Lord Carter’s Review: Procurement Transformation Across NHS England is Finally Getting Closer Part 3 of 3

Posted 16/02/2016


Ten Enablers to Achieve It

In parts 1 & 2 of this blog we summarised the holistic nature of Lord Carter’s 15 recommendations and specifically detailed the one that focused on procurement transformation. Full implementation will save £5bn of the £55.6bn spent annually in non-specialist acute hospitals, which account for half of the total healthcare budget in England. This saving however represents less than 25% of the NHS England-wide goal set out by Simon Stevens, the Chief Executive, in October 2014 in his blueprint, The NHS Five-Year Forward View . He committed to plugging £22bn of an expected £30bn funding deficit by 2020 through productivity efficiency savings of 2-3%. Presumably, if the Carter recommendations were extended to the full NHS, then the initiatives that he has detailed would save c. £10bn, so almost half of the requirement.

The Carter approach is both detailed and transformational. It requires considerable leadership and cultural change, and encouragingly positions the “process and technologies” associated with that change within the need for a quantum shift in NHS collaboration and engagement. He fully acknowledges that creating metrics and performance frameworks and identifying gaps and opportunities alone do not unlock the necessary savings. There is an overwhelming need for active support and facilitation, particularly from national bodies to work alongside trusts and help them to understand best practice and then make the changes and capture the benefits. This has been the approach adopted over the last 18 months of his team study, working closely with 32 acute trusts to identify and codify “what good looks like”.

It is now clear that there will be procurement transformation across the NHS, and that it will be pursued with vigour and clear expectations of successful implementation. Indeed, Carter makes it crystal clear that ignoring or avoiding timely implementation of his recommendations should not be tolerated. Our assessment is that a multi-wave transformational programme now needs to be properly designed, resourced and implemented nationally, regionally and locally. From our extensive experience of working with large, complex organisations on such change we know that there are ten critical enablers that need to be properly addressed in a holistic manner, and these are shown below. We have brought them to life by identifying 30 productivity and performance indicators, all of which have been touched on in the Carter review – quite a number of them are verbatim from the report.

There are bound to be many reactions to the proposals. Some will see them as inadequate and unrealistic; while others may feel they are overly ambitious and impossible to implement. In our experience though, we believe that they are capable of being achieved, provided that the leadership, people, capability and competence issues are properly addressed, and that will require top-down investment.





    Productivity & Performance Indicators of Transformation




Laggards
0-25%
Learners
26-50%
Improvers
51-75%
Exemplars
76-100%

L

E

A

D

E

R

S

H

I

P

1. Leadership
Direction
Procurement and supply chain leadership way below critical mass.
  • Board sponsored leadership strategy encompassing procurement together with comprehensive leadership skills assessments.
  • Nominated board director working with a procurement lead to embed the procurement transformation programme.
  • Senior executives committed to testing local procurement against national metrics and national solutions.
2. Governance & Sponsorship Unacceptable and unwarranted variations in quality and cost of care.
  • Joint clinical governance in place with agreed standards of best practice for each specialism, and with full cost transparency.
  • All trusts have a self-improvement plan meeting clear targets and the requirements of procurement transformation.
  • Active facilitation by national bodies ensuring trust boards know what good procurement looks like.
3. Operating
Model

Systemic failure to capture the benefits of scale, with uncontrolled variety and fragmentation.

  • Structure, work flow and resource allocation designed around patient pathways, not functional specialisms.
  • Ongoing restructuring of procurement and supply chain, rationalising the landscape and consolidating purchasing power.
  • New models of procurement in place deploying above-trust consolidation, shared services and outsourcing.
4.

Performance Measurement

Little understanding of what good procurement looks like.
  • Model Hospital operationalised with trusts measuring comparative procurement performance against other trusts.
  • Procurement benchmarks, dashboards, toolkits and guidelines available to reinforce best practice.
  • Monthly reporting via the Purchasing Price Index and adoption of explicit NHS standards of procurement.

P

E

O

P

L

E

5.

People
Strategy

Significant variation in the procurement skills and resource base.
  • People plans fully implemented, improving leadership capability significantly “from ward to board”.
  • Well-resourced procurement leadership strategy integrating recruitment, talent management and succession planning.
  • · Considerable reduction in national variations in procurement skills with the function properly modernised.
6.

Learning & Development

Infrequent sharing of best practice with few skills and behavioural frameworks.
  • Good procurement practice codified and incorporated in guidelines and toolkits to structure improvement action.
  • Ready access to this detailed guidance with knowledge sharing by top performers via a procurement portal.
  • Creation and deployment of skills development networks building procurement capability and sharing best practice.
7. Organisational Engagement Inadequate focus on procurement and little understanding of its contribution.
  • Mind-set shift with far greater transparency and collaboration in procurement locally, regionally and nationally.
  • Detailed guidelines available to facilitate collaborative procurement joint ventures across neighbouring trusts.
  • Creating a more open and respectful working environment that empowers procurement staff to modernise the function.

P

R

O

C

E

S

S

E

S

8. Category
Management
Systemic failure to capitalise on the national nature of the NHS.
  • National category strategies and aggregated sourcing work plans locally and regionally to reduce costs, waste and variety.
  • Category strategies actively supported by standardised data sharing and a national spend analytics platform.
  • Proper engagement with the health industry and active monitoring of market developments in order to contain costs.
9.

Consolidation & Standardisation

Fragmentation, obsolescence, few scale efficiencies and considerable variation on value.

  • Multi-trust partnerships and trusts working closely with 5+ neighbouring hospitals on procurement to drive down costs.
  • Trust boards leading work streams, driving better collaboration and co-ordination in procurement within and between trusts.
  • Boards addressing the root causes of waste and mandating strict compliance to P2P systems, catalogues and controls.
10. Programme Management Absence of structured programmes and plans for procurement change, with low accountability.
  • Clear accountability, with trust boards and national bodies ensuring “meaningful use” of new procurement systems.
  • Full adoption of the Model Hospital and integrated performance framework through clear road maps and work streams.
  • Adoption of lean daily management and individual performance management systems to ensure personal accountability.

If you missed Part 2 you can read it by clicking here. Part 1 can be found here.


Tagged by topic: NHS , Procurement Transformation

  by Jon Hughes

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Lord Carter’s Review: Procurement Transformation Across NHS England is Finally Getting Closer Part 2 of 3
Continuing our own summary of Carter’s 15 recommendations and…
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