A viewpoint by Dr Joe Sanderson, Head of the Department of Procurement and Operations Management, Birmingham Business School
Reading Lord Carter’s recent report on operational productivity in NHS hospitals took me back almost 15 years and got me wondering if anything has really changed in the last decade in NHS procurement. Many of the procurement problems identified in the Carter report were also evident in a report published by the Audit Commission in May 2002 (see below). Many of the solutions suggested by Lord Carter will also look strikingly familiar to anyone who remembers the work of the now defunct NHS Purchasing and Supply Agency (PASA).
First, the problems… Lord Carter’s report identifies three main procurement problems:
- An excessive range of different products being supplied by different suppliers, with significant variations in the prices paid by different hospitals for the same types of products. This affects both every day consumables and high-value medical devices.
- Significant variation between hospitals in the use of inventory management practices and electronic catalogue systems, resulting in patchy data on the volumes of products used and the prices paid.
- Procurement decisions being made by clinicians without a full consideration of all the supply market options.
The Audit Commission’s 2002 report provided some startlingly similar findings:
- The number of different makes of the same basic product ordered by Trusts varied tenfold.
- The vast majority of Trusts were working without an integrated computer system that could manage electronic requisitioning, ordering, invoice matching and payment.
- In a significant majority of Trusts clinicians without any procurement training were routinely making buying decisions about medical and diagnostic equipment and consumable products.
Second, the suggested solutions… Lord Carter’s include:
- The creation of new organizational structures, above the level of individual hospitals, to facilitate more coordinated decision-making in the procurement of medical devices.
- The creation of national specifications and standards for key product groups.
- The implementation of a single NHS electronic catalogue supported by strict policies to ensure adherence.
The Audit Commission’s 2002 report led NHS PASA to propose a very similar restructuring of NHS procurement, focusing on the creation of regional supply management confederations to facilitate inter-Trust collaboration. PASA’s objective was to use these confederations as mechanisms to complement the work that it was doing at the national level to achieve product and supplier rationalisation, and to spread better practice in contracting, inventory control and supplier relationship management.
So why is history seemingly repeating itself? The answer I suggest is that both of these reports, however well-intentioned, are treating the problems of NHS procurement and the solutions to those problems as essentially technical and managerial in nature. While investments in IT systems, procurement training for clinical staff and the creation of new decision-making bodies will deliver some benefits, our NIHR-funded research (www.journalslibrary.nihr.ac.uk/hsdr/volume-3/issue-18) suggests that a genuine step-change in performance outcomes will require solutions that explicitly address the organizational politics and conflicting preferences that characterise many of the procurement decisions made by NHS Trusts.
Lord Carter’s suggestion of a ‘Sunshine Act’ similar to that in the United States could be an important means of revealing unwarranted clinical preferences. His national-level solutions (common specifications and standards, adherence to a single electronic catalogue) are likely to be still-born, however, unless the power of NHS Trusts to make autonomous buying decisions is significantly curtailed.
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