1. NHS PROCUREMENT
Evolution or Revolution?
Colin M Cram FCIPS
Chief Executive Open Forum Events
Managing Director Marc1 Ltd
Colin.cram@marc1ltd.com
Tel: +44 (0) 1457 239894
Mob: +44 (0)75251 49611
www.marc1ltd.com
© C M Cram FCIPS

2. FINANCIAL IMPERATIVE
• 66 of 245 provider trusts predict a deficit for 2013-14
• 32 FTs predict a deficit for 2013-14.
• Provider sector is predicting an overall deficit when it had planned for a
£350m surplus.
• 28 CCGs also predicting a deficit when last year it was 1.
• Financial sustainability should not be at the expense of frontline services.
• Savings opportunities must be taken
• Savings from NHS procurement must be £2bn by 2015-16.
• Expect local freedoms to be reduced
• Further savings planned for 2016-18
2010-11 (£18.56bn) 2011-12 (£20.61bn) 2012-13 (£22.7bn)

3. 2010-11 (£18.56bn)

4. 2011-12 (£20.61bn)

5. 2012-13 (£22.7bn)

6. SAVINGS WILL NOT BE SUSTAINED UNLESS WE FIX
• Lack of leadership
• Poor data and systems
• Multiple orders and invoices
• Variation in prices paid and products used
• Variable capability and capacity
• Fragmented system and culture of ‘no sharing’
• Inefficient logistics in trusts
• Competing procurement landscape confusing and costly
• No mechanism for sharing information and knowledge
• No joined up category strategies or supplier management

7. STRATEGY LAUNCHED AUGUST 2013
A balance between the need to improve local
capability, data and leadership for the longer
term, and the need to drive savings…
Longer term:
•Create a new national ‘enabling’ function (NHS
Centre of Procurement Efficiency) to be the
home of professional
development, data, analytics, diagnostics, bench
marking, best practice, and networking; and
•E-Procurement strategy (inc GS1)
Immediate term:
•Develop a proposition to help NHS trusts
deliver £1.5-2bn efficiency savings
•Increase transparency

8. EFFICIENCY PROGRAMME NOW IN PLACE
Ministerial Oversight Board
(3 Ministers, 4 Non-Execs, NHSE, DH)
Procurement Efficiency Delivery
Board
(DH, CO, TDA, Monitor, HCSA, Shelford Trust representatives)
National Initiatives to
deliver £2bn savings
1.Key supplier programme
2.NHS Supply Chain
3.CG&S/CCS footprint
4.National Category Strategies (Temporary
staff, Property, Clinical, Pharma)
5.NHS ‘Core List’ (derived from above)
Enabling Initiatives to sustain
savings
•E-procurement strategy (Data
warehouse, Dashboard, Price benchmarking etc)
•Transparency and GS1
•Centre of Procurement Efficiency and Academy
•Combating inflation
•Support for NEDs and Executive lead on Procurement
•Guidance on procurement in local CIP plans
NHS engagement
•Appropriate levers/incentives
HMT/Cabinet
Office
oversight and
support
GMPP
MPA
DH-MPP

9. NATIONAL DELIVERY
Categories
Spend 2012-13
(£m)
Savings target
(£m)
Pharma/Inventories Consumed £6,510 400
Clinical £4,953 530
Property £4,017 150
Common Goods & Services £3,529 227
Temporary Staffing £3,471 450
Totals £22,480 £1,757
Initiative Savings target (£m)
Key Supplier Management £200-300m
NHS Supply Chain £150-400m
Common Goods & Services £227m
National Category Strategies £1,130m
Commercial Medicines Unit £400m
Note that initiatives cut across categories, so element of double-counting

10. NATIONAL DELIVERY (1)
1. Key Supplier Management
Programme
• Extending the existing Crown
Representative programme into the
NHS (non-clinical suppliers)
• Develop a new scheme for health
specific suppliers
• Appoint Crown Representatives for
Health
Crown Representative programme:
Wave 1:
•BT
•ISS
•G4S
•Serco
•MITIE
•Johnson & Johnson
•Medtronic
Wave 2:
•Vodafone,
•Rentokil Initial,
•Olympus Keymed,
•3M,
•Molnlycke,
•Baxter,
•Covidien,
•Becton Dickinson,
•Boston Scientific,
•Roche Diagnostics,
•Oracle
•Microsoft
Identifying wave 3:
Agency and pharma
Savings target: at least £250m

