NHS procurement and healthcare market research
What is purchasing and procurement?
Purchasing and procurement refers to the process of acquiring different goods, works and services to help support the clinical priorities, health and wellbeing outcomes, and organisational objectives of the NHS. It is separate from commissioning, which is the process of determining the healthcare needs of the local population and providing the services to do so. Purchasing and procurement arrangements compliment commissioning arrangements to ensure that Clinical Commissioning Groups (CCGs) can serve their local populations appropriately.
What kind of items or equipment are NHS purchasing and procurement teams responsible for?
Purchasing and procurement teams will typically carry out a number of functions relating to logistics (the internal delivery and distribution of items between different organisations), e-commerce, and customer and supplier support. In regards to the purchase of particular products, procurement teams often form local or regional hubs to increase their purchasing power and buy more essential medical and non-medical items for less. They may also pool expertise, and work closely with clinicians, to purchase specialist equipment and to predict the type of equipment that will need to be procured in the future to meet the changing healthcare needs of an ageing population.
Typically, procurement and purchasing teams will be responsible for securing products relating to the following areas:
- Clinical markets (specialist equipment required for the delivery of orthopaedic, cardiology, ophthalmics, renal, dental and pathology services)
- Resonance imaging equipment
- Theatre / surgical services
- General medical
- Facilities (including office supplies)
- Capital equipment (items that are not disposable or consumable, and have a’useful life’ of one year or more)
How has the recent financial climate affected the way in which purchasing and procurement is carried out in the NHS?
Procurement, purchasing and supply chain organisations are not immune from the current financial climate and many organisations are looking at new ways of working to make the best use of their resources and make financial savings. With an estimated total annual healthcare spend of £18bn of the total NHS budget, procurement teams are looking to reduce the amount they spend on certain items even further.
More and more teams are collaborating on a regional level to increase their purchasing power, particularly since the remit of procurement has also grown significantly as a result of the 2012 Health & Social Care Act and the widespread introduction of the’Any Qualified Provider’ (AQP) model to cater for all providers who wish to go to tender for the delivery of NHS services. As well as AQPs, there are a range of other procurement approaches when it comes to working with existing providers, competitive and non-competitive providers, and multi-provider models.
To make greater efficiencies as part of the government’s £22bn NHS efficiency savings plan, the Department of Health has provided procurement teams with an extra £300 million over the next four years to enable them to join forces and buy capital equipment in bulk. Increasing the purchasing power of organisations and buying at large quantities has been predicted to save over £1.2bn in the next 4 years, and £11 million has already been saved on £88m of advanced medical equipment orders through collaborative commissioning arrangements and smarter buying.
Practical examples of this include some CCGS or GP consortia using prescribing software in their surgery that cross references all written prescriptions with all other drugs to find the cheapest available option. This form of drug switching recommendation to safe, clinically effective, and less costly generic options is a good example of how intelligently procured services can save the health service significant sums of money in the longer run.
Do procurement teams have any other skills that are used to improve decision making within the NHS?
In some areas of the NHS, procurement teams also provide a business support function and identify areas where commissioners would benefit from better quality information to inform their decision making. This is particularly important to help commissioners make clear, justifiable decisions regarding services that they wish to purchase, and to be more prudent in their spending.
Procurement and purchasing teams can often provide support in a number of areas around healthcare demand and are often used to leverage for improvements in choice, quality, efficiency, and the responsiveness of healthcare services. This can be achieved in practice through modelling current and future demand and spend for healthcare services, reviewing service pathways and gap analysis, market engagement and testing events, the development of service specifications, and the development of CCG commercial strategies that look to maximise value. This is particularly important as healthcare demand rises, as efficiencies made in areas such as procurement and purchasing can be reinvested in the recruitment of more healthcare professionals to care for patients.
Are there any variations in purchasing spend across different NHS organisations in England?
There are significant differences in the amount that different trusts across England are paying for standard items such as catheters, needles and gloves. The NHS Atlas of Variation gives a full breakdown of the costs that CCGS incur for a wide range of services, and also includes further financial data on how much each CCG or trust spends through national procurement partners such as the Crown Commercial Service (CCS) and NHS Supply Chain. The Supply Chain is responsible for the majority of warehouse and transport logistics and the organisation of bulk purchasing in the NHS, helping to reduce product prices and net logistics costs per line. They also host a large amount of e-tender and e-procurement services, providing a means for suppliers of services to express an interest in local, regional and national contract opportunities.
Procurement and commissioning in the NHS are two very different functions. To understand more about the comissioning side of the process in the NHS and how this can be used in healthcare market research, download our guide.