Health Service Focus

Improving efficiency with eProcurement

NHE takes a look at what the Department of Health’s newly launched eProcurement strategy will mean for trusts across the country, with input from Steve Graham, eProcurement lead at the Department of Health. David Stevenson reports.

The Department of Health (DH) launched its NHS eProcurement Strategy on 7 May with grand claims about the impact it will have. It will make the NHS more efficient, deliver large financial savings and improve patient safety, we hear – but we’ve heard these claims before. Is this time different?

The ambition of the strategy is for all NHS purchase-to-pay transactions and all category management activities to be undertaken by electronic means to cover all non-pay expenditure.

Although it will take several years of “concerted” effort across the NHS landscape, and across the NHS supplier base, to achieve this ambition, the ultimate aim is to make procurement faster and more efficient.

But the DH is quite confident that as part of the NHS Procurement Development Programme, which aims to help the NHS save £1.5bn by the financial year 2015-2016, eProcurement can yield “significant recurrent financial savings that can be returned to patient care”.

Dr Dan Poulter, the minister responsible, said: “Previous efforts to improve eProcurement in the NHS have been patchy due to a lack of central direction. We have now mandated the use of the GS1 and PEPPOL (Pan-European Public Procurement Online) standards by amending the NHS Standard Contract to require compliance with this NHS eProcurement strategy.

“To embed these standards across the NHS, we will centrally fund and procure the critical national infrastructure to support the strategy, which will be interoperable with existing and future local eProcurement systems so that trusts can locally select their preferred technology partners.”

In the past, the DH stated that a “key barrier” to the maximum realisation of eProcurement benefits was that within acute NHS providers, many procurement process flows were fragmented across  multiple supply functions, including supplies, pharmacy, pathology, sterile services, linen services, appliances, estates, catering and cleaning services.

To maximise these benefits by using eProcurement, acute NHS providers will be required to migrate these fragmented supply functions to common business processes and rules, based on the requirements of the eProcurement strategy.

The adoption of common global standards by NHS providers and their suppliers, throughout their internal and external supply chains, will create efficiency and quality benefits for all parties, and there is no need for either to change their systems. Instead, they will need to implement the GS1 and PEPPOL standards to underpin the exchange of data between their systems, thereby achieving “interoperability”.

Trust compliance with GS1 and PEPPOL messaging standards will enable them to control and manage non-paying spending by:

• Using master procurement data;

• Automating the exchange of procurement data;  and

• Benchmarking their procurement expenditure data against other trusts and healthcare providers.

To encourage eProcurement implementation, adoption will be mandatory for both NHS providers and their suppliers through conditions of contract, as follows:

• The NHS Terms and Conditions for the Supply of Goods and the Provision of Services were revised in August 2013 to include a requirement on suppliers to place master product data into a GS1 certified datapool.

• The 2014-15 NHS Standard Contract between healthcare commissioners and NHS providers includes a requirement that the provider must comply with the requirements of the NHS eProcurement strategy.

Master data and datapools

Currently, GS1 has certified 29 datapools across 24 countries that provide repositories for suppliers to place master data. Suppliers can load their master data into any GS1-registered datapool, which are operated by either GS1 or commercial vendors and are linked by the Global Data Synchronisation Network (GDSN) network that enables master data to be synchronised in near real time and shared globally with buying organisations. To enable NHS providers to demonstrate progress, the DH will develop a certification scheme for NHS providers and their suppliers, and a framework agreement will be put in place with external accreditation organisations to provide certification services. Certification will be at the levels of: GS1 ready; GS1 implementing; and GS1 compliant. Progress against the adoption of PEPPOL will also be monitored through the reporting of transaction volumes exchanged by access point providers.

With regards to the master data, it supports all elements of procurement, including price benchmarking between NHS providers; analysis of expenditure within an NHS provider; catalogue content; exchange of requisition, purchase order, delivery and invoice data; and the notification and sharing of purchasing requirements when tendering. 

NHE was among the attendees at the Health & Social Care Information Centre’s (HSCIC) ‘AIDC Benefits Event’ in Manchester on 12 March. AIDC – Auto ID and Data Capture – technologies use barcodes, Radio Frequency Identification (RFID) and other machine-readable codes to quickly and accurately identify a person, item or process.

Steve Graham, eProcurement lead at the DH, was among the speakers, and explained how master data is the definitive and accurate version of the information held about an item. The GS1 system enables a single global source of master data to be created, captured and shared across supply chains, from the brand owner through to the end user – a message echoed at the event by Chris Doyle, healthcare marketing manager at GS1 UK, the independent supply chain standards organisation.