11. NATIONAL DELIVERY (2)
2. NHS Supply Chain
• Target to save £150m on existing £1.45bn business
• Target further savings (up to £400m) if business was increased
• Expectation that savings are trust level
• Intention is to reduce variation of range and drive competitive
tension into the supply base (consumables vs clinically sensitive vs
PPIs)
• Core list: ‘Procurement Tsar’
• Key issue: Trusts will need to commit and change behaviours
• Intend to put in place appropriate levers and incentives
Savings target: £150m - £400m

12. NATIONAL DELIVERY (3)
3. Common Goods & Services through CCS
• CCS developing a proposition to save £227m by 2015-16
• Core list: ‘Procurement Tsar’
• Expectation that savings are at trust level and base-lined against
2012-13
• Aiming to channel more spend through CCS
• Purchase spend analysis of 11 trusts confirms potential
• Primary focus will be on ICT expenditure
• Levers/incentives to achieve compliance
Savings target: £227m

13. NATIONAL DELIVERY (4)
4. National Category Strategies
(Complex, high-spend, multi-stakeholder categories requiring co-ordinated
national approach)
•Temporary Staffing (spend £450m)
1. Agency contracts (spend £2,100m: Savings target £170m). Better
use of CCS
2. Workforce management (spend £1,400m: Savings target £280m)
•Property (estates and operational contracting spend £4,000m)
•Clinical
1. Orthopaedics (spend c£400m)
2. Cardiovascular (spend c£500m)
3. Renal (spend c£400m)
• Pharma
Savings target: £1,430m

14. ENABLERS
• E-Procurement strategy due to be launched imminently
• Transparency:
• Letter sent to trusts (3 February)
• Price benchmarking
• Clause in NHS Standard Contract
• Combating inflation (guidance toolkit)
• Atlas of Variation
• Capability:
• Centre of Procurement Efficiency progressing, host now likely to be
a Shelford trust
• Academy for Procurement Excellence (APEX)

15. NHS ENGAGEMENT
Trusts engagement…
Update:
• Discussions with Shelford Group CEOs and their HoPs
• Test interventions within 1 or 2 major trusts (Imperial)
• Gathering data – all sources
• Role of TDA and Monitor (e.g. mandation and/or guidance for local
CIPs plans)
• Target trusts receiving financial support from DH (40 NHS Providers)
• Financial incentives e.g. dividend payments
• NHS Provider nominated NED to champion procurement locally
• ‘Support pack’ for NEDs and FDs

16. KEY RISKS AND ISSUES
• Trusts’ engagement with the programme – what is an appropriate mix of
incentives, levers and leadership? Are they different for FTs, non-FTs
and those receiving financial support/special measures
• Do trusts accept transparency and sharing of data? (Atlas of Variation)
• Need to ensure landscape works in harmony (one united front to
suppliers)
• £2bn is a stretch target. Need more confidence it is achievable
• The complex nature of the programme could result in double-counting of
savings
• But we need to collect NHS Provider level information (spend and
savings)
• How do we ensure savings are ‘cash releasing’ for trusts?
• £500m of the savings are in the clinical area, which will need strong
clinical support for such initiatives as reducing variation

17. ISSUES
• Fighting shy of fundamental reform. The strategy will not
deliver the further savings required after 2016.
• May require big increase in number of procurement
personnel. Assumes each trust can afford expert
procurement teams.
• Training programme will be extremely – possibly
prohibitively - expensive if it attempts to train people in
every trust in what is needed. ‘Forth bridge’.
• Some of the tools, designed to facilitate collaboration
could be expensive.
• Significant duplication would appear to remain
• Limited mandation.
• Very complex landscape remains.

18. THE 2016 STRATEGY?
Increasing savings have to be delivered
• Mandation
• Integrated contracting and procurement organisation
(with national and regional/geographical hubs)
• Very limited local contracting and procurement
• The influence of the Crown Commercial Service will
increase. NHS procurement may become part of it
• Central and regional/geographical hubs may serve all
public sector bodies
• Much reduced number of procurement staff
• Some collaborative tools prove unnecessary
• Where will NHS SBS or HTE fit in?

19. THANKS FOR LISTENING
Colin M Cram FCIPS
Tel: +44(0)1457 868107
Mob: +44(0)075251 49611
colin.cram@marc1ltd.com
www.marc1ltd.com
© C M Cram FCIPS