NHS Supply Chain has surprised many medtech companies, both in the scope of its activity and in its openness to innovative smaller companies. Mark Patterson, NHS Supply Chain’s Strategy and Procurement Transformation Director, explains the organisation’s dynamic role in the UK healthcare market.
NHS Supply Chain was set up with the remit of saving £1 billion from the NHS budget over 10 years. What means are you employing to deliver on that objective? What progress has been made? What can the medical technologies industry do to help?
We started the contract in October 2006 and are above target to achieve the savings that we outlined to the Department of Health. To date we have saved the NHS over £100 million, and obviously these savings will ramp up in the later years of the contract. To achieve such savings we have a number of key initiatives: aggregating NHS spend enables us to focus on price, which produces a large proportion of our savings; finding efficiencies within the supply chain; and looking at the buying behaviours within trusts, and helping them manage their inventories through our expertise in end-to-end supply chain management.
To aggregate spend, we work with trusts collaboratively. This benefits our relationships with suppliers, because if we can go to them with credible aggregated spend then we’re going to achieve the best value pricing that we need to meet our customers’ expectations.
We look at how we can strip costs out of the supply chain through our own internal processes to achieve back office savings and synergies across different departments. As a DHL organisation, our core capability is supply chain management. We look at both our distribution and transport costs and how we can leverage the wider DHL to ensure that we can deliver value to our customers.
We are working on a number of big projects that will deliver significant value to NHS trusts. Our capital planning offer has been in place since the start of the contract, but has really gained momentum over the past couple of years. We now manage complex procurement contracts within trusts. For example, a large new hospital may be built or a hospital may be having a large capital programme upgrade and therefore need to purchase a number of MRI scanners, CT scanners and items of operating theatre equipment. With our capital planning offer, they could save up to £140,000 on an MRI scanner through our contracting and work with suppliers as we can leverage the demand and aggregate it. Asking a supplier for a price of five or six MRI scanners also produces better value pricing for our customers.
Our Direct from Manufacturer (DFM) programme aims to save the NHS a considerable amount on certain product areas. The programme sees us developing a direct sourcing strategy that will result in us working directly with manufacturers. DFM is not about shifting production from the UK to offshore: it’s about going directly to offshore manufacturers that have the capability and expertise to produce healthcare products and working directly with them. This initiative will help us have a more transparent supply chain and can save NHS trusts money on product costs.
Last year saw the first sale of a scanner through NHS Supply Chain. What types of product and service do you cover? Will your scope widen further in the future?
We purchase and supply a wide range of diagnostic and interventional equipment such as digital mamographers and heart valves. Our remit covers non-pharmaceutical healthcare products, food and capital equipment. We procure most equipment that is used in theatres, dental surgeries, audiology departments, for catering, orthopaedics (we’re a large provider of orthopaedic joints and all the tooling required for them), rehabilitation equipment – and capital equipment, which includes the finance and maintenance agreements. We started with imaging capital, with MRI and CT scanners, and we’ve now broadened that to non-imaging capital: stretchers, operating tables, lighting, theatres and so forth.
Will the scope widen further in the future? We are currently focusing on what we need to deliver. There are other category areas that that we could get involved in, and if we choose to do so then we could write a business case for the Department of Health to outline the value that our service would deliver. However, there are parts of our remit that we don’t have contract coverage for at the moment. For example, in the areas of renal and cardiology we only have a small number of contracts that don’t cover the full range of products. So we are planning to widen our contract coverage in these areas over the next few years. We are looking to introduce more contracts to widen our range where we know that our customers need us to.
How successful has the Innovation Scorecard initiative been, for NHS Supply Chain and for medtech companies?
Very successful, and it has been very well received. We launched the Scorecard in October last year and to date we’ve received about 62 applications, which is a great response. We are doing a lot of marketing to get people to understand it more clearly – and more importantly for them, to understand the benefits of it. The first product coming through as a result of the Scorecard is a single-use tourniquet, designed to reduce the risk of hospital-associated infections during blood taking. So there’s already the first Innovation Scorecard product!
About 10 per cent of the submissions we’re working on have come from the medtech sector. Suppliers are always welcome to get in touch with us via the Supply Chain website – that’s www.supplychain.nhs.uk/innovation. We’re really looking to build on this initiative through 2010.
How does NHS Supply Chain interact with the medtech industry? Is it a two-way communication? How can suppliers improve this engagement?
We always welcome the opportunity to communicate and interact with our suppliers. We obviously have to be very clear about the legal requirements of the procurement process. We are always conscious of these requirements when we’re out to tender, when tenders are live, and therefore when we can and can’t communicate with suppliers. We have good communication with the trade bodies, especially in the medtech sector such as the ABHI and BHTA. We supported the ABHI’s annual conference in November last year and have regular meetings to keep them abreast of developments in the sector.
We have regular dialogue with suppliers who are on contracts throughout their contract life and discuss issues such as product development and the supply of products, or operational issues such as control of inventories.
We also support a number of our suppliers at exhibitions – especially in the capital medtech area, where we have had trade stands and some of our key suppliers have supported us on them. We always aim to be as collaborative as possible within the public procurement rules.
We are very focused on delivering the best value service to the NHS, as service levels and providing value is what the contract was created to do. We encourage our suppliers to help us in our quest to deliver value by giving consistency in pricing across the market and being aware of new innovations. We are involved in the NHS innovation agenda, as we can identify where value can be improved through the introduction of new products and services – and we’re looking to make improvements wherever we can.
We are very focused on delivering the best value service to the NHS. We encourage our suppliers to help us in our quest to deliver value by giving consistency in pricing across the market and being aware of new innovations.