HFMA 2020: valuing supply chain opportunities
by Seamus Ward
02 December 2020
NHS Supply Chain is adapting to the changing needs of the health service, making its supply chain more resilient and looking into the potential benefits of value-based procurement (VBP), the HFMA annual conference heard today.
Colin McCready (pictured), NHS Supply Chain chief financial officer and acting chief executive, said that VBP presented a big opportunity for the NHS both in terms of value and outcomes. He added that the value work was part of the organisation’s mission, as part of the NHS family, to support the health service, ensuring resilience in supply and ‘delivering the best possible products at the best possible prices’.
NHS Supply Chain value-based procurement project lead Brian Mangan said VBP challenged traditional procurement practice in the NHS. ‘The traditional procurement cycle was: get your savings targets, look at the frameworks to see where you might get things cheaper, challenge the suppliers and then record the savings,’ he said. ‘This has been done for years and years at the local, regional and national level, and procurement professionals have become highly efficient at it.’
However, a point will come where savings can no longer be found through this traditional route – this could be because of rising demand and limited resources, he said. Covid-19 will exacerbate this pressure on the system, while there will also be demands to introduce innovations at scale and pace.
He said the answer lay in the relationships between purchaser and supplier. The parties set aside their previously adversarial relationship during Covid to work in partnership and drive innovation, and this model was key to VBP.
VBP could also help integrated care systems (ICSs) validate their approach to reducing costs across systems, with a focus on procurement working alongside clinicians and finance teams.
NHS Supply Chain had run 10 VBP pilots since the summer. Mr Mangan said results in two pilots did not meet expectations. But he added that eight delivered value, including a scheme for patients to be administered antibiotics in their own home, which released a potential 2,000 bed days in one hospital.
‘There are benefits to engaging with suppliers and the pilots showed there were opportunities to engage with them, though both sides need to change from the traditional adversarial position,' Mr Mangan said.
Transparency and clear measurement of benefits are crucial, he added.
NHS procurement has changed a lot over the last year, with the Covid pandemic and the focus of the supply of personal protective equipment, which is now supplied through a ‘push’ system.
Mr McCready said NHS Supply Chain was adapting to the changing needs of the NHS, including the move to ICSs. In a year of change, so far it had delivered savings of just under £140m – £31m in revenue and £109m capital.
While helping trusts make cash-releasing savings was important, NHS Supply Chain was about more. He insisted it was also about adding value in terms of assuring quality and safety at a national level, so this does not have to be replicated locally.
In video messages, procurement and finance directors told the conference that Supply Chain had made improvements over the last few months. Sara Ford, NHS Supply Chain director of customer and strategy, added that the body was increasing resilience in the supply chain ahead of the end of the transition period out of the European Union and other events such as potential further surges in Covid cases.
She added that it had increased its stockpiled goods from three-and-a-half weeks of stock to about eight weeks of stock.
The body was also investing in its network infrastructure to support warehouse management and an ordering solution. ‘Before we transform services, we need to transition the service onto our new platform,’ she said.
Pictured above clockwise from left: Chair Ian Turner, HFMA deputy chief executive, Colin McCready, Sara Ford and Brian Mangan