Exclusive! NHS procurement outsourcing collapses, £1 million down the drain

Early last year we picked up from the Health Service Journal what looked like an interesting outsourcing being undertaken by the NHS South-Central Strategic Health Authority (SHA) in the UK.

Under the banner of the “Integrated Supply Chain" an exercise was underway to effectively outsource procurement across a number of NHS Trusts (hospitals) over a large swathe of southern England, including my own area.

We’ve commented before on the confusing landscape around NHS procurement, and one aspect of this exercise was that it seemed to cut across the existing regional Procurement Hub structure – those bodies were set up to a large extent to do just what the SHA seemed to be asking the market to bid. Hardly a vote of confidence for the regional hub, PRO-CURE.

A T Kearney, the leading consulting firm, were engaged to lead the procurement process, along with legal support and an interim project manager. Sometime later, minutes of the SHA Board revealed that MedAssets, a US firm, had been appointed as the preferred bidder. I thought that was a little odd at the time, as when I did a bit of research on that firm, they didn’t appear to be principally an outsourced service delivery company – they looked more like a software provider at heart. And of course they had no existing similar business in the UK.

Then, all went quiet. We heard a few rumours around the end of 2011, checked the latest minutes of the SHA and found nothing. So we put in an FOI, and last week we got our response – here’s the whole thing.

Dear SHA,

Please could you update me with the progress of the Integrated Supply Chain programme:

1) What is the current status of the Programme?

A number of trusts across NHS South of England continue to explore ways of collaborating more effectively to reduce input prices on product and services and this project is proceeding under the banner of 'Integrated Supply Chain'.

2) Were Med-Assets appointed as preferred bidder and if so, when?

Yes at the end of February 2011

3) Is it true that they have withdrawn from the process? If so, why?

MedAssets withdrew from the process. No formal reason was given.

4) If so, do you have any plans to pursue the programme?

A number of trusts across NHS South of England continue to explore ways of collaborating more effectively to reduce input prices on product and services and this project is proceeding under the banner of 'Integrated Supply Chain'.

5) Is there any prospect of payments either from MedAssets to the NHS or vice versa as penalties for withdrawal, or other fees/ costs?

No.

6) How much have you paid to A T Kearney (as per your Board minutes of July 2011) and to any other external providers including law firms and interim managers for work on the programme to date?

South Central Strategic Health Authority's (SCSHA) expenditure on this project to external consultants was £886,000 of which £593,000 was to AT Kearney.

Yours etc....

______

I think we’ll leave it to our readers to comment further. No bad language please.  We’d love to know why MedAssets withdrew – there must have been a reason even if it wasn’t given “formally”.

But that’s the best part of a £1 million of public, NHS money gone (probably more if you include the internal resource that no doubt went into this) for absolutely no return. Anyone shed any light on just how this happened?

Voices (5)

  1. Sam Unkim:

    Why is it always incestuous American companies who become the preferred bidded, when there are a good hand full of established domestic ones (HealthTrust Europe, NHS CPC etc. )

    CombineMed Déjà-Vu?

    1. Final Furlong:

      Would that be HealthTrust Europe, formally HPC (NHS), that is now wholly owned by an American company called HCA?

      Let’s hope your role doesn’t involve providing up-to-date market intelligence to (English) NHS Trusts…

      1. Sam Unkim:

        I realise that
        NHS Supply Chain => DHL (German Post Office)
        CPC = SBS => Steria (French & Off Shored in India)
        & most of the remaining Hubs are flirting with other American suitors

        But
        The point I was trying to make was in regard of companies already over here, who had therefore some idea of how the NHS functions.

        I bet one of the factors in Med-Assets pull-out was an “OMG, what are we getting into” moment.

  2. Dan:

    “No formal reason” usually means they got hacked off at the procuring organisation constantly changing the goalposts for political reasons.

    Also see Torbay Council’s attempt to regenerate the town centre: http://www.thisisdevon.co.uk/Mayor-attack-second-disaster-blow-regeneration/story-13740297-detail/story.html

  3. Dr Gordy:

    You could write a book but a soap opera may be more appropriate.

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