NHS eProcurement strategy – is it achievable and affordable?

Yesterday we gave a broad outline of the new NHS eProcurement strategy document, released quietly last week.  As we said then, there is much that is well-intentioned in the report, and the overall direction and aims seem good, but there are concerns and issues to be faced. Here are some of those – combining both initial Spend Matters thoughts and those of a handful of technology providers we’ve spoken to this week. (The quotes came from suppliers).

  • Choosing any standard always runs the risk of excluding other solutions which may be as good or better, and may actually be working fine.  “Have the authors of the report in the Department of Health (DH) become Peppol zealots? Mandating the use of a specific but relatively unproven standard seems high risk”? If a Trust is using something that works perfectly well but is non-Peppol, are they supposed to throw that out?
  • There are other market concerns about Peppol – the long term commercial model and the requirement for every participant to interact with everyone else, for instance.
  • Mandating Peppol and GS1 on an exclusive basis could even run into regulatory issues – “isn’t some of this anti-competitive”? The suggestion from the market is that more flexibility could have been allowed without jeopardising the principle of what DH wants to achieve.
  • These actions will increase the barriers to entry for new or small suppliers to the NHS – more hoops for them to jump through. “This will reinforce the oligopoly of suppliers we have in many NHS supply areas”.
  • Whilst mandating may be the only way to achieve the goals here, have the cost implications for Trusts been considered fully? Might there be some push back on those grounds?
  • Has there been much consultation with the Trusts who have to implement this? (Consultation with the eProcurement technology market seems to have been limited).
  • The concept of a national spend analysis and benchmarking programme is fine but are the costs and effort required here understood? Will Trusts who have their own spend analysis platform or provider have to switch to the new national provider? “Looking at how long it took Government Procurement Service to get spend analysis in place across central government, and given the greater complexity of the NHS, this is a huge task”.
  • Similarly, the idea of a category management portal is very interesting. I don't know if DH have a supplier in mind already, but we don’t know anything ‘off the shelf’ available in terms of the description given in the report, so again the cost and implementation effort should not be under-estimated.

There is also an elephant in the room. Who remembers the last major, national NHS IT initiative driven from the centre but requiring devolved bodies to change the way they do things? That's right, NPfIT, which wasted billions of pounds of taxpayers’ money. Now eProcurement isn’t going to be anything like that in terms of scale, but there are maybe some of the same issues to face around stakeholder buy-in, governance, compliance, defining standards and so on.

No-one is disputing that there is a significant prize here. But my biggest doubt (reflected by everyone I’ve spoken to) is whether DH or NHS England understand the cost and resource implications of what they are proposing, both in the network but perhaps even more starkly in the centre. Last August’s  procurement strategy document, whilst admirable in many ways, was over a year late. The eProcurement report publication “slipped” by 8 months. The Procurement Tsar who is going to put the 'more than just a preferred list' in place (announced recently) still hasn't been appointed.

That previous pace – or lack of it – does not bode well for the eProcurement programme, that will need two things from the centre. DH will need to deliver the long list of actions that lie in their own space, and do a lot of driving, communicating, persuasion and compliance management to get the wider network to fulfil their role. But I believe there have been only, and literally, a handful of people in DH working on both the wider and the eProcurement strategy. So are a whole bunch of interims going to be appointed to run this or is DH going to recruit? How will all these new technology procurements be run?

The list below is from the report and lays out the DH responsibilities. It is interesting that the actions have no timeframes next to them, and there is no discussion of the resource required to execute these actions – interesting and worrying. But, as someone said to me this week, “technology changes so fast, you can’t have a strategy that will take 10 years to implement. It will be hopelessly outdated before you get close to completion”.  I’m not convinced DH can deliver this programme in any sort of timely fashion. But I hope I'm proved wrong. Good luck to everyone involved and we will follow progress with interest.

