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How has the pandemic and the rise of digital transformation affected NHS procurement?

The last two years have emphasised the importance of effective procurement to the NHS, shifting perceptions of the function - and, in some cases, its practice.
By Steve Rowland on 19 October 2022

The last two years have emphasised the importance of effective procurement to the NHS, shifting perceptions of the function – and, in some cases, its practice.

At eXceeding, we’re here to help our clients do things better: to save time, resources, and money. Furthermore, all of our partnerships deliver better results for the organisations we work with. We create win-win firm but fair contracts for our clients.

Nowhere is the reward for “doing things better” greater than in the NHS, where budgets are tight and every penny saved on a procurement contract goes toward improving patient experience, providing vital services, and supplying life-saving care. When you can directly equate financial savings on a contract to purchasing new beds, hiring more nurses, or adding another highly skilled member to the team, the importance of the work we do becomes clear.

What exactly is NHS procurement?

In order to function on a daily basis, the NHS must purchase a large number of goods and services. These procurements can be conducted in a variety of ways, including frameworks, direct awards, and tendering exercises, each of which has distinct procurement advantages. The NHS’s procurement systems have been put under enormous strain during the health crisis caused by the coronavirus pandemic, which has created unprecedented levels of demand for some goods and services.

Teams have discovered new ways to work and retain best value in the face of extreme challenges, such as sourcing personal protective equipment during the first wave of covid shortages, the impact of Brexit, the supply chain ramifications of rising fuel prices, utility cost increases and driver shortages. Among them is an investigation into the increased use of technology for data collection and sharing.

What does the NHS actually purchase?

The NHS mostly buys equipment and medicines but also has large amounts of indirect procurements such as IT, FM and construction/refurbishments. In response to the pandemic, clinical equipment has included ventilators and personal protective equipment (PPE) such as gloves, aprons, surgical masks, eye protection, and protective gowns.

Much of the NHS’s primary service purchase is healthcare and associated products. Everything is covered, from planned operations and emergency care to GP and community services. Other services acquired by the NHS for its hospitals include cleaning, facilities management, and information technology. NHS bodies primarily purchase services from other NHS bodies, but the private and voluntary sectors also provide many services which account for 7.3% of total Department of Health and Social Care (DHSC) spending.

How much money does the NHS spend on procurement?

The Department of Health and Social Care (DHSC) spent around £70 billion on procurement in England in 2018/19, an increase from £68.3 billion the previous year. The vast majority of this is invested in the NHS.

Health is by far the largest area of government procurement spending; it is more than three times greater than the next highest amount, military spending. The majority of NHS procurement spending in England is on healthcare, with approximately £18 billion spent on medicine and nearly £6 billion spent on ‘hospital consumables’ such as gloves and syringes each year.

How are NHS goods and services procured?

The NHS is a highly complicated cluster of organisations. Clinical Commissioning Groups (CCGs) in England purchase services for each area that are delivered by hospitals, Trusts, GP surgeries, or other service providers. In England, there are over 200 CCGs.

In England, most items are purchased in bulk and distributed to providers by NHS Supply Chain, a wholly-owned company established in 2016 and accountable to the Secretary of State for Health. NHS Supply Chain manages over 4.5 million orders per year and aims to complete 80% of all NHS purchases by volume by 2022. Medication is obtained through a separate system of regional pharmacy purchasing groups.

Was there an issue with NHS procurement prior to COVID?

The NHS has never had to deal with a public health crisis of this magnitude. Recent government reviews have identified inefficiencies and a lack of procurement capability as the main issues with NHS procurement in England.

Unfortunately, the NHS has a reputation for outsourcing large IT projects that are delayed, over budget, and ultimately fail to deliver. Effective contract management should require suppliers to evolve technology and improve commercials each year in order to keep up with the market, but the NHS frequently fails to include clauses that allow this to happen. When things go wrong, there may be a lack of documentation to prove a supplier’s failure.

The digital challenges posed by COVID

While frontline staff were deployed to help with the coronavirus, non-clinical staff worked from home, as did many other organisations during the pandemic. According to Adecco, the number of remote meetings across the NHS increased from 13,500 to 90,250 as the health service prioritised flexibility.

The NHS plan, published in August 2021, stated unequivocally that it is critical for the NHS’s future to better address the needs of its workforce. However, implementing and maintaining new approaches takes significant effort, and flexible working must be supported in order to thrive.

