Reforming NHS procurement is more than bulk buying and executive ownership

The need for procurement reform in the public sector is not new and is something this and previous governments have struggled with for a long time.

Initiatives and announcements are made every year with a promise of better times to come.  Many of these focus on buying the right things, to maximise economies of scale and to deliver on overarching policy objectives, such as sustainability and a greater SME share of the cake.

However, few of the initiatives across the public sector actually tackle the problem of procurement processes and the cultural mindsets that often stop any of the overarching policies being achieved.   How can SMEs succeed in getting a greater share of government business (which is the policy aim) if the processes determined by the views of the procuring authorities prohibit SMEs to even get past the first hurdle in the procurement process?

In an attempt to fix this in the NHS the Department of Health last week announced a review into procurement in the NHS.  This announcement was followed by the publication of “NHS procurement: Raising our game” a ‘Best Practice Guidance’ document which is more of a wish list of things to consider overall when a customer(s) goes to procurement.  Both documents focus mostly on how to maximise economies of scale through bulk buying, a presumption towards frameworks, using e-procurement hubs and sharing resources and information and establishing executive ownership.

In the NHS goods and services worth about £18bn are procured each year, of this the ICT share is roughly £3bn (depending on what you count and who does the counting).  This is 17% of the procurement spend.  Very little effort is placed by senior officials on this slice of the cake whereas much of their focus is on bulk buying consumables like paper and gloves which is worth around £5bn a year.  Of course work should be done to make that part more efficient, there is no reason why there should be five different prices for gloves (or is there?).

In either case, the aim of the review and guidance paper is to get the NHS smarter when procuring consumables.  But buying clinical IT systems is not that straight forward, for example, we have seen that one size does not fit all when it comes to this, NPfIT being a case in point.  Each organisation works in different ways requiring varying functionalities and each have their own legacy systems that need to be taken into account when looking to buy a new system.  Achieving economies of scale and using e-procurement hubs for these systems is not easy, unless you standardise each NHS organisations or each maternity ward for example, it would be difficult to take a similar approach to procurement of consumables and clinical systems.

But when you look at information technology and its strategic and enabling role in the NHS one would think that more emphasis should be placed on getting this right.  If we get the procurement of information technology right we will get better implementation and use of these systems generating greater benefits for patients, carers and organisation over the long term, not just during the procurement phase.

This requires all of us to dig a bit deeper on what best practice for procurement of information technology should look like. We need to provide  the NHS with a ‘best practice’ guide on how it  can become a better customer, how it can better understand what they really need and what’s available in the market and look at what has worked before to deliver what they require at the best price. And finally to measure and evaluate to ensure they continue extracting value for what they bought throughout the life cycle.

With the new shift to local ownership and decision making of health IT this best practice and guidance is needed more than ever.  There is a lot of IT procurement activity going on in the NHS following the policy shift, which is a good sign for a more vibrant and open market, but we also see many of them collapsing so we urgently need to make improvements to ensure value for taxpayers’ money.

In some cases procurements collapse because of the failure of the customer to have a clear strategy for the procurement process, a well formed business case and a workable requirement specification.  In other cases procurement process hurdles are just too high for suppliers to provide a reasonable bid. Even for well-resourced multinationals let alone SMEs, where the requirements (financial, insurance, Ts & Cs etc) put on the suppliers have been disproportional to what was being procured.

Every failed IT procurement in the NHS is costly for both customers and suppliers. It can put small businesses at risk, slow down innovation and delay delivery of a modern health system.  It’s worth putting some concerted effort into getting this phase of the life cycle of information technology in healthcare right, it will benefit us all in the long term.

At Intellect we are working through our ‘Joint Plan’ with the DH to improve procurement in the NHS.  We have identified practical areas we can work on, and have NHS customers and suppliers willing to work with us on this. We are, for example, working with over 20 trusts in the South of England to help them develop their procurement process and approach to market. We hope it will address some of the issues highlighted.

What we in industry want to achieve with the NHS is the following:

1. Early upfront engagement between customers and suppliers – before officially going out to tender. This will help both sides set out what’s on the table, the business case, the proposed process, make modifications to requirement spec, and understand each side’s capability and capacity.  There is no reason this should not be done openly.  It’s thought of as best practice by the Cabinet Office and the NAO, and intellect have helped over 100 customers do this in the public sector to date.
2. Refresh and publish standard contract terms to support local trust procurements of clinical IT systems. Current Ts & Cs are too varied and lengthy for what’s being bought and adds cost, complexity and rigidity to the process, as well as locking out many suppliers whose solutions the customers are missing out on.
3. Publish baseline requirements for commonly used modules.  Again these requirements should not be kept secret, the earlier suppliers know what is expected, the better prepared they can be and deliver to the requirements.  It also flushes out unworkable requirements and gets us to a more practical state.
4. Publish the NHS business case process to assist all parties in understanding the complexity of it. Whilst the issue is often seen to be with ’procurement’, the actual underlying problems that cause difficulties  arise in activities done (or not done) in the prior preparation for the procurement activity.
5. Provide  a programme of support to develop the collective expertise of the wider IT procurement community. Both the NHS and supplier community, as well as the professionals working both sides, have expertise and experience that is not being fully utilised across the board.

We hope that improvements in these areas will put us on a better path, where we compete on quality and price, and not by who can survive an 18 month long battle of procurement war.