Lord HuntPresident of the Health Care Supply Association

The NHS Procurement Landscape

Agenda

• Introduction

• The NHS Commercial Environment

• The Procurement Landscape

• The Optimal Route to the NHS Market

Introduction

• Lord Hunt background

• Career review

• Current role and view of procurement

• Health Care Supply Association

The NHS Commercial Environment

The NHS is in constant state of change........

• Necessity Not Nicety / Commercial Skills for the NHS– Commercial Support Units– Demise of PaSA– Formation of PICD and SMDU

• Liberating the NHS– Demise of PCTs and SHAs– Greater accountability for GP Consortia (now Clinical Commissioning Groups)

• FT Network / Other Providers and the competition agenda– Foundation Trusts competing to provide services

• QIPP agenda driving £20b savings – £1.2b from procurement

……. but how do these changes affect the supply market?

The NHS Commercial EnvironmentPre White Paper Interim Position Post White Paper

Department of Health Department of Health Department of Health (?)

National Commissioning Board

SHAs SHAs Regional Commissioning Organisations

Commercial Support Units Commercial Support Units Commercial Support Units

Collaborative Procurement Hubs (CPH) CPH / Collaborative Commercial Organisations

Collaborative Commercial Organisations

Regional Specialised Commissioning Groups

Regional Specialised Commissioning Groups

Regional Specialised Commissioning Groups

PCTs PCT Clusters GP Support Organisations

Trusts (NHS/FT) Trusts (NHS/FT) Trusts (FT)

GPs GP Consortia Clinical Commissioning Groups

Private Healthcare Private Healthcare Private Healthcare

….. but do we understand the role of each organisation??

The Procurement Landscape

NHS procurement leadership and strategy appears uncoordinated?.....

• National Strategy– Procurement, Investment and Commercial Division– Shared Business Services (CPS) / NHS SC / OGC Buying Solutions subsumed

into Government Procurement– The QIPP Agenda and the role of the SHAs– National Procurement Council– National commercial organisations (regional) – Public and Private

• Regional Strategy– SHA’s morphing into something new– Commercial Support Units (Commissioning / Provider Services)– Commissioning Support Units – Public / Private

• Local Strategy– Acute NHS and Foundation Trusts / GP Consortia

…..there is little linkage across the players

The Challenges for Buyers

• Information– Lack of transparency of price paid – No single place for “rich” data on products and markets

• Communication – Use of value measurement i.e. innovation vs the need for cash

releasing savings– Clinical engagement with decision making– Various routes of communicating with supply market

• Business process – Inefficiency caused by framework contracts – Difficult to operate collaboratively without bureaucracy– Delivery to support Trust strategic objectives

.....no professional voice

The Challenges for Suppliers

• Information– Weak information and market intelligence – Slow uptake of new products and innovation– Clinical evaluation inconsistent

• Communication – Time and cost to take a new product to market – Limited performance & improvement feedback

• Business process – Multiple routes to markets – confusion– Prescribed supply routes may not be optimum – GPO / Intermediary business models – Access to decision makers

…..what is the optimum for suppliers

NAO / PAC Summary• NHS Acute and FTs in England spend over £4.6billion

• Each Trust controls its own purchasing, in line with the Government’s strategy

• Trusts can purchase consumables in various ways

• Foundation Trusts act independently and will choose how it collaborates – DH acknowledges that it is accountable for NHS procurement across the system, but it has no control over the actions of the individual trusts who could deliver improvements

• Fragmented system of procurement has produced a great deal of waste, with trusts being charged different prices for the same goods

• A lack of quality data - bar-coding of products would help trusts to rationalise the range of products they buy and compare prices, providing the data they need to benchmark their performance.

NAO / PAC Conclusions and Demands 1. There is a need for clarity from the Department about how it will deliver

the necessary improvements in procurement by NHS hospitals when trusts are independent of its control.

2. It is not clear how trusts will be motivated to deliver collectively the £1.2 billion savings required from procurement under the Quality, Innovation, Productivity and Prevention (QIPP) programme.

3. Information on what products trusts buy and the prices they pay is poor.

4. NHS Supply Chain is not demonstrating its value to the NHS.

5. Regional purchasing structures are confused and lack transparency

6. There is a risk that, faced with the need to make savings, trusts will not identify procurement savings and will instead cut elsewhere.

The Optimal Route to the NHS MarketWhat is the most effective route for suppliers to sell to the NHS? What drives the organisations involved?

• National– NHS SC– OGC Buying Solutions– SBS (CPS)

• Regional – Developing Commercial Organisations– “Old” Hubs

• Local (Direct)– 400 Trusts – 200 Acutes / 150 PCTs / 30 Mental Health / 20 Others– Potential GP Consortia now Clinical Commissioning Groups

…do you sell on price or value? …how much capacity do you have?

Is Your Strategy Aligned to the NHS?

• The £20b challenge and the QIPP Agenda

• Support and investment locally

• Tri partite relationship – clinician / buyer / supplier

• Transparent benefit to all parties

• Strategy Meeting between ABHI and HCSA on 19th July

• HCSA National Conference in Manchester 2nd/3rd Nov

“NHS Procurement “Where Next?”

Lord HuntPresident of the Health Care Supply Association

The NHS Procurement Landscape