the business of care - chartered institute of procurement ... · benchmarking strategic sourcing...
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delivering value to the NHS1© NHS Shared Business Services Ltd 2011
The business of care
delivering value to the NHS2© NHS Shared Business Services Ltd 2011
Patients:Choice of practice & provider
Practices:Holder of contracts with provider and consortia
Consortia:Co-ordinate healthcare development and acute contract ing for practices – manage risk pool
Reg Health Board:Award Primary Care contracts and assess performance and healthcare with ties to local authorities and public health
Care Providers:Deliver care to tariffManage input prices/costs
Health Industry:Supply goods, medicines, equipment, staffAnd provide managed services
The health market – commissioners, providerschoice, commerce and care
delivering value to the NHS3© NHS Shared Business Services Ltd 2011
With healthcare organisations facing structural change to align activities to meet healthcare business objectives and pressures…….
Challenges and opportunities balance out
delivering value to the NHS4© NHS Shared Business Services Ltd 2011
CPS - translating these challenges into simple service offers to meet healthcare business objectives
delivering value to the NHS5© NHS Shared Business Services Ltd 2011
Procurement and SBS CPS solutions focus on understanding the management of costs, and focus on care
delivering value to the NHS6© NHS Shared Business Services Ltd 2011
NAO Report
Amyas Morse – February 2011
“In the new NHS of constrained budgets, trust chief executives sh ould consider
procurement as a strategic priority. Given the scale of the pote ntial savings which the
NHS is currently failing to capture, we believe it is important to find effective ways to
hold trusts directly to account to Parliament for their procurem ent practices.”
“At least 10 per cent of hospitals ’ spending on consumables, amounting to some £500 million a year,
could be saved if trusts got together to buy products in a more collaborative way. ”
The headlines…..
delivering value to the NHS7© NHS Shared Business Services Ltd 2011
Back Office Efficiency Report
Jim Easton – January 2011
“The evidence base for a shared service is
overwhelming. It is critical that the NHS uses
its scale to leverage greater efficiency.”
“The NHS is paying a premium for its back office functions due to the fragmentation and lack of uniformity acrossthe sector.”
“There is a fiscal imperative for NHS organisations to transform
the way they work to deliver efficiency savings and high quality frontline services.”
“Evidence from the private sector,
central government and the NHS
has shown that adopting shared
services can deliver both significant
cost savings and service
improvement.”
“By adopting shared services
in greater numbers the NHS
will be able to deliver
savings without impacting
on patient care.”
delivering value to the NHS8© NHS Shared Business Services Ltd 2011
Efficiency Review
Sir Philip Green – October 2010
“Basic commodities are
bought at significantly different
prices across Government departments. ”
“Multiple contracts have been signed with some major suppliers by
different departments at different prices. ”“There is a huge opportunity that has been clearly identified both in central Government and beyond, but without a
clear mandate, energy, focus and commitment, this cannot be delivered. ”
“You could not be in business if you
operated like this. It would be
impossible”
delivering value to the NHS9© NHS Shared Business Services Ltd 2011
NAO Report key findings for NHS Trusts
§ Limited access to purchasing data (produc ts/prices/providers) within NHS Trusts, demonstrating low levels of purchase and contract coverage
§ Lack of commitment to col laboration
§ Wide price variation on common products
§ Wide product variation with low levels of standardisation
§ Large volume, low value, purchase orders increasing administration costs, reducing consolidation power
§ Spot Buying only using commitment at s ingle trust level – tactical short term step that lacks a sustained strategic cost reduction methodology – non compliant procurements significant financial risk to trusts from successful challenge award damages
§ Model required to engage col laboratively with regional and national agencies
§ Greater take up of eProcurement, eCatalogues , exchange market places and eSourcing systems required alongside standard product coding
delivering value to the NHS10© NHS Shared Business Services Ltd 2011
The vision for managed spend
delivering value to the NHS11© NHS Shared Business Services Ltd 2011
With acknolwedgement to the Kearney chessboard
Procurement may have Strategies for sourcing that supporthealthcare business development
delivering value to the NHS12© NHS Shared Business Services Ltd 2011
The SBS Commercial Procurement Solutions response:The business cycle driving our services
delivering value to the NHS13© NHS Shared Business Services Ltd 2011
CPS – Stepping down through M.I. Data and control points to manage costs, spend and drive savings
delivering value to the NHS14© NHS Shared Business Services Ltd 2011
NHS SBS
Trust Spend Analysis
Price & Product benchmarking
Strategic Sourcing &Market management
SAP clinical use / pathway review
Commitment contracting
Back office outsourcingOf finance / accounts /
purchasing
NHS SBS
Trust Spend Analysis
Price & Product benchmarking
Strategic Sourcing &Market management
SAP clinical use / pathway review
Commitment contracting
Back office outsourcingOf finance / accounts /
purchasing
NHSSC
Logistics consolidationVolume buy/supply
Materials management
NHSSC
Logistics consolidationVolume buy/supply
Materials management
StandardProcesses
GS1 Productcode adoption
Electronic marketplace& eCatalogues
Sid4Health supplieraccreditation
StandardProcesses
GS1 Productcode adoption
Electronic marketplace& eCatalogues
Sid4Health supplieraccreditation
NHS Trust
NHS Trust
NHS Trust
NHS Trust
NHS Trust
NHS Trust
Pan Govt.Suppliers
Pan Govt.Suppliers
Health IndustrySuppliers
Health IndustrySuppliers
Health Industry Markets
Health Industry Markets
Demand Side Enablers
Innovation and Learni ng
Supply Side Enablers
OGC BuyingSolutions
Pan Govt. Supplyframeworks
OGC BuyingSolutions
Pan Govt. Supplyframeworks
Spec
ialty
/Bes
poke
S
ourc
ing
Appr
oach
Com
mon
/Col
labo
rativ
e
A model for engaging with national support,Linking strategic change with operational delivery
delivering value to the NHS15© NHS Shared Business Services Ltd 2011
The SBS Commercial Procurement Solutionsprocess aligned services
delivering value to the NHS16© NHS Shared Business Services Ltd 2011
CPS – Products and services for business challenges.
