25 November 2010 | Helen Gilbert
Proposed changes to procurement in the NHS have raised conflicting views on who is best placed to hold the purse strings, says Helen Gilbert
Question any health service purchaser about how they view their future at the moment and the chances are there’ll be an air of uncertainty in their reply. Some are worried they might lose their jobs, while others are on the edge of their seat wondering how the new NHS will look and where procurement will fit into the structure.
The driver behind concerns is the government’s White Paper, Equity and Excellence: Liberating the NHS, which proposes a radical shake-up of the health service in England. Under the plans, Primary Care Trusts (PCTs) and Strategic Heath Authorities (SHAs) will be scrapped, GPs will be handed responsibility for commissioning most health services for their local communities, and hospitals will be released from central control.
The aim is to generate up to £20 billion from efficiency savings by 2014, which the Department of Health says will be reinvested in the NHS to support improvements.
As part of the shake up, general practices must join a consortium that will commission the majority of care for their patients – a task currently performed by PCTs. It is anticipated that these consortia will hold around 80 per cent of the total NHS budget. A shadow system is expected to be in place by 2011-12, with the consortia assuming full responsibility from April 2013.
However, health service purchasers are not convinced about handing commissioning roles to GPs. One senior buyer at an NHS trust tells SM that he would rather doctors concentrate on the latest clinical developments, than managing budgets and fears patient care could suffer as a result. He also questions their procurement ability.
Concerns over care
“I don’t think they have the expertise to do it,” he says. “A lot of my colleagues are concerned. You don’t know whether GPs have the skills to do it. They’re going to be managing a pot of money. How are they accountable?”
The senior buyer is also uneasy about the intended abolishment of PCTs and asks what will happen to their commissioning team purchasers once the trusts disappear. “Procurement needs to be higher profile,” he says.
There is a general “misunderstanding that every GP will have to do everything”, according to Richard Vautrey, deputy chair of the British Medical Association’s GP Committee.
“In reality, they will bring in the people with the necessary skills to deliver the big agenda,” he explains.
“Most consortia should be securing those skills within their organisation if they are big enough or across a service agency [set
up to help with back office functions] or lead consortium acting on behalf of others. Some groups will choose to be smaller and deliberately work closely together. It makes sense for procurement to sit within that lead agency.”
Elizabeth Wade, senior policy manager, commissioning at the PCT Network, part of the NHS Confederation, agrees, reiterating that everything at this stage is in proposal form and subject to the health bill being passed.
If it does happen, she says it
will only be a “relatively small” number of those GPs running and leading GP consortia who will be involved in the strategic care pathway design, and they won’t all be writing contracts.
Wade believes purchasers will transfer to somewhere else in the system. She thinks GPs might choose to buy services from local authorities or independent, commercial sector organisations that provide medical consultancy-type services. She also thinks they’ll use the third sector and voluntary bodies that provide specialist expertise in services, such as mental health or for people with complex health conditions.
“People in PCTs will end up somewhere in the new system,” says Wade. “The NHS is facing much lower levels of growth and is going to have to be more productive. Procurement professionals should be focusing on what they’ve got to add to that and support commissioners in commissioning a more productive and efficient service. They should also demonstrate the value they can add, rather than endlessly prevaricating where you might be in two or three years’ time.”
Short-term action
However, change is going to occur on a more immediate time scale for many people in NHS procurement. The NHS re:source collaborative procurement hub – a regional procurement body, which buys many goods and services on behalf of East Midlands NHS organisations across Nottinghamshire, Derbyshire, Leicestershire, Lincolnshire and Northamptonshire – recently discovered it could be wound up by March 2011, with the potential loss of 46 jobs. The hub was established in 2006 and has delivered nearly £85 million in savings since it was set up.
Ian Shepherd, the hub’s chief executive, describes the decision as “extremely disappointing” given its achievements, and it will have a “significant and adverse impact upon regional capacity and capability in the East Midlands”,
he warns.
“There appears to be a feeling that NHS provider trusts in the East Midlands are aiming to boost their own in-house procurement capability rather than use the collaborative hub,” says Shepherd. “However, the strategic value of organised collaborative procurement will always yield greater value.”
Meanwhile, Martin Hughes, the hub’s commercial director, explains that a number of the collaborative hubs set up in 2004-5 are being reviewed because they have come to the end of their original business case. “The NHS is reviewing what it spends its money on,” he says. “We’ve probably fallen victim
to that.”
