Procurement has been highlighted as one of the challenges facing the NHS during a period of austerity. The NHS Supply Chain believes it can help optimise the value Trusts get from non-pay spend, as well as helping develop Trusts’ procurement capability and the drive for greater collaboration and greater transparency.
Last November, the Secretary of State for Health, Jeremy Hunt, made an important speech at the King’s Fund. He started by addressing the scale of the economic pressures the country faced, which is: “in the deepest recession since the second world war with unprecedented austerity”, and the impact this is having on the NHS. “This has created perhaps the toughest financial climate for the health and social care system in its history,” he commented.
In his speech, Jeremy Hunt spoke of procurement as one of the challenges. He said: “The NHS spends almost £15 billion each year on medical equipment, devices, office supplies and facilities. Prices for surgical gloves vary from £2.43 to £5.44 across the NHS, and the National Audit Office found variation of up to 183% in the prices paid by Trusts for the 100 most commonly ordered products.”
Jeremy Hunt also spoke of solutions that have been put in place to improve care and reduce cost: “We have established the Procurement Efficiency Programme, led by Lord Carter, which aims to deliver savings of at least £1.5 billion from the NHS procurement budget from next year.”
Mandie Sunderland, chief nurse at Pennine Acute Trust and chair of the NHS Supply Chain Clinical Reference Board, said: “There has never been a better time to look at what nurses are buying and find those opportunities to save money, which will –at the same time – help protect patient safety and reduce the amount of waste in medical products. As the individuals at the heart of this process, we, as nurses, are in the best possible position to influence it.”
Atlas of Variation
Last July, the Department of Health (DH) launched the NHS Procurement Atlas of Variation. The Atlas, which was designed to show the differences in the amount hospitals pay for everyday items including catheters, gloves and needles, was developed to deliver greater transparency by comparing the prices paid by different Trusts for the same types of product. Its aim was to allow Trusts to identify savings opportunities and work with NHS Supply Chain to achieve better value.
As a combined procurement and logistics service for NHS Trusts, transacting more than 311,000 products nationally through its catalogue from gloves to implants, NHS Supply Chain plays a key role in helping Trusts deliver better value from their expenditure on clinical and consumable supplies and medical capital equipment.
“NHS Supply Chain supports the Department of Health’s call to NHS Trust boards to optimise the value they get from their non-pay spend, develop their procurement capability and the drive for greater collaboration and greater transparency,” said Joanna Timmerman, managing director at NHS Supply Chain.
The benchmark pricing in the Atlas of Variation, which will enter a third phase in January 2015, is based on the average price paid during 2013/14 and excludes any commitment discounts and rebates – some of which play a significant role in driving savings. The data covers all products deemed as like-for-like – which may be over a large range of products from different suppliers. Better value alternative products may be available (via NHS Supply Chain’s Compare and Save Programme) where a Trust sees a high average price; although clinical preference and specialism will play a role here (e.g. needles). The data featured has been normalised by the DH, for multiple units of issue. So the prices in the Atlas are not necessarily the prices for the unit of issue; they are the prices for a certain number of units.
“Although the data in the Atlas of Variation originated with NHS Supply Chain, we do not have access to the analysis conducted and are unable to breakdown the Department of Health’s analysis further,” said Joanna Timmerman. “We do, however, support that the analysis conducted by the Department of Health provides a good indication of savings potential. We would guide Trusts to the total opportunity that exists today from review of the NHS Supply Chain Trust Savings Packs which account managers are currently working through with their Trust procurement colleagues.”
NHS Supply Chain supports the Government’s focus on transparency of information which is a priority element of the NHS procurement efficiency programme. The transparency initiative includes the requirement for NHS providers to publish more procurement information, including prices paid.
“To realise the challenging savings that are required from the NHS, via procurement, NHS Trusts should continue to work with NHS Supply Chain to review the total savings opportunities available to them today. We are currently working with a number of Trusts with our Trust Savings Packs, which are delivering considerable savings while we continue to drive our category strategies to create future value for the NHS,” explained Joanna Timmerman.
Delivering savings
NHS Supply Chain is supporting the DH to achieve its £2bn procurement and efficiency savings target and is working with customers and suppliers to deliver £150m cash releasing savings. NHS Supply Chain has already delivered over £900 million worth of inflation beating and cash savings back to the NHS since the start of the contract, against the £1 bn target, which is ahead of plan.
While focussing on the challenges Trusts are facing, in his King’s Fund speech, Jeremy Hunt also spoke of solutions that have been put in place to improve care and reduce cost. He highlighted the savings and efficiencies which have been achieved by Mid Cheshire Foundation Trust by working with NHS Supply Chain’s eDC Gold1 system which supports the smarter management of consignment and high value stock.
