What is actually the problem with Procurement in the NHS?

(We’re pleased to welcome a two part guest post from Owen Inglis-Humphrey, a long-serving e-Procurement practitioner and now Director of advisory firm, More than Glue).

Much has already been written about the state of Procurement across NHS England and, as a direct consequence of the recently launched plan (“Better Procurement, Better Value, Better Care: A Procurement Development Programme for the NHS” – August 2013), more will be written for the foreseeable future.  The question here, however, is whether procurement capability is really lacking or, is it actually a case of having some of the best tools but a misguided set of directions?

Malcolm Preston (Associate Director of Procurement at County Durham and Darlington NHS Foundation Trust), published an interesting article in The Guardian on 4th September '13.  He makes the point that, if pooled, we would have one of the most capable and best-equipped procurement teams in the world.  Unfortunately, as the article goes on to explain, that is the crux of the problem.  We do not pull together the capabilities, instead we actively force them apart.  The prevalent culture is one of almost isolationism tantamount to mistrust and of in-fighting ingrained at nearly every level and discipline across Health.  The consequences? Lost opportunity, higher than necessary costs, frustrated staff and some suppliers seeing NHS as a cash cow.

Most of the column inches written on the subject of procurement in Health highlight common threads of public misunderstanding and misdirection which lie at the heart of the challenge.

•             Value is first and foremost about the individual unit price paid for products and services

•             Aggregating demand means buying in bulk from a single supplier

•             Keeping information to yourself is a strength

Sadly, these couldn't be further from the truth yet they are believed by many to be policy and 'the way we work'.  For as long as they persist we will always get less than we deserve.

Value is more than the ticket price.

The differences between price paid and value are regularly forgotten about, especially by the popular media.  It talks loudly about the 'cost to the taxpayer' as if it understands what that really means.  Procurement teams the length and breadth of the country are targeted with making savings yet most have little or no influence on the level of consumption or true visibility of the resulting on-costs or impact on delivering the service. A similar perspective can be seen, albeit from a different viewpoint, between Trusts where the focus appears mainly about cost of delivering service.  Surely the more important differentiating factors are how well the patient is treated, both clinically and as a human being.  That is real value and competitive advantage but that requires a more holistic approach.

The same can be seen in domestic settings.  Many people complain about the use by companies of foreign call centres.  In the case of low cost air lines, there are all the 'extra costs' chargeable for what are perceived to be pre-requisites such as luggage or even checking-in.  We are guided to go for the cheapest offering but do we consider the full cost?

Is it better to pay 5% less for a rubbish bag just to find that it only holds half the amount before it splits open?  With staff either double bagging or taking time out to empty bins twice as often?  Both actions result in needing to buy more bags than before and staff having to spend more time away from front line patient care, but not to worry, at least the NHS saved about 1p per bag which is after all what is actually reported.

Does procurement of lower cost surgical implants save the NHS money?  Not if the 'reduced' cost supply comes without any support during the introduction of the new product.  The result, time away from operating lists, additional investment and training required in new equipment, and more money spent on additional services. There may be immediate unit savings but what is the overall cost to the NHS?

 When is aggregation not about buying in bulk?

There is an idea that bulk buying from a single supplier guarantees best value.  This is once again an outdated, misguided or possibly even dangerous assumption and not one that the recent strategy promotes.  The world is littered with stories of major suppliers hitting problems that then affect the whole market.  The warning dates back to biblical times with parables telling of aptly named 'fools' building ever larger stores for produce, only to see them utterly destroyed in one incident.  Still, 2,000 years later we see people assuming that bigger is always better.

Just last week a fire at a Chinese factory of SK Hynix, the world's second largest supplier in its field, sent computer memory prices soaring by 19% to a three year high.  The expectation is that the effects will be felt for months to come.

(Stay tuned for part 2)

Voices (2)

  1. Bill Atthetill:

    And here’s another issue. Private sector is willing (and able) to pay £70-80k per annum to support their own Heads of Procurement in the NHS. Not only will NHS trusts lose their best people to commissioners (CSUs) due to the offer of higher salaries but to the private sector too.

    http://www.exec-appointments.com/Jobs/ad.aspx?adID=263331&executiveID=139574&refDate=19Sep13&eacid=jaeh

  2. Mark Lainchbury:

    3 x “public misunderstanding” debunked for Guardianistas

    Let’s hope part 2 plays more to this procurement network audience

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