Until now, though, the use of master data in procurement has been limited in the NHS, resulting in the same item being coded and described differently by NHS providers and suppliers. Adoption of GS1 standards across the NHS and by suppliers will provide the master data required for procurement efficiency.  Graham added: “The whole principle behind the eProcurement strategy is about standards, it is not about systems. It is about applying particular coding and messaging standards.

“We want to make the exchange of information more efficient. If we automate what we have at the moment in the supply chain, it would be absolute chaos. So there is a need to sort this transaction data out.”

The detail

Under the revised NHS Terms & Conditions for the Supply of Goods and Provision of Services, suppliers must place product data into a GS1-certified datapool. During 2014, the DH will specify and procure a GS1-certified NHS datapool, which will take supplier master product data from any GS1-certified source datapool to become the data repository for master data relating to products purchased by the NHS.

As part of the eProcurement strategy, NHS providers should include the requirement for suppliers to provide GS1 Global Trade Identification Numbers (GTIN) – a unique number used to access an electronic record held in a database that can contain hundreds of attributes concerning a specific product – and associated data as an integral part of any procurement process. The GTIN is encoded to a GS1 data carrier standard for barcodes and RFID tags, enabling the generation of a barcode that can be read by a scanner. Scanning the barcode provides an electronic key to access a database of product-specific attributes.

Additionally, in the short term, trusts will need to develop a GS1 adoption plan in the next financial year. GS1 UK has said it will support trusts by producing template plans which will be shared through the newly launched www.gs1ukinhealthcare.org website.

Lord Hunt, president of GS1 UK, said: “The eProcurement strategy highlights the value of GS1 standards to the healthcare supply chain. Currently our standards provide a consistent language for identifying, locating, moving and trading medical supplies and assets quickly, helping to save time and money in the healthcare supply chain.

“By mandating these standards and holding trust board members responsible for implementation, we will increase efficiency and productivity across the NHS, reducing paperwork, freeing up budget and crucially allowing staff to spend more time caring for patients.”

Cataloguing

Many NHS providers already operate electronic catalogues that are integrated with the purchase order module of their finance system. Those that don’t already have electronic catalogues should expect to implement a solution as part of their GS1 adoption plans.

The DH has stated that NHS providers can access the NHS eCommerce framework agreement for external catalogue solutions, which runs until 31 March 2016, and was established by Northumbria Healthcare NHS Foundation Trust in partnership with the DH and the NEP Shared Systems Group. And to enable GS1 master data to be transferred from suppliers to existing NHS provider catalogue solutions, central investment in national infrastructure will be undertaken by the DH.

The Department will also specify and procure a national Product Information Management system (PIM) that will integrate the NHS datapool with local NHS provider catalogue solutions, with each NHS provider using the PIM to request and manage master product data from the datapool, which in turn will request master product data from the source datapool chosen by a supplier.

Following this, the GS1 GDSN will enable this master data to be synchronised in near real time, thereby ensuring that NHS provider catalogues always contain accurate master data. The cost of procuring a PIM with this functionality is “prohibitive at NHS provider level”, hence the need for a single national solution. The national PIM will be the only available mechanism for NHS providers to access the NHS datapool and maintain their local catalogues with master data.

“There is no quick lightswitch for this project: it will take around 10 years for the programme to be sophisticated and to get to where supermarkets are now,” Graham told NHE. “The PIM will automate to whatever system is used within a trust, and the centre will invest in this. There will be an integration phase, so as long as you don’t have [an] obscure one-off system that no-one else uses, you’ll be all right!” he joked.

Master item data synchronised from a GS1-accredited datapool to an NHS provider catalogue system can be retrieved to manage logistics activity in the supply chain using AIDC devices to scan barcodes.

Within pharmacy, acute NHS providers utilise either the Powergate or Medecator requirement capture systems. However, over time, NHS providers should adapt these systems to capture GS1 barcodes as many medicines already carry a GS1 barcode.

The DH added that, currently, every NHS provider creates supplier numbers in their system, with the consequence that all NHS providers have different numbers for a given supplier. This works in reverse, with all suppliers having different numbers for a given NHS provider. But the GS1 system includes Global Location Numbers (GLNs) that enable globally unique numbers to be created for any location in the supply chain, from factories to clinical departments. GLNs are contained in barcodes used on supplier dispatch documentation and packaging labels, which can be read by a scanner at the point of receipt at the NHS provider, automating the goods receipting process. This does mean, though, that both supplier and NHS provider GS1 adoption plans should include early implementation of GLN codes for location identification.