delivering value to the NHS17© NHS Shared Business Services Ltd 2011
The SBS CPS strategic sourcing `contracting’ offer
delivering value to the NHS18© NHS Shared Business Services Ltd 2011
Strategy steps in increasing spend management
Spend Under Management Benchmarks*:
Laggards 30% - Industrial average 30-70% - Best in class 70%
delivering value to the NHS19© NHS Shared Business Services Ltd 2011
Trust objectives
delivering value to the NHS20© NHS Shared Business Services Ltd 2011
Aberdeen Group Global CPO Study Procurement key objectives
delivering value to the NHS21© NHS Shared Business Services Ltd 2011
KPI’s that underpin Trust business objectives and track the progress of procurement in optimising spend control
delivering value to the NHS22© NHS Shared Business Services Ltd 2011
Spend refined, aggregated and commited over time
All NHS expendi ture covered by Framework s/Contracts
A move away from frameworks
delivering value to the NHS23© NHS Shared Business Services Ltd 2011
The SAP pathway – The route to business performance and savings
delivering value to the NHS24© NHS Shared Business Services Ltd 2011
Product
Phase 1PathwayPhase 2
Innovation and Continuous improvement
Phase 3
SAP Process
Project team; CPS, DOFS, SBS, Clinicians
Supporting; Procurement, Business partners
Project team; CPS, AQuA, NICE, MHRA, NPSA, Clinicians
Supporting; Procurement, DOFS, Business Partners
Project team; Clinicians, Strategic Suppliers, NICE
Supporting; CPS, MHRA, NPSA, Business Partners
Analysis
- Review Spend data
- Benchmark Pricing
Pathway Efficiency Review
-Review processes in pathway
-Product use for patient/ task
Deliverables
-Efficiency, savings, innovation
-Full Standardisation
Product Validation
-Developing exact specifications
-Evidence based selection
Selection of Strategic Partner
-Drive product development
-Deliver further efficiency and utilisation savings
Pathway workstreams
-Pathway Product workstreams
-Patient Level Costing
Product efficiency
-Demand management
- Right product for patient/ task
Innovation and improvement
-New product development
-Implementation of innovative products
Savings and benefits delivery
-Establishment of ongoing KPI’sand targets
Clinical Review
-Share clinical expertise
-Consider NICE guidance
Procurement
-Procure with commitment
- Initial Standardisation
Implementation and savings
- Implement contractual outcome
delivering value to the NHS25© NHS Shared Business Services Ltd 2011
•We will support securing supplies, procuring compliantly, and in optimising your spend volumes.•We will ensure there are business ready catalogues for organisations to use in operational purchasing•We will continue to move framework volumes, committed customers, and commercially responsive suppliers closer together through continuous SAP rounds.
delivering value to the NHS26© NHS Shared Business Services Ltd 2011
CPS Data Flow and Map
delivering value to the NHS27© NHS Shared Business Services Ltd 2011
Using spend analytics global views to look across markets and NHS organisations
delivering value to the NHS28© NHS Shared Business Services Ltd 2011
The graph at the top left shows the top suppliers by invoice spend; blue bars are for invoice spend and red bars are for order spend.
The graph at the top right shows the top suppliers by order spend. Again, blue bars are for invoice spend and red bars are for order spend.
Spend By Supplier
delivering value to the NHS29© NHS Shared Business Services Ltd 2011
The invoices by supplier shows all the invoices a supplier sent.
There is the functionality to enter a name of a supplier you wish to view which will search and return all the invoices from that supplier.
Invoices By Supplier
delivering value to the NHS30© NHS Shared Business Services Ltd 2011
The products by supplier shows the distinct products bought from the selected supplier.
Products By Supplier
delivering value to the NHS31© NHS Shared Business Services Ltd 2011
The purchase order lines shows all of the purchase order lines for a chosen product
Purchase Order Data
delivering value to the NHS32© NHS Shared Business Services Ltd 2011
Spend by eClass
This bubble chart is a kind of scatter plot.
PO lines are grouped by eClass and represented by a bubble for each category.
The diameter of the bubble is proportional to the number of purchase order lines.
delivering value to the NHS33© NHS Shared Business Services Ltd 2011
Spend by eClass… continued
We can further drill into each bubble to obtain information on the next level of eClass, right down to level 3.
delivering value to the NHS34© NHS Shared Business Services Ltd 2011
This shows all the products bought in a chosen eClass category.
Products by eClass
delivering value to the NHS35© NHS Shared Business Services Ltd 2011
Data Driven change – Benchmarking prices and measuring markets
delivering value to the NHS36© NHS Shared Business Services Ltd 2011
Data Driven change – profiling each organisation
delivering value to the NHS37© NHS Shared Business Services Ltd 2011
Data Driven change – examining the use of contracts
delivering value to the NHS38© NHS Shared Business Services Ltd 2011
Data Driven change – using price variation to plan procurements
delivering value to the NHS39© NHS Shared Business Services Ltd 2011
Data Driven change – profiling each organisation