“Mid Cheshire Foundation Trust made savings of 9% on their orthopaedic wards and reduced clinical time spent on stock management by 74% by embracing modern procurement and stock control principles, and I am confident we can make similar changes across the NHS by collecting and sharing data, getting a grip on stocks and supplies, and helping providers with central frameworks and core lists to purchase common products,” said Jeremy Hunt.
With an estimated £1bn of the NHS budget2 attributed to consigned and high value stock, NHS Supply Chain recognised that managing this cost effectively within specialist surgical areas, such as orthopaedics and cardiology, brings complex and widespread challenges for Trusts. In response to these challenges NHS Supply Chain developed the cost efficient inventory management solution eDC Gold, to bring greater visibility and control to the management of high value, consigned stock in specialist surgical areas, such as orthopaedics and cardiology. Mid Cheshire Foundation Trust agreed to work with NHS Supply Chain to develop the eDC Gold managed inventory system which delivered both procurement savings and improvements to the Trust’s internal consignment stock supply chain.
Lesley Pugh, specialist theatre practitioner, Mid Cheshire Hospitals pointed out that the use of eDC Gold had given her team, “more time to spend in theatres.”
Clinical expertise
Clinicians are central to effective decision making in procurement, ensuring the products they use perform to the highest standards, ensuring patient safety. Maintaining these standards, while managing shrinking budgets and increasing demand, is a significant purchasing challenge for clinicians today.
While savings are increasingly important, clinicians also require assurance that products purchased perform to the high standards that they and their patients require.
The challenge has been set to the NHS to reduce levels of potential risk of harm to patients while also generating major efficiencies year on year.
To take the example of orthopaedics, what is perhaps less well-known is that the data and evidence is already out there to help inform and support clinicians, with NHS Supply Chain in a key position to help facilitate access to it. At the same time it can also enable access to a specialist orthopaedic procurement expertise through its new Orthopaedic Consultation Group, giving clinicians a voice in sharing and developing best practice in orthopaedic procurement, product performance and the introduction of innovative products and services.
Individual departments within Trusts are finding themselves in new territory that will now inevitably require a change in gear, which will need to see clinicians utilising their product expertise to procure in more innovative ways that does not compromise on quality or care. With resources available now, clinicians can proactively respond to the requests of their Trust procurement teams and help shape the future of innovation in orthopaedic procurement.
Standardisation exercises undertaken in Trusts, such as Mid Yorkshire Hospitals NHS Trust, North Bristol NHS Trust and Wirral University Teaching Hospital NHS Foundation Trust, generated over £1m in cost savings for these Trusts alone.
“Driving efficiencies that enable cost savings, while maintaining high standards of care, is one of the biggest levers for improvement within the NHS today. Procurement partners, such as NHS Supply Chain are able to work closely with clinicians and Trust procurement departments to facilitate effective decision making tailored to specific requirements, which has the potential to generate significant savings,” said Phil Lewis.4
Andrea Ramsey, purchasing manager at Mid Yorkshire Hospitals NHS Trust said: “NHS Supply Chain fully engaged with our orthopaedic consultants, theatre teams and procurement. The support and assistance we received from NHS Supply Chain was excellent and was key to delivering the required outcome resulting in overall cost reduction.”
Best-practice procurement techniques
NHS Supply Chain have introduced best practice procurement techniques at scale into the NHS such as e-Auctions, direct sourcing, bulk buying and commitment deals that have achieved cash releasing savings. E-Auctions provide a tool to maximise the value of competition, getting the best price without compromising on quality or patient safety. An example of this is the work carried out in collaboration with the Shelford Group (including nine of the leading NHS multispeciality academic healthcare organisations) to help determine product categories where significant savings could be made. Exam gloves were the first category to be identified – a highly competitive product area, with high potential for savings. The heads of procurement for each of the Trusts in the group engaged with their relevant clinical stakeholders, including infection control, and looked at the suppliers currently supplying all of the Trusts. Out of a total of eight suppliers, three were chosen by the Trusts. Clinical input played a key role in the selection process. An e-Auction was then held to obtain the best value for consolidated volume with projected savings standing at £1.6m (a 28% saving).
Clinical engagement roundtable
Last November, NHS Supply Chain worked with the Health Service Journal and key groups like the Shelford Group and the Working Together Programme to host a clinical engagement roundtable. Leading clinical, nursing and procurement professionals were invited to share their learnings and experience in getting the right people involved in key purchasing decisions to achieve the best outcome for NHS patients, staff and Trusts.
