A bitter pill to swallow or just good leadership?
David Loseby MCIOB Chtr'd FAPM FCMI FCIPS Chtr'd FRSA MIoD FICW
CPO, Professor, Editor in Chief, Advisor & NED (Pracademic)
A bitter pill to swallow, or just good leadership?
The NHS is one of our most valued British institutions, and one in which I’ve had the pleasure of working in. At the weekend I reflected on my experience of NHS procurement and public sector procurement transformation and the way in which procurement can help the NHS in the future meet the needs of its patients and stakeholders (clinical and non-clinical).
Procurement activity in the NHS already contributes and delivers. Yet the interim report on operational productivity published in June by Lord Carter of Coles concludes that ￡1 billion could be saved from ￡9 billion of annual expenditure by 2019/20 through refining procurement practice. When NHS England identifies a gap in funding to be of the order of ￡22bn the opportunity is hard to overlook. In short more must be done!
“From the evidence received so far, I do not think there is any one single action we can take but I do believe there are significant benefits to be gained by helping hospitals, using comparative data, to become more productive.”
Lord Carter of Coles, Interim Report, p.3
In 2013 I wrote a paper on the procurement implications of the Francis Report on care provided by the Mid Staffordshire Foundation NHS Trust. Then, like now, I was certain that collective accountability by all those involved with the NHS – including procurement – could help the NHS deliver on behalf of patients.
“This is about changing the culture, which should provide a platform for procurement to play its part.”
David Loseby, Procurement Implications of the Francis Report
I went on to summarise what my thoughts were having read all 112 pages of the summary report!
Taking personal ownership will always play a big part of the professionals’ role, it is not a job it’s a commitment you make not just to the organisation but personally and that is the ethos and essence that will be critical in turning around one of the most iconic public organisations in the world.
We must also be clear that in tackling what is in essence a change and transformation programme on a grand scale that there will be tough challenges ahead, areas where there are no precedence or established practices, but that is where the courage of the leadership in guiding the commercial activities is pivotal in changing the way things are into something that repositions correctly the profession as a more strategic function and not simply a tactical and responsive function that does not engage at the all decision points or influence the changes that are needed to ensure patient care but by different and more value adding ways than have been comprehensively considered as being the way procurement functions in the NHS.
Lord Carter’s report suggests a similar role for procurement, with the need to “create a culture of relentless cost containment with a forensic examination of every pound spent in delivering healthcare.”
For me, this means using the disciplines of supplier relationship management, contract management and contract monitoring to gather data for decision-making, understanding opportunity, and creating supportive environments for collaboration and innovation.
In 2013 I concluded that NHS Trusts would benefit from having a single point of contact and single direction for all commercial activity to enable objective decisions aligned to Trusts’ strategic objectives. Two years later I still think that a single commercial strategy for an NHS Trust would work most effectively, with discrete teams collaborating in a matrix model to implement it. Even outside Trust borders, experience and expertise could be shared for the benefit of all stakeholders.
Matrices aren’t quick to implement, but could enable the balance between clinical autonomy and operational productivity, allowing Trusts to use their strengths to go beyond cost savings to drive true value for the whole of the NHS “ecosystem”. Imagine a framework of contracts across the matrix, with flexibility at Trust level to implement terms in a way that meets its needs. Lord Carter is campaigning for a common electronic catalogue, an idea which I support. But in addition I think that the NHS is ready to embrace a matrix model to support the new ways of work that a catalogue and many other shared procurement enablers that would be needed. However, this will only happen if there is collective ownership borne out of trust between all parties and collaboration on a level that is upper quartile.
Whilst considerable and consuming, the leadership challenge is not insurmountable if realistic actions, targets and plans are implemented. With this in place, the NHS can move from where it is, to where it wants to be: healing and caring for patients in the best way possible for many years ahead.
David L Loseby FCIPS
Happily retired
9 年David this is a great post and thought provoking too. One of Lord Carter's suggestions is that the NHS could take steps toward centralised procurement. Whilst this already happens in other government departments they frequently end up with suboptimal products and services.This is because national procurement for some commodities can save money via economies of scale; but, it requires very careful contract management. Large contracts to supply goods to large institutions need constant review and checking. Government does not have a great record of scrutinising such contracts. National contracts also ignore regional differences. Moreover local flexibility seems to be the zeitgeist in government thinking for schools but apparently not for hospitals. However the real sting is in the tail. It not disputed that there could well be savings in national purchasing of non-perishable goods for hospitals, but the real money goes on staff. The big waste in hospitals is the billions of pounds paid to agencies. I agree with the central theme of your argument, regarding the use of of supplier relationship management, contract management and contract monitoring to gather data for decision-making, understanding opportunity, and creating supportive environments for collaboration and innovation. This is a mind-set thing as much as anything and has to be fostered by the leadership of the NHS.
Hi David. Our career paths have converged in history and I too have given support to NHS Trust Procurement. But my career has also covered a multitude of sectors. My experience is, that whilst there are definitely economies to be had from a more centralised procurement and commercial function (but the 10% saving is an often quoted, intuitive and aspirational target without any basis in analytics), and a collaborative approach to Supply Chain engagement, the problems of delivery quality and cost generally do not lie in the procurement. Contracts are mostly robust and well structured with appropriate commercial strategy that achieves optimum unit costs and with well prescribed contract and commercial delivery procedures. It is POST Contract when things go astray, when services and supplies are called off. through poor supplier compliance with those prescribed contract procedures and inadequate contract management by the Client representative. A more LEAN approach to the whole end-to-end process can deliver benefit to both Client and Supply Chain.
Leadership | Category Management | Regional Procurement South-East Asia | Marketing & Professional Services.
9 年Enjoyed the article David, I totally agree comparitive data is a good step but within the sphere of the public sector how could it work effectively when procurement professionals are unable to negotiate with suppliers?