Department of Health publishes long-awaited strategy aimed at revolutionising NHS procurement
Eight years of planning has come to fruition with the publication, this week, of the new NHS eProcurement Strategy, which will build a national framework through which supermarket-style technology will be used to improve purchasing and save money.
The 32-page document, produced by the Department of Health’s (DH) procurement, investment and commercial division, follows the release, last August, of the Government’s Better Procurement Better Value Better Care report, which established a new procurement development programme to help NHS trusts stabilise their non-pay spending so they spend no more than they currently do by the end of 2015/16, thereby realising £1.5billion of efficiencies
Previous efforts to improve eProcurement in the NHS have been patchy due to a lack of central direction
The eProcurement Strategy mandates the use of global GS1 coding and PEPPOL messaging standards throughout the healthcare sector and its supply chains. Compliance with these standards will enable trusts to manage their non-pay spending through the adoption of master procurement data, automating the exchange of procurement data, and benchmarking procurement expenditure against other trusts and healthcare providers.
Introducing the strategy, Dr Dan Poulter, Parliamentary Under Secretary of State for Health, said: “There have been many previous initiatives to realise procurement efficiencies, but this time we mean business and are determined to deliver efficiencies to free up more money for frontline care.
“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 standards by amending the NHS Standard Contract to require compliance with this NHS eProcurement Strategy. We have also required suppliers to place their product data in a GS1-certified datapool by amending the NHS Terms and Conditions for the Supply of Goods and the Provision of Services.”
To embed these standards across the NHS, the Government 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.
“The strategy also drives patient safety benefits as barcodes based on the GS1 standards can be read at any point in the healthcare supply chain so that a product subject to a safety alert can be quickly located and recalled. Under the new approach providers of NHS-funded healthcare, including the independent sector, must also be able to electronically track and trace individual medicines and medical devices to a specific patient.
“To help trusts further improve their non-pay spending, we will centrally fund and procure a single, national spend analysis and price benchmarking service,” said Dr Poulter.
To help trusts further improve their non-pay spending, we will centrally fund and procure a single, national spend analysis and price benchmarking service
“This service will provide high-quality expenditure data so that trusts can identify opportunities to continuously improve their procurement performance.”
Elements of the strategy echo systems already used in other industries including the banking, manufacturing and retailing sectors.
Dr Poulter said: “There is nothing in the strategy that hasn’t already been done in part somewhere, either in the NHS, in another sector or in another country. What is new, however, is bringing all these elements together in one cohesive strategy to improve patient care through a modern, effective and efficient NHS procurement function.”
To coincide with this week’s publication, the DH has written to all NHS trusts asking them to ensure there is a lead non-executive director for procurement who will be asked to hold the board to account for the delivery of the wider procurement development programme, including this NHS eProcurement strategy.
Dr Poulter said: “Patient care risks are presented by supply chain failures, by safety recalls and by the increasing numbers of counterfeit medicines and medical devices. A significant amount of clinical time is lost in resolving these issues and in the day-to-day acquisition of goods and services. These concerns can be mitigated by extending the use of eProcurement solutions, together with the adoption of global standards.
“However, the NHS lags behind other sectors, such as banking, manufacturing and retailing, which have widely implemented global standards to underpin machine-to-machine processing of transactions with little or no human intervention.
”As well as contributing to improved patient care, wider use of eProcurement solutions driven by global standards will generate significant financial savings for NHS providers, achieved through reduced errors, reduced obsolescence and increased productivity.
“The ambition of this 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. It will take several years of concerted effort across the NHS landscape, and across the NHS supplier base, to achieve this ambition.”
As well as contributing to improved patient care, wider use of eProcurement solutions driven by global standards will generate significant financial savings for NHS providers, achieved through reduced errors, reduced obsolescence and increased productivity
He added: “Ultimately, eProcurement is about making procurement processes faster and more efficient. A key barrier to the maximum realisation of eProcurement benefits is that, within acute NHS providers, many procurement process flows are fragmented across multiple supply functions, including supplies, pharmacy, pathology, sterile services, linen services, appliances, estates, catering and cleaning services. To maximise the benefits from the eProcurement ambition, acute NHS providers should migrate these fragmented supply functions to common business processes and rules, based on the requirements of this eProcurement Strategy.
Welcoming the publication, Chris Doyle, healthcare manager at GS1 UK, told BBH: “The strategy will stipulate that every trust in the UK is to have a GS1 adoption plan by 2015, which will involve using GS1 standards to enable purchasing and logistics efficiencies and to improve inventory management.
“GS1 standards have been used in retail for nearly 40 years and are estimated to save the industry approaching £11billion a year. By providing a common language for identifying, locating, moving and trading medical supplies and assets quickly, adoption of these standards in the NHS is estimated to deliver savings in procurement costs, making a significant contribution towards the overall procurement savings target of £2billion by 2015-16. The strategy also includes plans for a GS1 NHS Datapool to provide visibility of purchasing across the NHS to ensure the purchasing efficiency of the service as a whole is maximised.”
The data pool will provide information on products, including pricing. Being able to see what other trusts are paying in this way will help to reduce the huge price variations paid by healthcare organisations up and down the country.
Ultimately, eProcurement is about making procurement processes faster and more efficient
Doyle said: “The Department of Health has produced a number of publications over the past eight years, but this strategy is the first time it has promised big pieces of national infrastructure to help deliver improved procurement. This document says that this time they mean business and that trusts will have to deliver these improvements.
“It is a huge step for the NHS and will put pressure on trusts to conform. Thankfully, the strategy also lays out what national infrastructure and other support will be put in place to help.”
The publication has also been welcomed by David Rabjohns, e-commerce enterprise architect at NHS Supply Chain. He told BBH: “As a business, we greatly support the introduction of a new ‘common standards’ based approach to data processing for the NHS. 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.”
NHS Supply Chain has already begun its journey on this standards-based approach to data through achieving GS1 accreditation, collecting and displaying GS1 Global Trade Item Numbers (GTINs) to improve accessibility to product information, and increasing the use of e-solutions such as electronic invoicing, to simplify the procurement process.
“We also welcome reference made in the E-Procurement Strategy to eDC and eDC Gold – systems which are already delivering benefits to a large number of NHS trusts” said Rabjohns.
“For example, Mid Cheshire Hospitals NHS Foundation Trust found that data transparency across orthopaedic procurement improved through the use of eDC Gold, reducing clinical time spent on stock management by 74% and product recall processes by 92%. E-Procurement is the way forward for the NHS in terms of delivering better value for money in procurement.”
Click here to access the strategy in full.