Gary Welch, head of procurement at Oxford University Hospitals Trust, said it was important to have clinicians involved in the process if the organisation was to achieve its aims. He drew comparisons with other industries, such as engineering. “My background is in refining and we would always have engineers involved in the [procurement] process,” he said.“Maybe we have not done as much of that as we would want to.”5
NHS Supply Chain managing director for customer engagement, David Pierpoint, said it was necessary to support engagement and involvement at all levels, but this needed to be balanced against pace of delivery and the danger of the process stagnating. “It is important to support engagement in the clinical fraternity while being very clear about who has accountability for the process,” he said.
“If you look at history as to where procurement has produced the best outcome, a triangulation between the clinical fraternity, the procurement fraternity and the supply fraternity delivers the most optimal outcome.”
Talking about high use products, Mandie Sunderland, chief nurse at Pennine Acute Hospitals Trust, and chair of the NHS Supply Chain Clinical Reference Board said when she had worked at the Heart of England Foundation Trust, the head of procurement had identified the top 10 high use products within the organisation and brought them to the nursing and midwifery forum. This forum had then been able to make a decision about whether to continue with the existing products or switch to other ones.
“We did not know what the spend was on x, y or z,” she said. “We worked with procurement on what was the best solution. It made it very simple for the procurement guys. In one year we identified £780,000 in savings and there was no comeback from the clinical areas that the decision we made was not the right one.”
David Pierpoint concluded: “The challenge has been set to the NHS to reduce levels of potential risk of harm to patients while also generating major efficiencies year-on-year. For this challenge to be met, taking the time to look at how we can all improve the way in which clinical products and equipment are purchased is essential.”
About NHS Supply Chain
NHS Supply Chain is a 10 year national contract for procurement and logistics formed from the NHS Logistics Authority and parts of the NHS Purchasing and Supply Agency (PASA). It is operated by DHL (DHL Supply Chain Limited) and acts as agent to the NHS Business Services Authority.
Working Together Programme
The Working Together Programme is a partnership between seven acute Trusts in South Yorkshire, Mid Yorkshire and North Derbyshire. Its aim is to work together and strengthen each organisation by sharing collective expertise and knowledge.
The Programme’s work streams span quality, safety, efficiency and sustainability of services and are focused around the core principle of “what can the seven organisations do together that they cannot do alone”.
The Programme’s procurement work stream is very aligned with this principle, committing to economies of scale as well sharing of information and resources not previously realised.
Where feasible, this is enhancing opportunities to achieve best value from the public money spent on NHS goods and services and making collective efficiencies, which can exceed the levels available from individual Trust procurement processes.
The first challenge on procurement for the Working Together Programme was to ensure the governance process was able to stand up to any product selected and ultimately obtain regional consensus. All seven Trusts in the Programme agreed to adopt the products awarded from any procurement exercise.
It was agreed that exam gloves would be the best product to focus on first, being a feasible opportunity for standardisation and savings across all seven Trusts. In addition to savings and efficiencies, the initiative also supported inter site working across the organisations, by improving consistency of clinical supplies for clinical and nursing staff.
With consolidated spend for exam gloves being £2.1m across eight suppliers and firm agreement from each Trust to adopt the awarded product, there were good conditions to create strong competition. Added to this, there were two factors that could enhance competition further:
• 78% of the spend was across just two of the eight suppliers.
• All eight suppliers met the EN455 compliant specification, meaning they could all participate.
Further saving opportunities were also possible for a number of Trusts who were using the more expensive nine N ewton gloves and had agreed to move to the awarded six Newton gloves.
The results so far include:
• £400,000 annual savings (24%) on exam gloves through eAuction with a single brand of gloves in one box size across all seven Trusts (subject to successful implementation across all Trusts).
References
1 eDC Gold was highly commended in the ‘best product for improving working practices’ category at the 2014 Building Better Healthcare awards in London.
2 Estimated figure based on market size, known consignment stock levels at trusts and information provided by suppliers, for the UK market across all of orthopaedics, including consigned instrument kits.
3 Taken from the Procurement Strategy, Department of Health, August 2013.
4 Text first appeared in the BOA Journal, Vol 4, December 2014.
5 Quotes and text taken from the Health Service Journal‘Clinical engagement roundtable – take the doctors shopping’ by Alison Moore, published on 28 November 2014. http://www.hsj.co.uk/resourcecentre/supplements/clinical-engagementroundtable-take-the-doctorsshopping/5077115.article?blocktitle=Roundt able&contentID=14231.
