Procurement Productivity in the NHS – Will it Now Improve?

Posted 12/06/2015

The Health & Social Care Act 2012 in effect handed operational control of the NHS, with its £100bn+ of expenditure and 1.3 million staff, to hospital trusts and clinical commissioning groups.  An NHS Five Year Forward View then emerged in the autumn of 2014 from CEO of NHS England, Simon Stevens, articulating the requirement for fundamental change.  In particular, he emphasised “unleashing system efficiencies”, “eight major new care models” and “joint commissioning between NHS and local government”. 

Disappointingly, there wasn’t a single mention of procurement anywhere within that vision, unlike our own blueprint presented to policy leaders in Whitehall and 10 Downing Street, Why Procurement Transformation is Central to the Sustainability and Efficiency of the NHS:  Evolution not Revolution Across the Procurement Landscape. 

Well, exactly a year on from those briefings, an interim report has emerged from Lord Carter, Chair of the NHS Procurement & Efficiency Board, who was appointed last summer with the remit of “cutting waste, saving money and driving efficiencies which can then be spent on front line patient care”.  This had already been advocated in the Department of Health’s own Better Procurement, Better Value, Better Care – The NHS Procurement Efficiency Programme , back in August 2013, reinforced by the NHS e-procurement strategy announced in April 2014. 

Clearly change takes time!  But this new Interim Report, Review of Operational Productivity in NHS providers , is extremely timely as the pressures for it have dramatically increased.  While Prime Minister Cameron has pledged full delivery of a truly seven-day NHS service, a £30bn black hole still exists, and obviously has to be addressed.  An additional (but unfunded) £8bn will be provided by the end of this parliament, so £22bn of cost cuts still have to be found and implemented by the NHS itself.  And all of this at a time when many trusts are in deficit, with “success regimes” being rapidly implemented in those teetering on the verge of bankruptcy. 

We have always emphasised that productivity transformation can only take place in the NHS at the local level.  Simplistic mandation and centralised aggregation just doesn’t work in procurement across highly complex, multi-site, devolved structures.  This is why our NHS change proposition argued strongly for performance management by local boards, CEOs, CFOs, non-executives and clinical directors who, while accountable, also need to be proactively supported to achieve it.  Lord Carter definitely shares this view and over the last year has worked closely with 22 hospitals to shape a proposed series of “productivity collaboratives” and detailed guidelines on best productivity practice around the concept of a “model NHS hospital”.  A “productivity performance system” is to be created, embracing an Adjusted Treatment Index (ATI) metric for the whole NHS.  This work is ongoing, with “learning workshops” to take place across the UK that will identify and validate considerable savings that can feed into 2016/17 business planning.  The ultimate goal of this focus on productivity improvement is the unlocking of savings in the region of £5bn per annum by the end of the decade.  Clearly that will need political and managerial commitment, as well as the necessary funding, to achieve efficiencies on this scale.  More detail is expected in Lord Carter’s next report this autumn. 

The proposed “productivity collaboratives” will focus on four main areas:  workforce , addressing the huge variations in workforce rostering and utilisation of clinical time within the largest area of NHS spend at £45bn per annum;  hospital pharmacy and medicines optimisation , another £20bn;  estates management across £7bn of spend in 1,200 hospitals and 3,000 treatment facilities on cleaning, energy, laundry, building works etc.;  and procurement , which has been narrowly defined as £9bn of annual spend across consumables e.g. dressings (c. £2bn), high value medical devices e.g. hip joints (c. £3bn) and common goods and services e.g. stationery (c. £4bn).  A tightly controlled, single NHS electronic catalogue for products purchased by hospitals is not surprisingly recommended. 

Clearly a huge amount of change planning remains to be addressed.  All the following have been highlighted but not detailed.  How will the processes for self-improvement and support mechanisms locally, regionally and nationally be created, resourced and facilitated?  What are the leading practices that underpin better productivity performance, and how will they be codified and implemented?  How will the productivity performance system be industrialised and rolled out?  How will clinicians be actively engaged as key stakeholders? 

And finally one further key question that we would raise:  the interim report only highlights £9bn of annual spend, whereas the total figure for third party expenditure is well over £25bn.  This requires multi-disciplinary collaboration across the proposed work streams.  How will that be taken forward, and will it be addressed in the next report?  We definitely hope so.

Read more related NHS procurement blogs by clicking on the tag below.


Tagged by topic: NHS , Public Sector Procurement

  by Jon Hughes

Previous post
How Good are Category Managers at Applying Category Management?
An acid test for Category Management success is how well Category…
Next post
What Does Best In Class Category Management Training Look Like?
We asked a selection of procurement experts for their views. This is…
comments powered by Disqus
Subscribe to our newsletter?

Future Purchasing would like to invite you to receive our
monthly Viewpoint newsletter.

It contains evidence-led best practice procurement insight
guides, leadership and change management articles and
purchasing news.

Complete the form below to subscribe today...