What is actually the problem with Procurement in the NHS? (Part 2)

Here is part two (part one here) of the guest post from Owen Inglis-Humphrey, a long-serving e-Procurement practitioner and now Director of advisory firm, More then Glue).

It's about opening up the market rather than restricting it

Here is where the essence of the recent health procurement strategy lies. Aggregating demand and bringing alignment to the requirements (harmonising what you actually need) means that more suppliers could come into the market, not fewer. The adage that there is strength in numbers has never been more relevant not least with the focus on sustainability.

Now is the time for smaller companies to flourish, not because they can necessarily sell a particular product cheaper, but instead they can compete on the service they deliver, having already agreed on acceptable quality and unit price. In the same vein, Mark Hall (HMRC CIO) recently stated that the most innovative services were coming from SMEs, and that large multinational firms were getting tied up in knots.

A British based manufacturer of mobile phone covers is winning business from Far Eastern competitors. Whilst they may not be able to deliver millions of units at a time, and their unit costs might be very slightly higher, they can deliver the units much faster and in more manageable quantities than their Far Eastern-based competitors. Similarly, they can react to changes in fashion and buying habits much better.

Solution

Clearly much thought and direction has gone into the recent strategy but here are a few observations and thoughts:

• Educate those involved in decision-making about what competition, value and aggregation really mean.

• Increase the focus on output-based specifications – it is surely more important to say what you want something like a bin liner to do, than to define exactly how it is made.

• Promote the benefits of sharing information rather than forcing it – information given freely is always more complete and meaningful than if it is forcibly instructed.

• Let’s celebrate the success and opportunities rather than just highlighting the failures – we already have some real expertise around NHS in procurement, so let’s show how they add value.

• Recognise that procurement involves everyone and not just a single department – success comes from working together.

Does this mean we need yet another new IT system?

Rarely does a new system represent the answer yet it often seems to become a significant part of the solution. There is already a wealth of systems available throughout the NHS and considerable investment has historically been made. It is clear that rather than replacing what is there attention should be on how it is used, how it is fed and how the information is extracted.

The recent publication sums it up nicely – the focus should be on improving data, information and transparency. Drive the common approach to the way that products, services and suppliers are defined and do this by everyone adopting GS1 (an internationally recognised set of standards for defining products, companies and locations – www.gs1.org). Look closely at how systems are being used and if necessary change. Having done that, make sure that existing systems conform to interoperability standards – can they talk to each other? Only after all of that should there be discussions about replacing systems that still don't fit.

What about innovation?

Having clarity on what the true competitive aspects are and focusing on the output rather than being prescriptive about the inputs enables suppliers, manufacturers, commercial partners and in-house experts to get on with job of looking at how to deliver the services better. The issue then moves from the statement 'you need to make it for less!' and instead shifts to questions like 'how do we make it easier to use?', 'how do we reduce the amount of waste generated?', 'how can we improve the patient experience?' and 'how can we reduce the time a patient spends in hospital?'. That is how innovation is bred.

Where do we start?

With a re-emphasis of the key points:-

• Value is not all about the price on the ticket, it must instead be about the full cost of getting and using and disposing of something;

• Bigger is not always better (and most of the time the opposite is true);

• Transparency, openness and working together should be the norm in order to deliver the best possible outcomes for the general public as a whole; and

• New IT systems are often not needed and are never the answer on their own.

With these principles it should be possible finally to pool together the vast expertise already available across Health Trusts to find really meaningful savings. At the same time we will dramatically improve services for the good of both patients and taxpayers.

First Voice

  1. Sellesmere:

    Great vision unrealisable without a national organisation that determines the cat plans and sets levels of sourcing intervention in the market and a local organisation that manages demand and collective commitment

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