Circle Healthcare and Hinchingbrooke – Simple Procurement Question, No Answer

Hinchingbrooke Hospital

There was a  flood of publicity last month about how Hinchingbrooke Hospital had been “turned around by Circle in six months” as the Telegraph put it. Hinchingbrooke is the first UK National Health Service hospital to be “outsourced” to a private sector provider (Circle Healthcare).

The CEO of Circle, Dr Ali PArsa, appeared on the BBC – as they reported;

“Circle chief executive Ali Parsa said the company had saved £1.6m by ordering the hospital's paper supplies differently, and they had introduced the same management style used at their private hospitals”.

Well, of course this got my interest. Saving £1.6M on paper supplies - incredible! How did they do that, I wondered  So I asked Circle (by email).  I stressed that I’m not anti-private healthcare (true). But, as I said,

“What I would like to know is how you made this saving? It seems an awful lot of money to be spending (saving) on paper!  Is that a saving in a single year or £160K a year multiplied over a 10 year contract? Was it a dreadful deal previously from *****? Just a little more explanation would be very useful because our readers I’m sure would be interested in how you are improving procurement in this manner”.  (****Name of supplier redacted for reasons of fairness!)

I got no reply so tried again. Both emails were read (according to Outlook) but nobody replied. I tried phoning the media contact given on their website. Got an answering service, no response. Tried the Head Office number on their website, no answer at all.  That all makes me wonder about the firm generally, but coming back to the savings, I see that on their website, it now says “£1.1m procurement savings banked.  £1.6m identified this year”. (My highlighting)

Now that generic comment is VERY different from saving that £1.6M specifically on paper. I spoke to a friend of mine who is Head of Procurement for a significantly bigger hospital than Hinchignbrooke.

“We don't spend that (£1.6M) on paper in total in a year, including on medical pulp” he said. And that’s total spend remember, not “savings”.

So, what are we to conclude? Well, in the absence of any evidence to the contrary offered by the firm, I’m making a bold statement  – Circle will not save £1.6M on paper this year.  But let’s be charitable, and assume that Dr Parsa just got a bit confused in the heat of the moment, and £1.6M identified savings came out as £1.6M “on paper”. Strange mistake to make, but maybe in the heat of a live interview...

Because if we don’t assume it was an honest mistake, it might look like a soundbite in order to generate a snappy headline, and paint a stronger picture of public sector procurement incompetence.

Now as regular readers know, we can be as hard as anyone on public procurement when criticism is deserved. But what is really beginning to pi..  sorry, annoy me, is people using dodgy data or dodgy analysis either to simply knock public procurement or to paint some fantastic picture of “savings potential” (see this and another more recent example here).

Sir Philip Green of course did the same thing in 2010 with his review of the “terrible waste” in public procurement.  But it took months for the truth to come out – that at least some of his price benchmarking, that painted a picture of public procurement failings, were simply not like for like comparisons. So whenever we see this sort of thing, we must ask – is the data accurate? Is the analysis robust? Does the writer have a vested interest in painting a particular picture?

The problem is, by the time that the error is exposed, the casual Daily Mail or BBC website reader has long since moved on, to be left with just a slightly stronger impression of public sector incompetence.  And that’s not right. So let’s declare war on dodgy procurement figures, analysis, or news, wherever it comes from.

Voices (7)

  1. Take2:

    Hmmmm

    Imagine the scene a few weeks ago – a busy time at the Hinchingbrooke staff canteen….. in the middle of which there’s an informal Procurement Dept meeting/coffee break to review the progress so far.

    In the course of the usual discussions about cashable savings vs cost avoidence etc., a keen procurement person pipes up “Well, after analysing the spend I reckon that, on paper, we should be able to save around 1.6 million.”

    Three tables away a Circle spin doctor, taking a coffee while early for a meeting, hearing an interesting number, pricks up their ears…. and begins to type earnestly on their shiny new iPad.

    The rest is history as they say.

    1. Final Furlong:

      “On paper” Central Government still isn’t joined-up, it seems….

      http://www.taxpayersalliance.com/qdsprocurement.pdf

      1. Sam Unkim:

        To be fair, the NHS stuff is 65gsm & grey coloured and is only really used internally.

        https://www.supplychain.nhs.uk/product-news/customer-notices/2011/march/new-product-office-paper-who091

        Though considering the tiny amounts, individually, delivered to 10,000s of order points, it’s still pretty good value

        1. Final Furlong:

          Sam, it’s called ‘toilet paper’.

  2. Dan:

    I suspect that they saved £1.6m, some by more procurement orientated methods, others just by cuts. But to escape the stigma of the private company cutting budgets in a race to the bottom, they just stressed the procurement savings such as ordering paper differently. Its just spin that the BBC jumped on without checking its facts.

    I would like to know just how much of the procurement saving is cashable. Ordering paper differently smacks of a non-cashable efficiency saving that, while a good thing, shouldn’t be a priority for an organisation that is short of cash.

  3. Sam Unkim:

    Shame really.
    If any other NHS Trust had made huge savings like this, the method would have been rippling out across the entire NHS by now.

    Maybe we will get more detail, once this brilliant project is nominated for the next round of award ceremonies, where I am sure we can expect it to sweep the board

    http://www.govopps.co.uk/go-awards etc….

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