NHS Shared Business Services – a rare success story (part 1)

The history of shared services operations in the UK is not a very happy one.  That's not just true in the public sector - I suspect if the private sector had the same level of disclosure, and National Audit Office crawling all over them, we'd see the same thing there. But there have been some particularly  high profile public sector failures, such as the Department for Transport and the Research Councils, both castigated by NAO.

But there is one shared services operation that actually has a different story to tell.  The National Health Service Shared Business Services (SBS) operation, a 50:50 joint venture between the Department of Health and with French IT / BPO firm Steria, has an enviable track record.  So in this series, we’ll give an overview of the operation today, then get into analysing why it has been successful, and look at lessons that other shared services operations might usefully learn.

SBS was originally an internal NHS operation, formed in 2003. But then in 2005, the Department of Health decided they needed private sector expertise to make it work, so after a competitive process engaged Xansa (who were later acquired by Steria), as the chosen private sector “partner in perpetuity”.  350 staff transferred into the new venture, which retains the NHS “badge”, and has an independent Board, chaired by David Edmonds, and including Peter Coates, the Department of Health Commercial Director, who has been involved from the start.

After a slow start, it has grown steadily so today, with expected revenues of over £80M this year, it provides services in finance and accounting, payroll & HR, family health services and procurement to around 50% of all NHS organisations around the UK.  175 different organisations use the finance and accounting services, 66 use payroll and over 50 the procurement services. The numbers are huge – SBS is processing 5 million invoices a year, administering over £43B annual spend and in payroll, servicing more than 200,000 employees with 2.5 million payroll transactions per annum for NHS organisations.

SBS has been profitable since 2009, with any bottom-line “surplus” shared with customers. In July 2012, some £1.49 million was returned to NHS clients, based on 2011 performance which showed a bottom-line profit of around £4 million.  And there is a target for savings of £224M ( a strangely precise number...) to be generated by 2014 for the NHS, which they’re well on track to achieve.

There are now some 1900 staff, demonstrating the impressive growth since 2007. Of those, 800 are located in India, which is an issue of some sensitivity given the public sector nature of the work. “We’ve tried to get a balance”, John Neilson, the CEO of SBS told me. “The offshoring is part of the reason we’ve generated significant savings for our clients – but we’ve grown our UK based staff numbers significantly too. We’ve also put a ceiling on the amount of work we will offshore, there’s no call handling outside the UK, and we applied a no compulsory redundancy policy to the original NHS staff who transferred”.

Their move into  the procurement services arena a year ago came with the acquisition of what was previously the North-West Procurement “Hub”.  That enables them to provide  services ranging from a full procurement outsourcing offering, to provision of access to a wide range of compliant framework contracts.

And the customer response appears to be very positive. The percentage of clients agreeing that they “would recommended NHS SBS to others” has grown from 39% in 2007 to 95% in 2011.

I took a look at their operation in Leeds recently and met some of the senior team, with a focus on identifying why this venture has been a success when so many other attempts in the public sector haven’t. So in part 2 we’ll get into that, and also cover what they’re doing specifically in the invoice processing area.

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