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Top tips for outsourcing IT services in the NHS

How to balance risk and reward when lives are on the line
By Steve Rowland on 6 April 2021

At eXceeding, we’re here to help our clients to do things better: to save time, resource, money, and to deliver better results at the end of it. 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 squeezed and every penny saved on a procurement contract goes towards improving the patient experience, providing vital services and life-saving care. When you can directly equate financial savings on a contract to buying X new beds, employing Y more nurses, or putting in place an extra surgeon, the impact of the work you do is brought into stark relief.

Through our work with Cambridge University Hospitals Trust, we have generated cost savings of more than £4 million annually, which will be put back into the fantastic work the Trust does for its patients. The savings were made in transitioning their outsourced IT contract to a new service provider.

CUH’s example begs the question: how many other NHS trusts are over-paying on their current IT provision? If each one could make their budget go further to the tune of £4 million a year, imagine what that would mean for patient care.

Outsourcing IT in the NHS: why go external?

The NHS is the biggest employer in the UK, and every NHS trust will use outsourcing to one degree or another. They may call a spade a spade, or it may be known as managed services or by another similar term but, essentially, it is a form of outsourcing. But, why outsource IT?

In the NHS, IT encompasses more than just storage and servers – it runs across every part of patient journey and care, from the imaging systems used in radiology and cardiology, to blood transfusions and the equipment used to perform certain tests on the ward. Electronic Patient Records (EPR) connected to a nationwide network ensure confidential, highly sensitive data about individuals is available to healthcare professionals treating that patient, no matter what hospital or GP surgery they may be at, simply by inputting their NHS number.

If you were building a new hospital today, everything would be digital. There would be no servers or storage systems on site – all records would be electronic, and everything would be hosted in the cloud. But existing hospitals often have legacy technology and reasons for needing to maintain a hybrid model, such as applications that cannot go to a cloud solution. So, the variance across Trusts is huge, from those at the forefront of digital to those still in the process of migrating to realise the more agile cloud based.

With such volume, demand fluctuations and complexity, it isn’t surprising that Trusts look externally to provide the support and expertise they need, but how do you choose an outsourcing provider that’s right for you?

eXceeding’s top tips for NHS trusts considering outsourcing:

  1. Avoid bias
    We’ve heard of Trusts purposefully picking different providers from their peers, for no reason other than they want something different. Whether you buy from a framework or run an open tender, you need to start by defining exactly what it is that you want to buy, and consider all the options available to you to deliver that service. If you don’t have the expertise to define this in house, take advice from someone who does. This could be the CIO of another NHS trust that has successfully done something similar, another member of your network, or an independent procurement consultancy like eXceeding. All IT providers will have their preferred way of doing things and will – intentionally influence the solutions and advice you receive from them, so guard against setting off on the wrong foot by narrowing your options too soon.
  2. Consider if bigger really is better…
    It can feel less risky to go to one of the biggest IT system integrators and get them to provide everything you need but bear in mind that no one company will be able to deliver everything in your ITO themselves. By contracting one company to deliver everything, you may be paying more than you need to as you’ll incur a mark-up on the services they sub-contract. Outsourcing to multiple providers, including directly with subject matter experts, may be financially more beneficial, and you’ll probably end up with the same people, or better doing the work. Bear in mind though, with more integrators comes a higher chance of problems if contracts are not robust, which brings us onto…
  3. … but size does matter in some areas!
    If your contract with your IT outsourcing supplier is 30 pages long for tens of millions of spend (like some we’ve seen!) then it’s far too short and will likely be missing crucial details. Does it clearly define responsibilities in the event of a security breach? Does it provide mid-term benchmarking clauses for price and service delivery? Does it set out exit clauses? You wouldn’t want to agree a pre-nup during a divorce, and it’s the same with exit clauses – it’s vital to get them mapped out at the beginning of a contract, when everyone is happy, rather than try to agree them during exit proceedings when you’re on the back foot. If you leave it until you are terminating the contract the service provider will go for your jugulars (commercially!) You hope you’ll never need to use them but, if you do, then everything is agreed and understood. Without defined exit clauses, NHS trusts leave themselves open to being charged huge fees to exit unsuitable contracts. Likewise, if there’s a security breach and the contract doesn’t say it is the supplier’s responsibility to guard against and handle the fallout from any breach, then that risk and responsibility stays with you, regardless of how much control over or knowledge you might or might not have of the situation that led to the breach.
  4. Be firm, but fair
    It’s important to create genuine partnerships with suppliers that benefit both parties. You don’t want your supplier to be over-leveraged and become disgruntled, or go so far the other way that you’re overpaying. Contracts that set out clear deliverables, firm-yet-fair SLAs and service credits, what happens in the event of a security breach, and unambiguous exit clauses will help with supplier management, including holding them to account in the event of a problem.

Where do NHS trusts go wrong?

Sadly, the NHS has acquired a reputation for outsourcing big IT projects that get delayed, exceed budget and ultimately fail to deliver.

The tips above hint at some of the potential issues at play, but – for us – all the reasons point to one thing… the NHS is too nice. Now, we’re not advocating the NHS stops caring about people and screws suppliers for everything they’ve got – that’s no way to run an effective supplier partnership – but, sometimes, it’s ok to offer up some tough love to drive the best commercial outcomes, as every pound saved help investment in patient care and outcomes.

Too often, we hear of invoices coming in from suppliers for extra charges, and no one really knows what they’re for, but Trusts pay them anyway. If you don’t understand what SLAs and service credits are included in the contract you’ve got and where extra charges might be incurred, how do you know if these invoices are fair, or if you’re paying again for work that’s already covered?

It’s ok and absolutely right to challenge suppliers, and to hold them to account. Outsourcing is a partnership, and it needs to work for both parties. Effective contract management should challenge suppliers to evolve the technology and improve the commercials each year to keep pace with the market, but often the NHS fails to include clauses enabling this to happen.

When things turn sour, there can also be a lack of a paper trail to evidence any failures on a supplier’s part.

How can eXceeding help the NHS?

Public sector procurement can be fraught with challenges, and IT is one of the most complex categories in which to procure, because the technology moves on so quickly, but the service is vital to patient care and often lifesaving! Even if you are knowledgeable about healthcare software requirements and the latest technological innovations, procuring IT services in a critical domain like the NHS requires in-depth market knowledge and skills of negotiation, transition management and supplier management that – with the best will in the world – you cannot expect your internal teams to have, especially if it has been a while since you last went out to market. With the potential for lives to be on the line in the event of any disruption in service during transition, you want to be sure you’re in the right hands.

Once you have run a compliant process and engage the right supplier, you’ve got to put in place a contract that’s competitive and evolves over time as technology moves on and your requirements change. You’ve got to effectively manage that contract during its entire duration to extract value from it.

At eXceeding, our procurement consultants have all worked in industry and have in-depth knowledge of their marketplaces. They all cut their teeth in commercial organisations and aren’t afraid to give the tough love, negotiating firm but fair contracts that challenge suppliers to give as much as they get from any agreement, and holding them to account to deliver promised service and value.

Our team includes consultants who have previously worked in selling outsourcing services, so we are uniquely placed to understand the potential pitfalls clients face in sourcing suppliers.

We have proven experience of managing critical transitions including establishing exit strategy, minimising crossover, and ensuring service continuity.

To find out more about how eXceeding could be the “teeth” that give your NHS trust back its “bite”, you can contact us here or book a free consultation.

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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