QIPP, Efficiency & Savings

Leading the way in procurement partnerships

Mario Varela, managing director of NHS London Procurement Partnership (LPP), discusses the changing landscape of NHS procurement and the importance of clinical engagement.

Since 2006, the LPP has saved its members more than £850m by working together in partnership. At the moment it saves the NHS nearly £2m a week, with a return on investment averaging in excess of 10:1. But what has been the key to the organisation’s success, allowing it to boast the mantra ‘commercial advantage for the NHS by the NHS’? 

Mario Varela, who has been leading LPP since 2009 and was appointed its first managing director in 2011, said a vital aspect of the hub’s activities has been its ability to work with its members to identify priority areas and categories to take to market. 

“Over the last two or three years we have focused on big ticket items,” he noted. “There have been quite a lot of savings achieved in the estates and facilities arena.” 

Varela added that Lord Carter’s efficiency review highlights the variation in performance across NHS estates, “with lots of opportunities to utilise our estates more effectively”. 

“Obviously our main focus is in things like the contract in soft facilities management and hard facilities management, the maintenance of the building and the contracts in maintaining the buildings,” he said. “We have seen tremendous savings in these areas, and are also sharing best practice in terms of contract management.” 

Clinical engagement 

Additionally, he claimed the procurement hub has made “tremendous inroads” into the medical and surgical area, but has stayed away from the main consumables arena. 

“Where we concentrated our efforts has been on areas like cardiology, orthopaedics and we have been extremely successful in linking with the main centres and bringing some competitive tension into those markets,” said Varela.

“In some instances clinicians get very wedded to particular products and brands, and one can understand and imagine why that is. An orthopaedic surgeon, for instance, who is trained to use a particular hip or knee, and then being told to use something else, may not find it an easy case of switching from one product for another. 

“Sometimes people have to be retrained and that impacts on their ability to deliver an optimum service to patients. But there is lots of variation in the market and we are trying to reduce that.” 

He added that a lot of this work is a “hard slog”, but by working with leading clinicians and directors of specialisms LPP has been able to look at the functionality and ask whether, for example, five different types of hips and knees are required. 

Clinical buy-in and engagement has been crucial to starting the journey and making decisions people are comfortable with, noted Varela. “But if you take Royal Brompton & Harefield NHS FT, a major cardiology centre, the work we have done with them has taken something like 20% out of their budget, because we were able to rationalise the products they were using and rationalise the number of suppliers. We also incentivised suppliers to give us better deals to get a bigger market share.” 

Discussing the long-term impact of the Carter Review, Varela added that it is an “important piece of work that needs to be followed through and implemented”. 

“It is about having the data and comparators so that people know where they are and they can ask the question, ‘if it can be done at Oxford or UCLH, why am I not doing it here?’ What is the problem? What is the variation? Once you have got the data, you can start to make informed decisions,” he said. 

The former director of Procurement & E-Commerce at Barts added that LPP had an influence on some of the recommendations Lord Carter came out with, “because we could show him real examples”. LPP also has an NHS Improvement (NHSI) representative on its steering board, “so Carter is very much a focus of what we do”. 

LPP has also been working with other NHS hubs, including NHS Commercial Solutions, NHS North of England Commercial Procurement Collaborative and East of England NHS Collaborative Procurement Hub, on the first National Clinical Staffing framework, supporting compliance with NHSI’s caps on agency staffing pay and charge rates. 

“We were the first hub in London that basically kicked this off by working with workforce directors and talked about how can we bring some order to the system,” he said. “What people probably didn’t realise at the time was that if I’m Guy’s and St Thomas’ and I’m willing to pay an additional X amount per hour for a band 5 nurse, then I am robbing Peter to pay Paul. I’m robbing someone that might work at another hospital in London because I’m prepared to pay more than they are and can afford to pay.” 

Although a national framework, the four hub agency staffing teams will be available to provide full support to organisations accessing the framework. A critical feature of the new framework is the requirement for every agency to be evaluated each year by an independent auditor, commissioned by CPP and at no cost to participating trusts. It is also arranged into three lots (see box out), offering a variety of supply models. 

“We need to operate as a system and that means setting some ground rules about what rates we are willing to pay and act together as a system,” said Varela. “We started that work back in 2010. Now NHSI has come along and we informed some of their work about what should be the caps against each grade. Our contract does meet all those requirements, and the suppliers on the framework have to abide by the rules being set.” 

Strengthening shared services 

Lord Carter also emphasised the need to restructure the NHS procurement and supply chain delivery model to rationalise the procurement landscape, reduce spend and consolidate purchasing power. 

LPP are doing a number of things in this space, said Varela, with a pilot in south west London supporting a number of hospitals, including Croydon, Epsom and Kingston, in having a shared procurement resource as opposed to separate teams. 

“We have put some resources to work out an outline business case in terms of whether they can have a shared resource,” he noted. “There are a number of opportunities by doing this. One is that by having a shared resource you can increase the capability and capacity of the team to deliver more, because you have common goals and objectives. 

“You are able to set up networks across the three organisations making common decisions. Your ability to negotiate your positon in the market place is greater than each organisation doing it themselves. There are also economies of scale to add in terms of merging the teams and making it a cohesive and unified team. 

“That business case has been written and is to go to these boards. It is likely that sometime in the future you will see more of these, what we call clusters, shared services, within the procurement world.” 

Varela added that consolidating work is one of the major themes to come out of Carter, with the opportunity for multiple trusts to collaborate not just in procurement but right across the back-office. 

“We are supporting all of this,” he said, adding: “In many ways we are providing the expertise in making it happen. I guess that is part of our role to provide the intellectual rigour and muscle to enter into these discussions.”

Lot 1: Employment Business – Under this lot agencies supply temporary workers and pay the worker 

Lot 2: Employment Agency – Agencies supply either temporary or permanent workers to the trust, but the trust pays the worker, with the agency receiving a commission fee 

Lot 3: Neutral Vendor- The supplier acts as a neutral party. They do not supply their own staff, but instead manage the supply chain

FOR MORE INFORMATION

W: www.lpp.nhs.uk