Friday, 23 November 2012

Whither procurement?

Or should I say wither procurement?

It was always going to happen – those ‘I told you so moments’ as top down NHS restructure led to cracks in the system. Alas, however well-meaning Andrew Lansley’s Healthbill was, the execution and interpretation of the changes were always going to lead to trouble as the NHS struggles to achieve savings of £20bn over the next four years.

A good example is procurement. As I witness changes in procurement strategy and behaviour I can’t help thinking of that hilarious scene in the iconic 60’s movie, The Italian Job. The incompetent would-be villains have a practice run to open a bullion van but overdo it with the explosives. As the van is blasted to smithereens, the head honcho says  You're only supposed to blow the bloody doors off!"

Some trusts and Clinical Commissioning Groups (CGGs) are viewing procurement as a blunt instrument of torture, aiming at sweeping cost cuts without considering the implications of squeezing suppliers till they, at best, bleed, at worst, expire. I was passed a document recently from a Hospital Trust advising a supplier that ‘in addition to and savings initiatives driven by our procurement department, we are also applying a 2% settlement discount on all invoices presented during 2012/13’.Take note – this isn’t an early payment settlement, this is basically chopping 2% of the bill, and it’s quite likely that the bill will be paid late too. Hardly ethical practice. This supplier, like many others, had also been advised that there will be an additional 5% reduction in terms or no deal. Like many independent suppliers working with the public sector, this supplier’s margins are virtually zero so what can they do? Operating in a specialist clinical device sector, this company could go out of business and the NHS will lose access to some exceptional intellectual property and equipment vital to enhance some patients’ quality of life.

The procurement mantra should be ‘value’, not ‘cheap’, and short term savings are not necessarily translated into long term value.

Effective procurement needs a robust strategy, experienced operatives and clear tender process. The ‘various procurement organisations and initiatives’ (to quote a recent procurement conference promotional literature) do not generate the clarity needed. It is highly time-consuming and expensive to complete an NHS tender process and if each Trust or CGG uses a different document, suppliers are at risk of re-inventing the wheel with alarming regularity.

Speaking of experienced operatives, a quick glance of the interim job ads display an air of desperation. As the disassembled Primary Care Trusts created an unprecedented brain drain, the newly formed procurement teams are, in some cases, sadly lacking essential expertise. Here is one of many of those ads:

I am urgently seeking a Commissioning Project Manager for a 4 month contract in London. Essential skills include:
- NHS experience
- Masters degree or equivalent managerial level experience or qualification
- An understanding of the NHS policy framework
- Understanding of procurement and contracting rules in the NHS
- Experience of working successfully with clinicians particularly GPs
The ad continued with other worthy attributes such as stakeholder engagement, bla bla.

But where would such a candidate have gained such experience? In the NHS. So this organisation will either be re-employing someone who was made redundant earlier or they will be pinching an expert from another procurement body. Same old same old.

No-one can argue that savings must be made for the NHS to remain a sustainable, free to all, health service. But efficiency savings should be as the name suggests – efficient. Working smart, not just cheap, is the way forward.


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