Key actions – Department of Health

8)            Publish detailed guidance for NHS providers, together with a template GS1 and PEPPOL  adoption plan and business case

9)            Publish detailed guidance for suppliers to NHS providers

10)          Develop a certification scheme for NHS providers and suppliers

11)          Establish Task & Finish group(s) to determine:

11.1           classification standards

11.2           product and price datasets for the NHS GS1 datapool

11.3           dates for supplier compliance with GS1 coding requirements

11.4           dates for NHS provider compliance with GS1 coding requirements

11.5           specification for provision of certification services

11.6           specification for provision of a GS1 certified GLN registry service

11.7           specification for an NHS GS1 datapool service

11.8           specification for an NHS Product Information Management system

11.9           specification for provision of PEPPOL messaging services

11.10         specification for eProcurement implementation support services

11.11         specification for a national NHS Price Benchmarking service

12)          Facilitate the procurement of:

12.1            provision of certification services

12.2           provision of a GS1 certified GLN registry service

12.3           a single NHS GS1 datapool service

12.4           a single NHS Product Information Management system

12.5           provision of OpenPEPPOL compliant messaging services

12.6           provision of eProcurement implementation support services

12.7           a single national NHS Price Benchmarking service

12.8           a portal for the NHS Centre for Procurement Efficiency”

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Voices (5)

  1. Ger Clancy:

    Hi all,

    I disagree with a few of the points made above, which can lead to the benefits of PEPPOL being misrepresented.

    In terms of being unproven, PEPPOL is being used already for millions of transactions per month in Norway, Denmark, Netherlands, Austria, for Business to Business, Business-to-Govt, and also Govt-to-Citizen (the latter only in Norway as far as I know).

    It’s incorrect that there is a “requirement for every participant to interact with everyone else” – Certainly every PEPPOL-connected party CAN interact with any other connected entity, but that doesn’t compel either one to do so. PEPPOL doesn’t eridaicate the general need for vendors and suppliers to interact separately to agree terms. It does however, facilitate a purchaser reaching a wider pool of suppliers, including those from other countries, but it doesn’t force customers to then buy from a particular supplier. More compellingly it allows smaller businesses to trade electronically with each other, instead of only vertically with larger strategic trade partners.
    The initial join-up costs to PEPPOL give access to all other “members”, including accessing future traders without additional cost, since the connection is standardised. It is also not important via which Service Provider a business gains access. Service Providers will differentiate from each other on other services, as the basic PEPPOL access will be uniform.

    In terms of barriers to entry, this should actually lower barriers, as it will give a common structure and format to all data being transmitted from a vendor to a customer. Smaller, more agile businesses may find advantage in this, as they can execute faster than larger organisations.

    There is an also an concern expressed about the “long term commercial model”, but I don’t understand what is being challenged.

    See also my PEPPOL Tipping Point #NotJustPublic blog post below:

  2. David Lawson:

    Every day Hospitals order huge quantities of clinical supplies and medicines all of which are time sensitive yet very few Hospitals have comprehensive inventory management systems in place to ensure effective control. Initiatives to improve unit price benchmarking are important but the hidden cost of unnecessary waste within Hospitals from over ordering/ obsolescence/ care-free consumption deserve more attention.

    1. Mark Lainchbury:

      Hi David
      Surely an NHS datapool moves this three-steps closer?
      Even if we accept, your point about over ordering & obsolescence, which I don’t.

  3. Mark Lainchbury:

    Re. These actions will increase the barriers to entry for new or small suppliers to the NHS – more hoops for them to jump through.

    …….It’s hardly a hoop (in this century) to produce an e-list of your products and may well lead to more sales to due increased visibility through categorisation. After all Ebay and Amazon have led to a huge explosion in boutique suppliers, by bringing the manufacturer, closer to the consumer

    1. Final Furlong:

      I couldn’t agree more. I came across a solution recently which seamlessly supports hundreds of small businesses to provide thousands of their products through retailers’ websites. It’s extraordinary when you see it in action. Such technology can and should be exploited across the NHS Procurement landscape. It’s no longer rocket science (well, unless you prefer to live in the past…)

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