Lord Carter on NHS Procurement – More Hard Evidence, Less Assertion

We gave our initial comments on the recent London Procurement Partnership members’ event a week or two back, but probably the highlight of the day was the speech from Lord Carter, chair of the Efficiency and   Board, who is tasked with steering the overall procurement improvement effort in the health system.

I’d heard a couple of things in advance that worried me – for instance, that his focus was very much on cost comparisons rather than relating costs to outcomes, to get at real value. But in practice, his comments were intelligent, considered and very hard to argue with. Much as we love to be controversial and challenging to those in senior roles, we struggled to find fault with his direction, which is of course good news, assuming he is going to influence the direction of NHS procurement.

Carter has apparently impressed procurement staff by getting out and talking to many practitioners around the country. And he does seem to be someone who listens and forms views from the evidence, rather than coming in with ready-made assertions and bias (not mentioning any names, Philip Green).

He started by saying “if we don't hang together we will hang separately”. Hospitals will be picked off by vendors taking advantage of the fragmented structure and autonomy of Foundation Trusts within the NHS.

We need to learn from the beacons out there, as he described the best performers. He also made some very interesting comparisons with other countries, which generally are favourable to the UK – for instance, we achieve very high utilisation of our hospitals, unlike some other countries.

Back to vendors. Carter believes that “they hate aggregation and people coming together to face them”. They want to maintain high margins and keep their relationship with their user not with procurement. But one problem is that everybody thinks they have the best price and the sector is dominated by “assertion not hard evidence”.

He does not believe the money to properly fund the NHS as it currently stands can be found through simply taxing more. Purely re-organising does not tend to generate major savings so efficiency is key. For instance, we are spending £5 billion a year on temporary staff in the system - “something is wrong there” (hard to argue with that). So at the heart of his approach is detailed cost and efficiency comparisons between Trusts.

Some cost differences are explicable – one hospital may be on an old, high cost physical sites versus a brand new building for instance. But in other cases, the big differences he is finding are less explicable - ranging from the price of prosthetic joints, the cost of the pharmacy operations, levels of written off stock, or the way staff rotas are managed. He wants to “shine a light on costs”, so his project has collected a huge amount of data from 22 hospitals, right down to ward level.

In April that will be extended to 32 covering 25% of trusts. Then he will talk to CEOs, CFOs, CPOs, medical directors and other leaders about the findings, and use the information to “puncture myths” as he puts it.

The future, Carter says, lies in limiting choice, managing compliance and learning from the good performers. The system will be built to report the data regularly to support this. The best companies in the private sector have a highly centralised procurement system (that is maybe the one comment he made that we could argue with, to some extent at least). But he says dealing with big vendors is a highly skilled task and we would certainly agree with that.

Clear cost data will help good procurement be valued more highly in the system, he hopes, and provide levers to influence trusts. And a final comment on the link between costs and outcomes - Carter pointed out that generally hospitals that have good outcomes are also good on costs. Those elements go together and indicate a well run organisation.

So an encouraging session actually, and we left with hopes that progress is actually going to be made here. Watch this space!

First Voice

  1. Sam.Unkim:

    Lord Cole’s speech is also available to view here.

    https://www.youtube.com/watch?v=m41cDUabdBs&feature=youtu.be

    Whilst yours is locked behind their (LPP’s) paywall.

    http://www.lpp.nhs.uk/news/lpp-community-addressed-by-lord-carter/

    Perhaps you could consider that a compliment.

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