PEPPOL

Under the current framework, almost all NHS providers utilise the GHX Pharmacy Messaging Service to process purchase order messages and around 80% of these transactions are integrated with their suppliers’ systems. For non-pharmacy orders, around half of NHS providers use the GHX exchange but less than half of their purchase order messages are integrated, with the majority reaching the supplier as a PDF file that requires re-keying by the supplier into their sales order processing system. This inefficient process generates excess costs in the supply chain that are ultimately borne by the NHS in the form
of higher prices and inventory levels, something the DH wants to see initially reduced and then removed.

In June 2013, the European Commission (EC) proposed a draft directive on electronic invoicing in public procurement. The proposed directive includes a requirement for contracting authorities, such as NHS providers, to offer their suppliers the ability to submit electronic invoices.

Although some progress has been made on purchase order messaging, particularly in pharmacy, NHS providers have made little progress on electronic invoicing.  Therefore, to achieve automated machine-to-machine purchase order and invoice transactions between NHS providers and suppliers, both must operate to a common messaging standard. This strategy recommends adoption of PEPPOL as the messaging standard to be adopted by the NHS and its suppliers.

To do this, trusts will have an access point that is integrated to the NHS provider purchase order processing system. It receives purchase orders from the NHS provider and converts them to the PEPPOL messaging standard. It then exchanges PEPPOL-compliant purchase order messages with the supplier access point, which in turn is integrated to the supplier sales order processing system. This enables a purchase order from an NHS provider to be transmitted and loaded directly into a supplier sales order processing system without manual intervention. 

More importantly, says the DH, there are no fees payable between access points, with each party paying only their own PEPPOL access point provider. During this year the DH will specify and procure a national framework agreement for the provision of PEPPOL-compliant access points. And, as part of this, existing NHS eProcurement Strategy providers of exchange services will be able to compete for this framework agreement provided they become compliant with the PEPPOL standards.

Additionally, to support safety recalls; traceability; identification; and reduce counterfeiting, the EC has issued a recommendation on a common framework for a unique device identification system (UDI) for medical devices, which requires health institutions and suppliers to electronically store and keep the unique identifier of devices they have been supplied with or have supplied; and requires health institutions to issue an implant card, carrying the unique device identifier, to patients receiving an implantable device.

Trusts have been told that GS1 provides for both device and production identifiers to be encoded into a single barcode, and NHS providers should include plans for UDI in their GS1 adoption plans. Graham added: “This is a really significant saving opportunity coming from across all trusts. [Not just] in procurement, but savings made from reducing drug errors, the obsolescence of inefficient systems and errors in the supply chain – fixing the errors that people make.”

Expectations

Without the goods and services provided by external suppliers, patient care cannot be delivered, whether directly by clinicians or when enabled by the support services and back office functions that support front line care, the DH has stated. It is hoped that the adoption of GS1 global standards will provide “consistently” safer healthcare with fewer mistakes, with clinicians spending less time on procurement activity, and with redundant activities and their associated costs being eliminated.

Simon Walsh MCIPS, head of procurement and e-commerce at Central Manchester University Hospitals NHS FT, said: “The GS1 system has enabled the retail supply chain to undergo transformational change over the last 40 years and similar transformation is now needed for NHS procurement. The mandate for GS1 coding and an NHS datapool should serve as a clear call for our suppliers to adopt GS1 standards to identify the products and services we buy.”

And as well as achieving compliance with forthcoming legislation, full implementation of eProcurement solutions could yield significant “recurrent” savings that can be returned to patient care. A McKinsey report, ‘Strength in Unity’, for instance, has identified that recurring annual savings of £3m-£5m for a 600 bed acute NHS provider can be achieved from the application of GS1 global standards to hospital procurement activity.

Conducted with the participation of more than 80 healthcare industry leaders from around the world, the report stated that by adopting a single global standard in healthcare, costs can be reduced and better patient care can be delivered.  For instance, by adopting the new strategies, it is hoped that doctors and nurses could spend less time with paperwork and more with patients, while opening up opportunities for innovation – enabling new progress in personalised medicine, customised devices and mobile health.

David Rabjohns, e-commerce enterprise architect at NHS Supply Chain, said: “This strategy will allow transparency throughout the NHS procurement process, simplifying the supply chain, driving cost efficiencies, increasing accuracy and allowing greater compliance.

“It will also enable a more unified system of procurement across the NHS, enabling product comparison, aggregation and standardisation across trusts.”

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