Navigating the Changing NHS Procurement Landscape

1. Lord Hunt President of the Health Care Supply Association The NHS Procurement Landscape

2. Agenda • Introduction • The NHS Commercial Environment • The Procurement Landscape • The Optimal Route to the NHS Market

3. Introduction • Lord Hunt background • Career review • Current role and view of procurement • Health Care Supply Association

4. 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?

5. The NHS Commercial Environment

6. 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

7. 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

8. 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

9. 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.

10. NAO / PAC Conclusions and Demands • 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. • 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. • Information on what products trusts buy and the prices they pay is poor. • NHS Supply Chain is not demonstrating its value to the NHS. • Regional purchasing structures are confused and lack transparency • There is a risk that, faced with the need to make savings, trusts will not identify procurement savings and will instead cut elsewhere.

11. The Optimal Route to the NHS Market • What 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?

12. 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?”

13. Lord Hunt President of the Health Care Supply Association The NHS Procurement Landscape