HCSA and Department of Health Battle Over Future Procurement Model

So what do we make of the press release from the Health Care Supplies Association criticising the Department of Health over the “Future Operating Model” and the plans for the NHS Supply Chain replacement?

It was obviously driven by some frustration that senior figures in the DH Commercial function have not engaged enough with the procurement leaders on the ground, as it were, in the hospitals that are the prime users of the current Supply Chain contract – and will be the users of whatever is put in place under the new strategy.

The model that is being discussed as the replacement is based on no less than 12 “towers” or category groups. It was 11 but we were tipped off that it has changed to 12 – in fact here is the picture showing that.

NHS

 

The idea (as far as we understand it) is that each tower would be contracted separately, although one supplier might win more than one tower. The work would include in effect category management, so developing strategy and putting contracts in place, plus making sure the logistical arrangements for that category were also there to support the users.

We understand there have been some meetings for potential bidders, who could be private sector firms – (consultancies, outsourcing providers, US healthcare service providers) or indeed public sector such as the current collaborative bodies in the sector.

It’s hard to comment without knowing more about the approach, but it does sound like an interesting theoretical construct but maybe not something that in practice will work very efficiently.  12 different suppliers to manage, 12 different delivery mechanisms potentially into a hospital for different towers?

We know of another  over-complicated DH procurement that collapsed a couple of years back in the face of supplier lack of enthusiasm, although it didn’t get much coverage at the time. We also know that the cynics in the wider network see this as a “jobs for the boys” exercise by DH, given the huge contract management team that would be needed to look after the towers, and indeed the huge procurement exercise to put contracts in place.

Anyway, the point is not to criticise, given our lack of understanding, but to discuss the HCSA response. And what seems clear is that DH needs to get those key users on board with this or indeed any other strategy. It seems unlikely that DH will have the inclination to mandate the use of any contract in the face of unified opposition from the users, and if potential suppliers see that this procurement exercise is a dead duck, they won’t waste large amounts of time and money on the bidding process anyway.

I guess we could even see a breakaway movement – perhaps Countess of Chester would like to let a national framework for a single supply chain operation? We’re not suggesting that would be the right move, but it’s not impossible either.

We’ve said previously that one weakness in the DH Commercial team is the lack of big hitters with real experience of hospital procurement since Rob Knott left. Pat Mills is clearly a very bright guy, and I’m sure Jin Sahota is too. Sahota appears to be leading the process here – but his background is entirely in the IT industry. With the greatest respect to him, he can have no real understanding of what being a procurement head in a large hospital or hospital group is like, or of the challenges, issues and critical success factors.

We’d suggest he and Mills need to get engaged with HCSA quickly, and maybe look at seconding a respected leader in from the wider network to work with them on this element of the Future Operating Model.  For what it’s worth, that’s what I would do in their shoes.

Voices (7)

  1. David Atkinson:

    One day, someone is going to publish a story credibly demonstrating that a third-party category management operator is CONSISTENTLY better than an in-house procurement function at engaging with specifiers and other stakeholders in optimising demand/usage/specifications*. I’m not holding my breath.

    But hey, maybe this procurement lark really is about ‘shopping efficiency’.

    *anecdotes from third party providers not submissable

    1. bitter and twisted:

      …and then show how that ‘betterness’ would apply to the core spending of a multi-billion pound behemoth.

    2. Final Furlong:

      Brilliant!

  2. Sam Unkim:

    What happens if a large wholesaler wins a Tower, such as Office Depot or Staples – for the Stationery tower ?

    Also, much of the saving for the original outsource, was moving these guys (below) off the NHS payroll, are they now being Tupe’d back – I doubt it – which would mean a inherent preference for Ltd. winners

    https://www.supplychain.nhs.uk/suppliers/new-suppliers/~/media/Files/Suppliers/Contract%20Information%20and%20Buyer%20Details%20December%202015.ashx

  3. bitter and twisted:

    This is what always puzzles me about Category Management. How do you decide the categories? I can see the non-medical towers 9 and 10 are coherent piles o’stuff but the medical grouping looks like a random back of an envelope job by a drunken lemur.
    What is the rationale for a Medical Category? Medical usage? Operational-practical usage? The Supply Market? Alphabetical order? Smell?
    Also surely the big capital stuff is made by a diverse bunch of specialists and having a prime contractor is just faffing around with invoice letterheads – or getting mediocre value.

    1. life:

      Thanks Sam. I was wondering.

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