Oli Hudson, content director at Wilmington Healthcare, takes a further look at the changing world of NHS procurement and asks what this might mean for industry.
My last (broadly positive) piece on value-based procurement for Med-Tech Innovation drew considerable interest.
Since then, there have been a few areas of development in the world of NHS procurement that I thought needed some further exposition – particularly on the question of whether these changes might affect the ongoing progress of genuine value-based procurement.
Firstly, news has arrived that NHS Supply Chain is to undergo some governance changes. The procurement body, and its management company Supply Chain Co-ordination Ltd (SCCL), which is responsible for procuring and transporting medical and non-medical goods for most trusts across the NHS in England, were formally folded into NHS England in November, having previously been overseen by the health secretary.
This could be seen as the first rumblings of what the Government was attempting to set out in the Green Paper of December 2020. The pandemic had illuminated how important responsiveness, flexibility and transparency were in procurement, particularly in healthcare, and the Green Paper sought feedback from suppliers as to how the system could work better.
Proposed legislation now includes introducing a new ‘flexible competitive procedure’ that gives buyers freedom to negotiate and innovate to get the best from the private, charity and social enterprise sectors; an ‘open procedure’ that buyers can use for simpler, ‘off the shelf’ competitions; and a ‘limited tendering procedure’ that buyers can use in certain circumstances, such as extreme urgency.
Doesn’t this sound like NHSE is gearing NHSSC up to work more in harmony with the wider procurement ecosystem, and to be one of several options purchasers can use? Some in the NHS felt it has been prohibitively complex, with purchasers having to deal with multiple towers, not to mention an expensive endeavour, funded by a top slice from trust tariffs.
Equally, the Supply Chain has never had the best of reputations with Industry, particularly SMEs, and it’s likely that many felt shut out from the framework system operated by the towers, not to mention difficulties in getting the longer-term value argument across.
So it’s interesting that a fresh strategy for procurement – covering some £3 billion pounds worth of spend currently controlled by NHS Supply Chain – could be on the cards, as a prior information notice has been issued that says SCCL is “reviewing [its] approach to the market for the delivery of its category towers”.
More details around the “final structure and approach” will be included in a contract notice in April 2022, it added.
It’s not yet clear what the new system will look like, or whether the existing towers’ contracts will be extended or reviewed, but it looks like 2023 at the earliest before new players come onto that scene.
Meanwhile, we are seeing more and more aggregate procurement in places and systems; and it may be the government’s thinking that deals struck at this more local level – regarding the specific needs of the area, its estates, its priorities and its pathways – represent a large part of the future. The Shelford Group – an association of top teaching hospitals with a joint procurement function – seems to be thinking like this, with its procurement director’s sub group suggesting it would be “Linking with, and providing support to, STP/ICS partners in respect of procurement activities in order to bring greater value to all” as well as stating it would be “representing Shelford Group trusts’ interests in relation to national procurement developments including the revised NHS Supply Chain Model”.
If so, my colleague Jack Serle’s HSJ interview with Keith Rowley, chief officer of the Health and Care Supply Association, has much to offer in terms of how this will affect the idea of value in future NHS procurement.
Addressing trust chiefs, he says that the NHS has historically focused on price, especially cost improvement plans, and not value. With the rhetoric from the government saying resilience and sustainability should be brought front-and-centre, the onus in his opinion is now on trust-based procurement professionals to take that lead, persuade finance directors to invest in quality, and open up the market to new ways of thinking – essentially the message that if you want reliability and sustainability, you are going to have to pay for it.
It does seem sometimes that the arguments in the procurement world between cost and value are interminable. What is apparent however, is that whoever is in charge of purchasing in the new NHS, wider values than just unit price are going to become increasingly important drivers.
