Dissecting the Carter Report – Good Intentions, Some Naivety and Implementation Questions

So let’s start our more detailed look at the Carter Report into NHS efficiency – or “Operational productivity and performance in English NHS acute hospitals: Unwarranted variations” as it is known to its friends.

Now the chapter titled “procurement” is arguably just one of a number of parts of the report that we might consider to address procurement issues. It focuses on health consumables and supplies, but other chapters get deeply into estates and facilities management, much of which we would normally classify very much under the procurement banner. Another area is Pharmacy, which again has considered overlap with procurement and supply chain issues, and agency staff is also outside the “procurement” commentary. But let’s focus on the core supplies findings anyway.

The first point of contention is the estimate of 5,000 staff in procurement and supply chain across Trusts and third-party organisations such as NHS Supply Chain (NHSSC). Informed sources suggest the true figure is more like 3,000 and that the Carter data sources are simply inaccurate. Target savings are £700 million, “This has been calculated on the basis of a 9.5% reduction on the £6.5bn clinical and general supplies/ services spend plus small additional savings related to agency and estates and facilities spends.” This seems a little odd; one might have thought that pharmacy, agency and FM areas had at least as much potential as the supplies costs.

There is commentary on the vast range of different products purchased, and a useful chart (from BravoSolution data) shows the spend, average price and variation for cardiac stents. However, this and other charts do throw up one interesting point, not really commented on in the report; the bigger spenders aren’t getting lower prices, indeed there seems to be no spend /price correlation, which might call into question some of the usual assumptions about potential economies of scale.

There is a further issue here; we might agree that there is too much variation, and limited price comparison, but there has been no work done really on what is the right level of variation for each product. It might not be a thousand different options but it certainly isn’t just one either. This highlights a naivety in the report from a strategic procurement point of view – there is little sense that more than just benchmarking might be needed and appropriate. How about national category management strategies for all key spend areas, for instance?

So, the overall recommendation in this area is the following:

“Recommendation 5: All trusts should report their procurement information monthly to NHS Improvement to create an NHS Purchasing Price Index commencing April 2016, collaborate with other trusts and NHS Supply Chain with immediate effect, and commit to the Department of Health’s NHS Procurement Transformation Programme (PTP), so that there is an increase in transparency and a reduction of at least 10% in non-pay costs is delivered across the NHS by April 2018”.

It then has six more detailed recommendations backing that up – let’s get into a detailed review of those, three today and three tomorrow. Here we go:

“a) developing PTP plans at a local level with each trust board nominating a Director to work with their procurement lead to implement the changes identified, overseen by NHS Improvement and in collaboration with professional colleagues locally, regionally and nationally.”

Our comment - What does a good PTP plan look like? Anyone got a view on that? And what sort of Director? Executive or non-executive? Procurement must report into a Board member anyway, so what changes here? We don‘t disagree with this intent, but this is what the August 2013 NHS Procurement Development Programme report said “We already recommended trusts should appoint a board executive director to be accountable for procurement and non-executive director to sponsor the procurement function”. So nothing new here, and we might ask – why will this work now if it hasn’t already?

We also have the first of several mentions of NHS Improvement (NHSI) as the body that will “oversee” (what does that mean anyway?) and presumably drive this work in some sense. That organisation does not exist yet – it is the merger of Monitor and the NHS Trust Development Authority - and has no senior level procurement expertise that we are aware of. What are their plans for getting to the point where they can deliver what Carter demands of them? And why them rather than NHS England or indeed the Department of Health taking the lead?

Then we have “and in collaboration with professional colleagues locally, regionally and nationally” – what, everyone? All 5,000? Does everyone have to sign off every other Trust's PTP? We know what is meant, again the intent is good but frankly that is vague and sloppy writing.

“b) NHS Improvement providing a national spend analysis and benchmarking solution from high quality trust spend data to be fully operational by April 2017.This will include a purchasing price index starting with an initial basket of 100 products with immediate effect. NHS Improvement will hold trusts boards to account in performance against the index from October 2016.”

Our comment - And another one for the non-existent NHSI to drive! So this looks like bad news for spend analytics firms except for the one that wins the national contract, as local contracts will presumably be terminated. Let’s hope the procurement process comes up with an appropriate choice … Even getting anything useful from the initial 100 products from April 2016 might be fun, given NHSI have no experience of this and receiving data in different formats (almost inevitably) will be a challenge. But let’s not be too negative, this is very sensible conceptually.

c) all trusts to prioritise the role of procurement on ensuring effective system control and compliance, building supply chain capability in terms of both inventory management systems and people. Trusts to aim to work in collaboration both with national procurement strategies and other trusts to explore common systems adoption e.g. efficient electronic catalogues using retail system standards, enhancing current purchase to pay systems, adopting (GS1) and Pan European Public Procurement Online (PEPPOL) standards detailed in the eProcurement Strategy, and to align with NHSSC on category initiatives.”

Our comment – this is huge, very strategic and hard to argue with conceptually. But again, there are major unexplored questions around the implementation, not least the skills needed to make this happen. As a well-informed insider said “if you think procurement skills are weak in the NHS, wait until you see the supply-chain staff”! But, as we have featured here, there are emerging examples of very good practice in terms of systems in some Trusts, so let’s hope that can spread more widely in coming years.

More tomorrow …

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First Voice

  1. Mark Lainchbury:

    Benchmarking “from high quality trust spend data”

    Interesting qualifier given Carter’s earlier comments

    “The values above are estimates because
    data on volumes and prices paid for
    products and services is patchy. We know
    this because we collected all accounts
    payable and purchase order data from the
    22 hospitals for the last two years and only
    18% could be matched.”

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