PROCUREMENT in the NHS in England came under the spotlight earlier this year with the release of three reports that criticised the service for being too fragmented and missing out on potential savings – the National Audit Office report on the purchase of consumables in the health service, published in February; and two reports from the House of Commons Public Accounts Committee: the first on the purchase of consumables in the NHS (released in May) and, more recently, its report on Managing high value capital equipment in the NHS in England, published on 25 October.
On the release of the Public Accounts Committee report in May, committee chairman, Margaret Hodge, commented: "The Department of Health needs to be clear how, when trusts are independent of its control, it will achieve the essential savings it should enjoy from the joint, bulk buying of medical supplies and other consumables in NHS hospitals."
The Department of Health needs to be clear how, when trusts are independent of its control, it will achieve the essential savings it should enjoy from the joint, bulk buying of medical supplies and other consumables in NHS hospitals
"The department wants a three-tiered structure, with local, regional and national organisations involved in procurement as appropriate. This does not reflect the current complex reality, in which a profusion of different bodies is involved in procuring consumables and where, in around a half of cases, prices of products available through NHS Supply Chain can be higher than through other routes."
A clearer path
While acknowledging that the department has no control over foundation trusts, the Public Accounts Committee recommended that the department should "strengthen the way hospital procurement is supported by national and regional organisations so it is easier for trusts to make use of this support and so the benefits of doing so are clearer."
A recent File on 4 report on BBC Radio 4 (27th September) questioned whether Scotland's centralised system, where hospitals source products at a set price from a central warehouse, is something that should be considered in the NHS in England.
We will continue to drive forward the strategy we have put in place to increase the level of national contracts, increase the use of common systems, and increase the profile of procurement
At the same time as its English counterpart is shifting responsibility for procurement to trust and GP commissioning level, the NHS in Scotland has moved from individual health board-level procurement to greater centralisation.
The move is part of the Scottish public sector reform programme set up in 2006 following the publication of a report by John McClelland entitled Review of Public Procurement in Scotland The strategy went into its second phase in January 2010 with Transforming procurement: accelerating delivery. The four main priorities of the programme are:
- Maximising efficiency and collaboration
- Delivering and demonstrating real cash savings across the public sector
- Improving access to public sector contracts, particularly for SMEs
- Embedding sustainable procurement at the heart of the reform agenda
Products are categorised as follows, according to type and the relevant level of procurement:
Goods or services that are "of a standard or similar nature across the largely common requirements of users in the public sector in Scotland". These contracts are negotiated by the public sector procurement agency Procurement Scotland for the whole of the Scottish public sector. They include office equipment, relevant IT hardware and software, and utilities such as electricity and water services
Goods or services that are common across a particular sector, eg health. These are negotiated on behalf of NHS Scotland by the centre of expertise for health, National Procurement. They include consumables and medical equipment.
Goods or services that respond to a local or regional need and are, therefore, negotiated by an individual health board or as a collaboration between health boards in a particular region. This can include translation services, taxation and other services better sourced locally
Scotland v England
Some aspects of the Scottish system would be good, such as having a central organisation to provide support and advice, but it is a different scenario in England
The NHS in Scotland purchases around £200billion worth of goods and services, around 50% of which is through some form of national arrangement, according to Colin Sinclair, divisional director of National Procurement. National contracts negotiated by National Procurement have a value of around £740m, and since the programme began five years ago, the NHS has saved around £200m.
Decisions about which products and services to contract are made in consultation with health boards and clinical staff. The aim is to standardise as much as possible and to reduce variation while continuing to meet clinical needs. Commodity advisory panels, made up of those who would use the products, work with those responsible for the contracts at National Procurement to agree what needs to be purchased. Different contract types are negotiated according to clinical need – some may be brought down to a single supplier, while others are developed on a framework basis.
"The key is stakeholder and clinical engagement" Sinclair says.
The participation of clinicians reaped rewards in National Procurement’s most recent orthopaedic contract. The clinicians took a close look at the wide variations in what they buy, then examined how they could reduce the range of products. This has resulted in £2.5m savings out of £30m total spend.
Another important factor in the success of the programme is having a common procurement system and common procurement portal. All health board, National Procurement and Procurement Scotland contracts are advertised through the Public Contracts Scotland portal.
There is a lack of certainty in the acute sector about what they will be delivering, so how can they have the confidence to forward purchase?
In addition, a common purchase-to-pay system provides National Procurement with data on what has been purchased, who it was bought from, and the cost. The hope is to eventually have a common system across the whole of the Scottish public sector.
"We will continue to drive forward the strategy we have put in place to increase the level of national contracts, increase the use of common systems, and increase the profile of procurement", Sinclair says.
Bulk buying
Simon Walsh, communications lead for the Health Care Supply Association (HCSA) agrees there are certain products which could lend themselves more naturally to a national model – for example consumables and certain medical devices.
"Some aspects of the Scottish system would be good, such as having a central organisation to provide support and advice", he comments. "But it is a different scenario in England."
For one thing, the Scottish procurement service is publicly funded, whereas in England NHS Supply Chain and other intermediaries, such as the collaborative procurement hubs, have to find their own funding.
However, Walsh comments: "It has been good to see how the public sector’s Government Procurement Service, formerly Buying Solutions, now has a role at the heart of government."
The Government is determined to do everything it can to root out waste and inefficiency so that NHS funds are spent on patients, not bureaucracy
The Scottish health service is much smaller and, in England, the move to create foundation trusts puts control in the hands of individual trusts, and, according to Walsh, trusts want to be able to determine what they do.
This is especially true in an environment where trusts increasingly see themselves in competition with other trusts and with private sector providers for who can deliver the best services to GP consortia.
"There is a lack of certainty in the acute sector about what they will be delivering, so how can they have the confidence to forward purchase?" asks Jason Long from Asteral.
Long believes the fragmentation of procurement in the English health service will continue. But it is not all doom and gloom, he says. Many are already getting the lowest price for their products. And, for those who aren’t, he suggests they may turn to the help of companies such as Asteral, outsourcing the negotiating of contracts for procedure-based consumables and/or other goods and services.
Meanwhile, the Minister for Health, Simon Burns, says: “The Government is determined to do everything it can to root out waste and inefficiency so that NHS funds are spent on patients, not bureaucracy.
"We are already developing a strategy that will enable the NHS to save £1.2billion as part of the QIPP programme by ensuring trusts take their accountability seriously and by encouraging them to collaborate with each other more effectively."