interviews

The state of estate

Andy Brown, Managing Director of Business Solutions at NHS Supply Chain, tells NHE why better planning is key to a sustainable medical equipment estate and better healthcare – and why time is of the essence.

Recent research highlights a growing problem for the NHS – the need to keep life-saving equipment up-to-date.

As machinery ages, it starts to wear out, posing a danger to patients and a huge challenge to the health service in terms of replacement costs, maintenance costs, finance costs and productivity costs.

Yet this is just one of a myriad of problems facing the health service, and has to be prioritised alongside the need for integrated care, huge demand on A&E, new commissioning bodies, and the influence of the private sector.

Capital Equipment Fund

The DH recently announced the largest ever procurement of high-value linear accelerators through the Capital Equipment Fund. The £30m deal was set up with NHS Supply Chain and will give radiotherapy across the UK a significant boost. But it’s not enough, Managing Director of Business Solutions at NHS Supply Chain, Andy Brown, warns.

Warnings have also been issued by the National Audit Office and the Commons Public Accounts Committee in 2011 amongst others, and Brown said the analysis was that there has been “no aggregated buying of high-value capital equipment going on”, adding: “The NHS could get better value if it could aggregate its buying.”

The NAO report also identified a lack of planning for investment in new capital equipment, or replacement of old equipment, as well as “huge variation” in the utilisation of equipment.

‘Not free money’

The £300m fund was launched in March 2012 and has allowed NHS Supply Chain to bulk-buy a range of equipment, which can then be bought by trusts wanting to benefit from the lower prices. Brown said: “The important principle about the fund is that it’s not free money for trusts. It had to be sustainable. 

“If the £300m fund was used one-off, then we couldn’t use it again. We wanted to create a trading fund by which we would do deals with suppliers, buy in bulk, and trusts would pay for the equipment at the lower prices, replenish the fund and we could use it again and again.”

The total value of deals struck thus far is over £200m, with the level of savings around 12%.

Strategic replacement

Considering whether the need to replace old equipment on a more strategic basis is gaining momentum yet, Brown said: “I think the majority of trusts strategically don’t get it yet.

“More and more of them need to replace aged equipment and it has reached crisis point in a number of areas such as MRI, CT and linear accelerators. The imperative to replace their 10 or 14- year-old scanner is acute, yet many lack the capital finance to do so.

“But philosophically, does NHS England get the need to put in place a proper asset management strategy which routinely does this? No, we’re a long way away from that yet.”

And it’s not the cost which is prohibiting better upkeep of capital equipment, he made clear: “The equipment costs what it costs. We can bring down the price by aggregating and by buying better – which we’re doing – but a linear accelerator still costs north of a million pounds and you still need a linear accelerator to treat cancer patients with radiotherapy.”

Stick to the plan

Brown stated the need for proper replacement cycles, and emphasised that better equipment planning, and being more disciplined against those plans, will achieve better results.

“Equipment has a life and it wears out. You cannot keep it forever,” he said. “Every trust will try to [create] a capital equipment replacement plan, but no trust adheres to that plan in our experience.”

The situation has reached “crisis point”, with more equipment that needs to be replaced than the NHS could afford in a single financial year. Only “fundamental changes” to the financing of equipment and devoting lots of time to the issue would return the health service to a state of equilibrium.

“If every piece of equipment had a ten-year life expectancy, then if you’re replacing it properly the average age of equipment should be five years.

“But it’s not, it’s far from that. In some equipment types, more than 60% of the fleet is 8-10 years old”

If trusts planned with NHS Supply Chain “in a more comprehensive and strategic way”, it would improve the volume leverage against more deals, making the equipment more affordable, he added.

“But it’s not as simple as that. The equipment is used for delivering healthcare. This is not just a question of procuring the equipment better – it’s actually a question of planning the whole and managing the whole asset base better.”

Looking outside the health sector

A good example was to look outside the NHS to other asset-rich industries, such as oil exploration and refinement or transport. While the outcome is different, the asset management process for these industries is very similar; yet it would be unheard of for an airline to put off replacing an old plane if it was economically difficult to do so or if the plane posed a passenger risk.

Brown wants the NHS to see itself in the same way. Instead of working to deliver profit, the NHS delivers “healthcare utility”. Classifying positive health outcomes from equipment ‘assets’ would enable a “better debate” about what to buy, when, for how much and how long to keep something.

“The NHS keeps using old equipment because it doesn’t equate the whole-life cost of the equipment with the healthcare utility – ‘could we treat this patient better and more cost effectively by having more modern up-to-date technology?’

“The oil and gas and aviation industry examples are absolutely relevant to the NHS. Their purpose is to make a profit, the other is a healthcare utility; the strategic objectives are slightly different but the purpose in managing the assets and the disciplines you need around them are the same.”

Healthcare utility

The benefits of better equipment for patients are clear; in radiotherapy for example, using IMRT / IMGT technology in linear accelerators will result in more effective cancer treatment, in less healthy tissue damage, shorter recovery, and less pain than using old technology linear accelerators. This also means lower costs for the NHS.

It’s this link that Brown is keen for the NHS to recognise, using the fund to stimulate a debate around the bigger picture of procurement. It’s not just about a single scanner, or even a £30m deal – it’s about considering the equipment as part of a process which leads to better healthcare outcomes.

Moving to a situation where all the NHS is fitted with modern equipment is a long-term goal, which may explain some of the reluctance to engage with a more comprehensive plan for replacement and investment.

Brown said: “It’s not on the agenda of many people. This is where I start to get evangelical – I can see that, a few other people can. But I think the NHS has got so many issues to deal with that that subject matter and that point of view would rarely find its way onto the board agenda of a FT or policy making body. Asset management and healthcare utility from assets isn’t really understood as a concept.

“If we’re going to do anything about it we’ve first got to get everyone to agree there’s a problem and that people want to do something about it.”

Acute crisis

As more and more pieces of equipment go past their life-expiry date, the warning bells will get louder. In the end, it’s probably this that will stimulate a response. While known as the National Health Service, some have relabelled it the ‘national illness service’, recognising its failure to move to a preventative mindset.

“What you’ll get is a more and more acute situation happening with more and more equipment going beyond its life. The fire will get hotter and touch more things and therefore more people will ask ‘what are we going to do about it?’,” Brown said.

Part of the puzzle

Brown stressed that the NHS must go beyond the scope of the Capital Equipment Fund to turn the situation around, specifically better planning and a different approach to those plans.

“The £300m fund is a part of the jigsaw puzzle of solving an asset management solution for the NHS. It allows me to buy better, and allows more trusts to save; I can get better deals at lower prices. It’s that wider asset management and healthcare utility context. An asset management strategy for the NHS with the policies and practices and disciplines under that – how can the NHS learn from best practice industry asset management?

“That’s something we’re researching and investing it, but we can’t do it on our own.”