NHS Procurement – Value Means Considering Cost AND Outcomes

It was a shame Lord Carter could not make the HCSA Conference last week (see picture, event was held under interesting blue lighting ...), as it would have been good to hear from him directly. Because based on what we heard of his ideas, he may be moving in a direction that could put the focus onto the wrong objectives and metrics for NHS procurement.

After moving into the role as the “NHS Procurement Champion,” he became chair of the “Procurement and Efficiency Board.” Not “procurement efficiency” but “procurement and efficiency.”

That is the clue to his focus - he appears to be looking at efficiency as the key measure and metric for hospitals. But what does he mean by efficiency? US hospitals are apparently being taken as the gold standard here, with their robust measures on costs and the ability to look at metrics such as "Supply Cost per Patient Day" and "Total Cost per Patient Day."

So what's wrong with that, you may ask? Well, this reference to the US is interesting in that most independent studies reckon the US health system costs far more than the UK system and delivers poorer outcomes.

And indeed, the main problem with those metrics is that they take no account of health outcomes. Or how many days patients are staying in hospital. At the extreme, a hospital might have very low “cost per patient day” but patients marooned in hospital for ages, with appalling treatment, then dying. Or, less dramatically, and as I pointed out at the HCSA event, a procurement person can reduce the “supply cost per patient day” by not providing any food. Or not cleaning the wards. Or reducing the staffing levels ... or ... you get the picture.

Such focus also runs the risk of taking procurement back into a tactical, cost reduction mentality if we're not careful. The smart procurement leaders in the sector are working with clinicians to improve health pathways and outcomes, looking at real value that is obtained from their spend on goods and services. They not simply trying to cut a few percent off the cost of gloves (not to disparage such work, it has value too, but it must not become the over-riding role of NHS procurement).

It will also of course lead to league tables and lots of ammunition for the media and the private health lobby to throw stones at those hospitals that have a "high” supply cost according to these metrics. Never mind whether they are burdened by historic PFI deals or an intrinsically expensive estate; or whether they produce excellent health outcomes and happy patients. They will be tarred by a poor position in the league table.

It will however give the politicians who won't face up to the fundamental problems of the NHS more excuses . You can hear it now. "If only every hospital had a supply cost per patient day as low as Barsetshire, , they will say. "Then we could run the NHS comfortably within current funding levels."

To be clear, I'm not exactly a raving socialist on NHS issues. I have no problem with private sector involvement, and I think affluent pensioners - a whole lot better off than most 25 year olds these days - should pay for prescriptions. I think we may have to charge for GP appointments, tax sugar, and offer more patients different and yes, cheaper, treatments (as per Alan Brace's comments, reported here). But read what Michael Porter and Thomas Lee have to say here – powerful stuff, and focused on value as defined by health outcomes and costs.

That seems to me to be where procurement and clinicians should be looking in terms of future direction.

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