With NHS chiefs warning of a financial crisis in the near future, tackling inefficient procurement practices and wasted spend is an urgent priority for hospital trusts

Whichever way you look at it, the NHS’s built estate is massive. The Carter Report, an independent review of operational productivity and performance by Lord Carter of Coles published in February 2016, calculated that NHS acute services in England alone comprised 1,200 hospitals and some 3,000 other treatment facilities spread across 25 million square feet of land.[1]
 
With NHS chiefs warning that the service is facing one of the most severe funding crises in its history, the spiralling cost of maintaining the NHS’s physical assets is a question of critical, and hugely topical, importance.[2]
 
After all, if trusts can get better – smarter and more strategic – at their procurement of mechanical, plumbing and electrical spares, replacements and components, that’s going to free up cash for hard-pressed patient and frontline services.
 
Room for improvement
What’s more, this is an area the NHS could definitely be better at. The NHS, Lord Carter argued, was pouring way too much money into running and maintaining its built estate, with “unwarranted” variation in spend levels, too much space being wasted for non-clinical purposes (as much as 69% in some trusts) and too few trusts actually taking the plunge (even though the appetite was there) and investing in newer, more energy-efficient building technologies.[3]
 
As he said: “Acute trusts spend around £500m per annum on energy and if all trusts could move to the median benchmark then £36m could be saved. This saving could increase to as much as £125m if trusts were able to invest in energy-saving schemes such as LED lighting, combined heat and power units, and smart energy management systems.” [4]
 
So, what’s the answer? Lord Carter’s report recommended that the NHS embrace a number of changes that go right to the heart of more strategic procurement approaches, notably more use of eProcurement solutions and methodologies, more use of expert (rather than simply convenient) suppliers, better use of data and knowledge sharing, and the pruning of unwieldy procurement supply bases.
 
“Maverick” spending, too much “just in case” buying (and storing on site), too much wrestling with massive, bureaucratic supplier databases simply because that’s how things have always been done, too little sharing of knowledge and best practice… All these are problem areas for NHS procurement managers, agrees Kudzai Manduvi, National Account Manager at RS.
 
“I was speaking to a procurement manager from a big London trust the other day who gets four to five quotes for every single item and then has to spend at least half an hour validating every single one. People are, of course, under pressure to get the best item cost, but there are wider, much less visible indirect costs that need to be recognised too; the wasted time and energy that procuring in this way takes up.”
 
Significant savings to be made
The positive news, Manduvi concedes, is that NHS managers “get” the fact there are considerable savings to be made here, not least around switching to more energy-efficient LED lighting and better use of space and storage.
"Trusts are looking closely at how much space they can devote to treating patients rather than space for admin, offices or storerooms"Kudzai Manduvi, National Account Manager, RS
And it is not just about energy efficiency – the physical environment in hospitals also plays a role in positive clinical outcomes. Visits to hospitals are stressful for patients, families and staff members. There are studies that link the physical environment to patient and staff outcomes in four areas[5]:
  1. Reduce staff stress and fatigue and increase effectiveness in delivering care
  2. Improve patient safety
  3. Reduce stress and improve outcomes
  4. Improve overall healthcare quality
 
This means that working with suppliers and investing time and money not only into ensuring buildings and facilities look good and work well but utilising technological innovations. A good example of incorporating hospital design and technological innovation is the development of an interactive environment at the Royal Hospital for Sick Children in Glasgow[6].
 
“There is a big drive to increase the percentage of clinical space, and so trusts are looking closely at how much space they can devote to treating patients rather than space for administration, offices or store rooms,” he points out.
 
“One way of doing this is to deliver in smaller quantities so, if instead of purchasing a box of 1,000 items, you can ship them in ones and twos with next-day delivery – as we can do – you won’t have to store 900 or so items in a cupboard or storeroom somewhere.
"Good procurement is about saving costs by running things with greater efficiency"Kudzai Manduvi, National Account Manager, RS
“It is very important that there is a joined-up approach to procurement for buildings,” agrees Helen Alder, Head Of Knowledge at the Chartered Institute of Purchasing and Supply.
 
“Maverick spending on items like light bulbs or new washers may seem innocuous at an individual level, but if it is widespread across your business it’s likely you won’t be able to keep track of all that spend. You may be paying too much for parts and there’s also the risk that non-branded, inferior parts may be purchased that will have a short lifespan,” she points out.
 
“It is about educating procurement managers, and the people below, about how best to manage their time more efficiently, as well as focusing on cost. Good procurement is about saving costs by running things with greater efficiency,” adds Manduvi.

 

 


[1]https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/499229/Operational_productivity_A.pdf
[2] https://www.theguardian.com/society/2016/sep/10/hospitals-on-brink-of-collapse-say-health-chiefs
[3]https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/499229/Operational_productivity_A.pdf
[4]https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/499229/Operational_productivity_A.pdf
[5] https://www.healthdesign.org/chd/research/role-physical-environment-hospital-21st-century
[6] http://www.glasgowsciencecentre.org/press-releases/2015-06-03-14-42-20.html