The role of the NHS Purchasing and Supply Agency

Neil ArgyleAssociate Director of Purchasing

- Policy and Performance5 December 2001

Neil.Argyle@doh.gsi.gov.uk

Agenda

• background to the Agency

• the NHS Plan

• Agency’s Corporate Plan

• what does it mean for suppliers?

Background: NHS Supplies

• NHS Supplies formed 1992

• born out of NAO criticisms – wasted purchasing muscle

• part of NHS – special health authority

• 3 national operating divisions:– Purchasing– Wholesaling– Customer services

• all income derived from ‘customers’

NHS Supplies scale of operation – March 2000

• 4,500 national / ‘sub-national’ contracts with 1,400 suppliers

• £2.5 billion influenced spend (total NHS non pay expenditure 2001/2 = £11 billion)

• 12 warehouses

• 18,000 stock lines

• £42 million average total stockholding

• £530 million per annum stores sales

• NHS Supplies expired 31 March 2000

Historical view of purchasing and supply in NHS

• focus on non-pay spend in secondary health care

• historical ‘functional’ rolecontracting and distributionprocess driven and low profileexpertise in operational activities price focused

• unclear priorities and strategies across NHS

• fragmented, variable practice

NOT STRATEGIC

Cabinet Office - Procurement Review 1998

Overall principles:

• working in partnership

• instituting best practice

• organisational change

• ‘Procurement savings of at least 3 per cent per annum

achievable’

Trusts

• appoint board member with specific responsibility for procurement

• take responsibility for local procurement staff

• produce a written procurement strategy

• implement electronic information management system

• wholesaler to logistics provider

• manage the supply chain

• increase influence £500 million £1,500 million

• review potential for private finance

manufacturers

and

importersNHS

Hospitals

Clinics

Community

GP surgeries

etc

Wholesalers and

DistributorsNHS

Logistics Authority

NHS Purchasing and Supply Agency

• works on behalf of the NHS

• executive agency of the Department of Health

• Chief Executive reports via NHS Operations Director to Health Minister

• Ministerial Advisory Board

• centrally funded

• framework agreement with Department of Health

The Agency’s objectives – Framework Agreement with DoH

• deliver a cost-effective supply chain

• ensure strategies reflected in ministers’ policies and priorities for the NHS

• establish overall framework for performance management of procurement in the NHS

• determine/control the appropriate level at which procurement decisions are made

• improve efficiency and effectiveness of NHS procurement and supply chain

• improve skills, expertise and professionalism of NHS procurement staff

• increase NHS boards’ awareness of procurement issues

The NHS Plan

• A plan for investment with sustained increases in funding . . . . . .

– NHS to grow 50% in cash terms, 33% in real terms in 5 years

– 7000 extra beds in hospitals and intermediate care

– over 100 new hospitals by 2010 and 500 one-stop primary care centres

– over 3000 GP premises modernised and 250 scanners

– clean wards and better hospital food overseen by ‘modern matrons’

– modern IT systems in every hospital and GP surgery

– 7500 more consultants; 2,000 more GPs; 20,000 extra nurses; 6,500 extra therapists

www.nhs.uk/nationalplan/nhsplan.htm

NHS Plan – the reform agenda

• services to be redesigned around the needs of patients

• a new system of ‘earned autonomy’ with £500 million performance fund

• Modernisation Agency

• national standards matched by regular inspection (CHI)

• increased capacity for NICE

• NHS and social services to come together – new Care Trusts

• role changes e.g. nurses able to supply some medicines

• patient input at all levels

• concordat with private sector

NHS Plan – direct improvement to patients• patients to have GP appointment within 48 hours

• end of long waits in accident & emergency

• maximum waiting time for an outpatients appointment will be three months, and six months for inpatients

• big expansion in cancer screening programme

• end to ‘postcode lottery’

• rapid access chest pain clinics

• improving the patient environment

NHS Plan – investmentin equipment

• 50 new MRI scanners

• 200 new CT scanners

• 80 new liquid cytology units

• 45 new linear accelerators

• 3000 new automated defibrillators in public places

• 450 new and replacement haemodialysis stations

• extension of ‘patientline’ (bedside TVs and phones)

• £250 million in new IT to underpin NHS Information Strategy

NHS Plan – task forcesthe ‘priorities’

• improving access

• cancer

• CHD

• capital and capacity

• children

• inequalities and public health

• mental health

• older people

• quality

• workforce

• performance

Shifting the balance of power

• more responsibility to front line staff

• national standards/local delivery

• structural changes – Health Authorities, Regional Offices

http://www.doh.gov.uk/shiftingthebalance/index.htm

Agency’s Corporate Plan 2001-2004 (1)

• Agency will have made significant contribution to NHS Plan

• Agency will have led on NHS procurement objectives flowing from wider government agenda

• Agency established and recognised as centre of expertise

• all non-pay NHS expenditure will be subject to best procurement practice

• Agency will be influencing 80% on non-pay NHS expenditure

• at least 30% (£3.7bn) will be purchased from Agency contracts

• there will be full NHS commitment to Agency’s contractscontinued…..

www.pasa.doh.gov.uk/publications/

Agency’s Corporate Plan 2001-2004 (2)

• the NHS will be trading electronically

• the NHS will be using an integrated supply chain for at least £1.5bn of its expenditure

• organisational structures will be in place across the NHS that will eliminate fragmentation and deliver efficiency

• all staff involved in procurement issues will have the required professionalism, skills and competencies

• all procurement activity will be subjected to performance management to include demonstration of best VFM and will be regularly part of Trust Board agendas

What do the changes mean for suppliers?

• procurement firmly on the agenda, at both national and local level

• more inclusive NHS procurement - joined up purchasing and supply

• opportunity for nurturing innovation

• emphasis on value, not just price

• a ‘once only’ approach where appropriate

• modern systems

A STRATEGIC APPROACH