Where are we now?

According to Institute for Government research, procurement capability in the NHS is still viewed as a weakness by civil servants.

Everything would be digital if a new hospital were built today. There would be no on-site servers or storage systems; all records would be electronic and hosted in the cloud. However, existing hospitals frequently have legacy technology and reasons to maintain a hybrid model.

With such volume, demand fluctuations, and complexity, it’s not surprising that Trusts are looking externally for the support and expertise they require, so it’s critical that you choose the right outsourcing provider for you by asking the following questions:

  • What exactly does ‘good’ look like?

All too often, we receive invoices from suppliers for additional charges. Nobody knows what they’re for, but Trusts often still pay them. How do you know if these invoices are fair if you don’t understand what SLAs and service credits are included in your contract and why/where extra charges may be incurred? Worse, how do you know if you’re paying for work that has already been completed?

We understand how to advise contracting authorities on all aspects of their procurement process and routes to market, consider public sector frameworks when appropriate, and ensure that a compliant and auditable process is followed every time, while achieving the desired best practice outcomes.

  • Can we find ways to collaborate?

Outsourcing allows teams to refocus on core activities while freeing up space and financial resources to improve service quality.

Senior stakeholders’ perspectives on outsourcing frequently differ from those of functional unit heads. This is why eXceeding’s outsourcing advisory services are a great way to get an objective assessment of your situation, current processes, and organisational needs.

Our experience allows us to bring “best practice” from a variety of sectors and other Trusts as well as the ability to provide the path to the optimal solution – we bring the knowledge of having done this before – we know the pitfalls and the proper way to structure deals.

  • Is outsourcing as costly as people believe?

Public sector tenders, of course, are subject to much stricter and more rigorous governance. Public sector procurement accounts for some of the highest levels of expenditure in the economy, which is borne by the UK taxpayer. That spend is critical because it comes from public funds, which means that the way money is spent on goods and services is scrutinised to ensure the best possible value for money for the public purse.

Contrary to the popular belief that hiring expensive outside resources to do work that could be done in-house is a waste of money, public sector consulting allows organisations to deliver resources in a much more efficient manner.

Procuring through public sector frameworks could entitle you to free public sector procurement consultancy and delivery support from eXceeding.

  • How do you manage risk when people’s lives are at stake?

Public sector procurement can be difficult, and IT is one of the most complicated categories to procure because technology advances so quickly. With the possibility of lives being lost in the event of a service disruption, you want to be sure you’re in good hands.

Even if you’re familiar with healthcare software, SaaS and IaaS requirements and the most recent technological innovations, procuring IT services in a critical domain like the NHS necessitates in-depth market knowledge as well as negotiation, transition management, and supplier leadership skills that you can’t expect your internal team to have, especially if you’ve been out to market for a while.

Our procurement consultants at eXceeding have all worked in the industry and have extensive knowledge of their respective markets. They all got their start in business and aren’t afraid to give tough love, negotiating firm but fair contracts that challenge suppliers to give as much as they get from any agreement and holding them accountable to deliver promised service and value.

We have demonstrated experience managing critical transitions, such as developing an exit strategy, minimising costly duplication, and ensuring service continuity.

  • What social value can you add?

The incorporation of mandatory social value into the supply chain is regarded as critical to effectively improving patient outcomes. In addition to committing to net zero by 2045, the NHS has five social value goals, which include:

  • Fighting climate change
  • COVID-19 recovery
  • Tackling economic inequality
  • Equal opportunity
  • Wellbeing

Our vision is to bring the best of commercial procurement to the public sector, collaborating with both buyers and suppliers to create value and long-term win-win collaborative relationships. We want to help you achieve your strategic and political goals by promoting social value initiatives such as involving SMEs and local suppliers, achieving Net Zero, and improving sustainability.

If you want to read about how eXceeding successfully assisted Cambridge University Hospitals (CUH) in transitioning their outsourced IT contract to a new service provider, please click here >

Steve Rowland - eXceeding Managing Director

Steve Rowland

Before eXceeding, Steve spent 16 years working on the supplier-side of outsourcing. During Steve’s 24 years’ experience, he has worked on global and UK outsourcing deals, ensuring the creation of win-win partnerships.

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