Alejandro Alvarez, Partner, Operations Performance at Ayming recently interviewed Mick Corti, one of the first heads of an NHS shared procurement service. Mick leads the shared service, Partners Procurement Service (PPS), based in North London. Alejandro wanted to get Mick’s thoughts on the key challenges and opportunities for NHS shared procurement services, and the part they can play in achieving cost savings and efficiencies for the NHS.
Alejandro Alvarez: “Mick, what’s your role at Partners Procurement Service?”
Mick Corti: “I’m a Director at PPS, a procurement shared service for four acute trusts across North and Central London. To give you an idea of the scale, the total non-pay spend of PPS is in excess of £700m a year. I’ve been in post since November 2016 and my role is to lead a programme of procurement transformation, covering people, systems and processes across all four trusts. The primary objective is to deliver step changes in customer delivery, both for tangible bottom line savings, as well as increased efficiency and value-add for NHS patients and staff.”
AA: “As one of the first heads of an NHS shared procurement service, what’s your advice for other NHS trusts considering setting up a shared service for procurement?”
MC: “Firstly, it’s important to recognise that shared services are still not particularly well understood in the NHS, and have not always had the best track record. That doesn’t mean, though, that they don’t work. Being frank, most commercial organisations with different operating business will generally have found a way to join up procurement across those different businesses.
The thing to bear in mind when setting up a shared procurement service is that you can’t just bring together a set of legacy departments and hope for the best. You need to review the landscape from both structural and systems perspectives, and then use this insight to establish and implement recognisable and repeatable work flow services, delivered across the shared service. Consistency is the key to success here. This is challenging and we have spent most of the last year trying to address exactly this issue. It really is no good just changing the sign on the doors and saying ‘right we’re a shared service now.’
This doesn’t mean though that all your procurement teams need to sit in the same room, though. It’s about establishing, and sticking to, a common approach across all the trusts involved. Cloud based technology makes things a little easier.
Finally, you do have to accept that trusts will always have different requirements and actually it’s not always a problem if they buy different things. Procurement can’t try and force aggregation where it isn’t going to work”
AA: “How much of a challenge is it to achieve a unified approach across all trusts?”
MC: “Not insignificant! But good communication helps. You need to keep communicating, because unless stakeholders buy into the concept of joint procurement, nothing will change. It’s a case of getting all the teams involved to recognise the overall benefit of pooling resources. While they may not see a benefit on every single transaction they make, the overall benefits achieved for their trust need to be highlighted.”
AA: “What are some of the benefits of setting up a shared procurement service?”
MC: “The most obvious benefit is, of course, improved savings. The buying power of several trusts combined naturally commands better prices in certain markets, and therefore cost savings. Our trusts have got better pricing by working together in a number of clinical and non-clinical areas.
In addition, removing variation is a factor in successfully achieving further savings – if all trusts are buying the same product, rather than each buying a different brand or variant, then there will be cost savings and efficiencies. This is interesting, as the national direction of travel is starting to take over to some degree and we absolutely welcome this in terms of the arrival of national category strategies. Hopefully, as a shared service, we will be able to present a larger stakeholder base for meaningful engagement with our national colleagues.
However, savings shouldn’t be the only driver for setting up an NHS shared service. It also has to be about delivery. Consistency of service and better use of technology bring benefits too and can’t be underestimated and mean less admin. In the last 12 months we’ve put a lot of effort into the infrastructure side of things, including a common P2P front end, helpdesk portal, contract registry and benefits reporting platform. Areas, where previously we had multiple versions.
Having more effective transactional and operational shared services then in theory allows us to move further up the chain and work with our members in a way that is more recognisable as strategic or value adding. The shared service environment should allow us to develop more expertise in non-traditional category areas than perhaps we would be able to do as a single trust. We’re not there yet, but well on the way.
AA: “The Future Operation Model for NHS Procurement, or FOM for short, is a growing number of NHS initiatives focussing on collaboration. As the FOM start date is fast approaching, can you give an overview of what the FOM is, and what you see as the benefits and potential challenges?”
MC: “The FOM represents a large change in procurement philosophy, both for procurement teams but also for clinician’s choice. The fundamental principles of the FOM are removing price variation by having one NHS price items, and rationalising the range of items commonly used. At the same time it aims to declutter the existing landscape where there may be several competing frameworks that the NHS can buy the same product from.
Frameworks which in themselves give suppliers little in the way of commitment. By doing this, the FOM aims to leverage volume across the whole NHS to achieve cost benefits, whilst also ensuring a consistent quality of products are supplied nationwide.
Some simple product areas will be specified, bought and provided nationally while others will have more complex solutions. The key is whatever the solution, it will have been considered and developed as the national category solution most appropriate to that product area, its usage in the NHS and the supply market. There are a number of service providers, some NHS and some private, which will develop and deliver the category strategies for particular product areas, or category towers as they are known.
The financial savings to the NHS is expected to be in the hundreds of millions of pounds, which is an obvious benefit.
The main challenge I see is managing the change on the clinical side. Presently, there is little limitation on the choice available to doctors and some take full advantage of that. The category strategies need to ensure that they are able to both hit their savings targets, as well as meet clinical requirements. Clinical engagement is paramount. I imagine this will be part of our role at a local level, helping the national teams engage with relevant clinical stakeholders and to support the implementation of the national strategies.
AA: “How do you think the role of procurement in the NHS has changed in recent years and will it change further with the FOM?”
MC: “As in any industry or business, the greater the pressure on costs, the more procurement comes under the magnifying glass. I can only speak from my perspective, but I would say that procurement teams are generally experiencing opportunities to become much more of a strategic partner within their organisations and to extend their support into less traditional areas of spend. After all, procurement is at the coal face when it comes to managing many of the risks and opportunities that can significantly impact organisations.
For instance, Brexit will affect practically all procurement and supply chain professionals, regardless of their industry, because most supply chains are global. While this will obviously present challenges, it does mean that procurement teams can prove their worth as a strategic function.
I think once implemented, the FOM will only enhance this further. The transactional admin that procurement teams undertake, on price variations and competing frameworks, should be further reduced, which in turn should again allow for procurement teams to spend more time on value adding activities.”
AA: “Thanks for your time and insight, Mick.”
This interview was first published in Supply Chain Digital on 8th July 2018.
About the author
Alejandro Alvarez is Partner of Operations Performance at Ayming based in our London office. Alejandro has extensive experience within procurement, having previously held senior roles at Efficio and Henkel. He also holds an MBA from the European School of Management & Technology, Berlin.