Hughes also remains unconvinced the new GP consortia will retain current purchasers, which many commentators believe. “Local Medical Committees [groups elected and chaired by doctors] are saying it’s a bit naïve to say GP consortia will immediately turn to PCTs for commissioning support,” he explains. “They might look to the market and see what’s available out there. I can see there then being an opportunity for independent organisations to come in and start to support the NHS.”
Buyer power
A number of health service buyers agree that internal and external attitudes towards procurement need to change if substantial savings are to be generated across the health service. One NHS buyer who spoke to SM, who wished to remain anonymous, has worked for an acute general hospital for the past two years. She has noticed a slight shift in attitude over the past 18 months. At the beginning, she found she hardly had any negotiating power – the surgeons appeared to have it all. Now she can challenge medics on their product choices. “The trusts are short of money and being put under a lot of pressure to break even and not overspend,” she says. “They’re getting desperate as to how they’re going to make savings and pushing to get as much out of procurement as possible.”
The buyer has also witnessed a change in supplier attitudes. “In the past, the supplier would have paid it lip service, gone through the contract,” she recalls. “If they put in a price that wasn’t the cheapest and the clinicians agreed, it would go to them. So they would always focus on making sure the clinicians wanted to use them. Now we are asking consultants to show us the evidence [why they need a specific item] and we’re able to challenge them over it. Suppliers believe it now when we say we will move, and I can talk to them more.”
Spoilt for choice
Malcolm Preston, associate director of procurement at the County Durham and Darlington NHS Foundation Trust, thinks there’s far too much choice in the NHS Supply Chain catalogue. He believes the government could save millions of pounds by limiting the selection of products available. He has restricted choice on a number of items. Now only one type of black pen can be bought, for example. Meanwhile, stripping back stationery selection has saved the trust £15,000 in one year. The same approach was applied to bandages.
“We picked our high-user areas – A&E, orthopaedics, etc – and trialled cheap, mid-price and the most expensive bandages,” Preston explains. “We chose a middle of the range bandage and more than £5,000 was saved in a year.
“Why do we need all those bandages? What should happen is if it’s fit for purpose in one NHS trust, it should be for all of them,” he continues. “We have a list, it’s board approved and that’s it – no one can choose anything else. Why isn’t this applied to the whole public sector for all non-clinical or non-critical items? Why isn’t it the same for schools, fire brigades and police?”
Another NHS buyer agrees, and argues that procurement needs to be respected by other parts of the organisation. “What’s annoying is we keep reading about how purchasing should do this and that,” he says. “It’s the other parts of the organisation that need to listen to us. There’s too much choice. When we say there’s loads of things you could mandate, people need to say that’s fine, that stuff is risk free. You could have one pen for the whole public sector.”
There are plenty of medical products – such as syringes and swab dressings – where choice is not essential. “You don’t need to buy the most expensive,” he insists. “Clinical need is important, but that gets traded on just a bit too much.”
One supporter of the NHS White paper is David Smith, head of procurement at Walsall Hospitals NHS Trust. He believes the approach will work, citing less duplication and the removal of bureaucracy as positive benefits. But he agrees that procurement in the health service must be given higher priority. “There’s a major opportunity for professional procurement to make a big difference,” he argues. “It needs the support of the board. I’ve got that, but I know colleagues who haven’t.”
Board-level backing
Andy Mullins, head of health at PA Consulting, is aware of the proliferation of patchy board support. He says the NHS buys around £17 billion worth of goods and services each year, around 30 per cent of the total budget of an NHS trust. “Yet in our experience, the subject of improving efficiency and reducing costs through better procurement strategies rarely appears on a board agenda.”
“Only around one third of all non-pay expenditure in the NHS is managed through a purchase order. This scary statistic suggests that trust boards have little control over the rest at a time when they are all under immense pressure to make savings. In the new world of empowerment and local decision making, the Department of Health cannot instruct hospital trusts to improve their procurement practices – or indeed insist they all use the same supply chain to save them money. Their challenge will be to drive the issue high up the agenda of trust boards by providing the evidence about what can be done to save taxpayers money through more effective procurement practice.”
Beyond cost savings, procurement can also play a crucial operational role within the NHS. Smith points out that the late delivery of items to wards or departments as a result of inefficient purchasing systems can lead to the cancellation of surgery and appointments, which leads to delays and inefficiency. The NHS is undergoing a radical makeover, so now might be the time for trust boards to finally sit up and take note of procurement’s importance.
- Helen Gilbert is a freelance journalist
NHS DATES OF CHANGE
2011-12: GP consortia established in shadow form
2012: Formal establishment of GP consortia
2012-13: Strategic Health Authorities abolished
April 2013: Primary Care Trusts abolished
Source: NHS Employers
