rise in demand have seen trusts struggle with their capital equipment expenditure.

Not only does the UK have less diagnostic equipment than its European neighbours – for example, we have 6.1 MRI systems per million people compared to Germany’s 30.53 – but it also has an aged asset base, which increases the risks to patient safety. As trusts can no longer keep pace with the investment and replacement cycle, a backlog of aged equipment is emerging. A recent survey by the Clinical Imaging Board found that 29% of MRI systems in the UK are over 10 years old, which the European Society of Radiology recommends is the age they should be replaced or risk becoming obsolete.

Faced with the challenge of helping trusts to unlock investment in their capital equipment, replace ageing assets and generate savings, NHS Supply Chain developed its Strategic Investment Planning (SIP) service.

The service is a data-driven, systematic approach designed to help the NHS plan and finance the replacement of medical equipment by establishing credible, long-term replacement plans and financing strategies.

Supporting trusts

The majority of trusts approach us because they have a backlog of equipment that is due to be replaced and want help to manage this. Most trusts require support to identify and articulate their equipment replacement priorities and understand the financing and procurement options available within such a financially challenging environment. They also want to ensure that the decisions they make will deliver best value for money.

SIP can address these needs by providing trusts with credible, multi-year medical equipment replacement plans that include data and analysis to support the case for investment. Practical and effective solutions to finance plans and maximise equipment savings are also provided.

The process begins by working alongside the trust to outline objectives, agree the project scope and confirm the stakeholders involved. We then work with clinicians and equipment specialists to assess the condition of the medical equipment and provide analysis to identify replacement priorities. This provides the foundation to establish a long-term equipment replacement plan. We then work with finance and procurement managers at the trust and provide analysis to increase their understanding of the financing options available. 

A typical project will focus on a specific equipment type or clinical area, such as the replacement of radiology, endoscopy and general theatre equipment. Regardless of the equipment type, a key part of our service involves working in partnership with a range of different stakeholders. It is essential to gain buy-in from clinical, finance and procurement managers for the process to work.

Financial challenges

For many trusts the financial challenges they face are acute, and it can appear somewhat overwhelming when there is potentially millions of pounds’ worth of essential equipment that needs to be replaced. An initial step that trusts can take involves understanding how to get the most out of the capital budget. We look at ways to drive down equipment costs by aggregating spend across the equipment replacement plan or aligning purchases with other trusts to drive additional savings. Utilisation of the Department of Health Trading Fund also delivers significant savings as a result of the commitment deals we set up on behalf of the NHS with equipment suppliers.

In addition, we also explore alternative financing solutions with trusts. For example, leasing can be a very effective way of financing equipment over the long term, alleviating pressure on the capital budget and transferring some risks of ownership to the lender. As part of our SIP service we can provide cash-flow analysis for different financing options to present trusts with the information they need to make the best decisions. We also provide the NHS with a compliant route to draw down lease financing. With a consortium of lenders on our framework, we can offer a range of solutions and provide hands-on support through the quotation and award stages – including the provision of lease portfolio reports.

Supporting the Lord Carter agenda

A key focus of the Carter agenda is to deliver savings through better procurement. If we look at high-cost medical devices alone, Lord Carter estimates that £2bn is spent by the acute sector. At this scale, even modest incremental efficiency improvements can unlock significant financial savings.

However, with many trusts having already exhausted the quick wins, the focus needs to be on innovative new ways of working – which is where SIP comes in. We are enabling trusts to take genuine strategic decisions about their equipment, maintenance and financing needs through the provision of data, analysis and practical, hands-on support.

We can also use the strategic plans we establish with trusts to maximise the benefits of the different savings initiatives offered through NHS Supply Chain. An example of this is our Multi-Trust Aggregation (MTA) initiative, which we developed to consolidate demand across multiple trusts to drive down equipment costs. If we have visibility of a trust’s short- to long-term equipment needs we can be more proactive with MTAs to increase volume, which drives even better pricing. The key is to get more trusts on-board and collaborating with each other for the benefits to be realised.

We also see the potential for SIP to support Procurement Transformation Programmes and sustainability and transformation partnerships (STPs). In radiology, for example, some STPs are exploring how services need to be designed, what their equipment needs are and how they can collaborate to deliver procurement savings. Through SIP we can provide STPs with the foundations they need to make the right strategic decisions for their areas.

Ultimately our message is a simple one: through SIP we can help trusts and STPs to plan, buy and finance medical equipment in the best possible way at the lowest overall cost.

Top Image: Neustockimages

FOR MORE INFORMATION

E: Paul.Turton@supplychain.nhs.uk

W: www.supplychain.nhs.uk

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