Procurement blocks innovation: report

Tags: Quality

06 Jan 2009

The Policy Exchange has attacked the government for not doing enough to drive innovation in the NHS and called for a shake-up of financial incentives and procurement processes to drive new technologies and working practices into the service.

The right-leaning think-tank says that as things stand, new drugs, devices and other technologies “inch” their way into the health service and “this is one of the reasons our standards often fall below those of comparable countries.”

It also argues that although the final report of Lord Darzi’s Next Stage Review of the NHS focused on improving quality through information and choice, it could have been “bolder.”

The report says NHS organisations should be given more freedom to innovate and given financial incentives to do so.

It also identifies procurement as a particular problem, arguing that the NHS spends significantly more on developing innovations than on spreading and adopting them and that there are “huge inefficiencies” throughout its supply chain.

The report, All Change Please, says that although the NHS has a number of bodies to advise trusts on procurement issues, trusts are “under no obligation” to listen to their advice, which often goes unheeded.

It also identifies a lack of common descriptions or codes for items purchased by the NHS and the wide range of purchasing systems in use by and within trusts as problems.

“Neither the trusts nor the central and regional bodies have accurate data on costs,” it says. “This damages relationships with suppliers, who do not know how many of a product they will sell and must factor this into their prices.” Improving procurement would save between £0.8bn and £2.1bn annually, it claims.

The report’s conclusions are not new. Audit Commission reviews of procurement in 1996 and 2002 identified areas for improvement, with the latter noting that trusts had been slow to adopt computer systems for ordering, invoice matching and payment despite government targets.

The NHS Purchasing and Supply Agency also found that trusts lacked awareness of purchasing and costs in developing an e-procurement strategy. It further found that they were generally failing to following goods to their final use so they could analyse their effectiveness and safety.

NHS PASA has been running an NHS Procurement e-Enablement Programme since the strategy was published in late 2007. This has a number of work-steams, including programmes to develop common data and messaging standards for NHS procurement systems, and to encourage interoperability between NHS and supplier systems.

The strategy itself is aligned with other projects to ensure the consistent use of standards across the NHS, such as Coding for Success, which encourages trusts to use the GS1 system of codes in both clinical and business processes.

However, the Policy Exchange report makes no mention of this work, and may not have been aware of it. One of the 80 people interviewed for the report was critical of the NHS PASA, claiming that “if it ceased to exist tomorrow, nobody would notice.”

Other ideas put forward by the Policy Exchange for improving the uptake of innovation in the NHS include scrapping the procurement hubs which sit below PASA, creating a new “best practice tariff” to encourage trusts to innovate and to make sure they are not penalised for raising efficiency, and building pay for performance bonuses in clinician and manager contracts.

Link: All Change Please: putting the best new healthcare ideas into practice. The Policy Exchange.

Lyn Whitfield

Readers Comments

Circles of concern

06 Jan 09 20:20

This rot makes me groan. Life is too short to read all the detail, but it appears that the report is more about CT scanners, drugs and the many other things that the NHS buy.

There are in my opinion two key reasons why we dont adopt the best practice.

One is perpetual reorganisation, which means that people who remember the problems from the last time something similar was tried, are sidelined so that the next 'young smart thing', or worse, management consultant, can recycle an old idea.

And the other is Headline politics, fuelled by inaccurate media. Every hospital should have MRI, and all will be well (or at least "I'll be popular with my constituents"). Each time we lurch around we undo the business justification of the previous initiative before it has had time to deliver value.

I think a fundamental reason that everywhere else does better is that they spend more on healthcare, and their systems appear less exposed to the chopping and changing of our NHS football.

And then there's IT. We have a great advantage that people at some time in their procurement, or sometimes just as they unwrap a newly purchased whaterveritis and want to get it live, have to come to the experts to plug it in. At which point we can ask embarrassing questions like - does it really work, or do you realise we already have one of those you could use, or where's your business case, specification ....

Which is perhaps why NPfIT in riding roughshod over local informatics expertise, and ignoring anything worthwhile that had gone before got it so wrong.

Procurement is not so much the problem as sloppy procurement, which with the many DoH initiatives thrust upon us, and idiocy of the provider/commissioner split, seems to be increasing chaos rather than getting better and smarter.

Many of the tarrif based systems I have seen are not flexible enough to allow innovation or the 'best spot price', because they take a long time to negotiate, and they ignore the smaller suppliers, who tend to value and listen to the end users, serve their customers, and offer realistic rather than telephone number pricing. Unlike LSP arrangements.

Happy new year

Not allowed to be efficient

07 Jan 09 22:04

Not sure if it's just our finance department or more widespead problem but we still use carbon copy triplicate books for all ordering and not even the directors have credit cards. As a busy IT department trying to explain to users that items can take weeks to be ordered and might even get inconveniently lost in the internal post is very frustrating. Unfortunately purchasing isn't on the NIMM model. We have also had many instances of finding cheaper prices than PASA listed companies and for larger orders having suppliers quote via Catalist suppliers and adding their 5% is not the best use of tax payers money just to satisfy the rules. Not to mention getting three quotes for complex IT systems which usually end up within a few hundred pounds of each other. I do hope they don't bog us down further with more red tape...