1 Supplies Department Procurement Strategy Version No. 2.0 Lead Author’s Name Graham Beck Lead Author Job Title Head of Supplies Accountable Director Andrew Copley Approved by (1) Date Approved (1) Approved by (2) Date Approved (2) Effective From April 2015 To March 2020 Review Date Annually Next Review Due October 2017 Location of Copies SharePoint / Supplies Website Associated Policies and Procedures Procurement Policy Used By ANHSFT Staff DOCUMENT REVIEW HISTORY Document review history Review date Reviewed by Changes Changes Approved by 06/11/2014 John Logue Detail/layout Graham Beck 21/11/2014 Linda Stewart Detail/layout Graham Beck
Transcript
1
Supplies Department Procurement Strategy
Version No. 2.0
Lead Author’s Name Graham Beck
Lead Author Job Title Head of Supplies
Accountable Director Andrew Copley
Approved by (1)
Date Approved (1)
Approved by (2)
Date Approved (2)
Effective From April 2015
To March 2020
Review Date Annually
Next Review Due October 2017
Location of Copies SharePoint / Supplies Website
Associated Policies and Procedures
Procurement Policy
Used By ANHSFT Staff
DOCUMENT REVIEW HISTORY
Document review history
Review date Reviewed by Changes Changes Approved by
06/11/2014 John Logue Detail/layout Graham Beck
21/11/2014 Linda Stewart Detail/layout Graham Beck
2
Contents
Section
1. Executive Summary
1.1 Non-pay expenditure, Quality, Innovation, Productivity and Prevention (QIPP) and Cost Improvement Programme (CIP)
1.2 Shared Procurement Service and the Procurement Team
1.3 Procurement Team performance development
1.4 Procurement CIP
1.5 Procurement Strategy Objectives
1.6 Implementation of the Procurement Strategy
1.7 Periodic review of the Procurement Strategy
2. Introduction
3. Trust Vision, Aims and Objectives
3.1 Trust’s Vision
3.1 Realising our Right Care Ambitions
3.3 Achieving the Vision and Aims: Procurement
3.3.1 Relationships
3.3.2 Quality
3.3.3 Value for Money
3.3.4 Patient Experience
4. Procurement Strategy Action plan (to achieve strategic objectives)
5. The Trust’s Non-Pay Procurement Profile
6. The 18-NHS Procurement Standards
6.1 Introduction to the Standards
6.2 Trust Performance against the 18 NHS Procurement Standards
6.3 The 18 NHS Procurement Standards Action Plan
7. NHS Procurement Dashboard
8. How the Procurement Team Will Support Trust Staff And Projects In Their Procurement Needs
9. Implementing The Procurement Strategy
Appendix 1: Procurement Team/Receipt and Distribution Organisation Structure
3
1. Executive Summary The Procurement Strategy describes the actions which Airedale NHS Foundation Trust applies to promote, develop and implement in order to continue to improve our procurement performance. It also demonstrates the Trusts commitment to meeting the demands and expectations of the Better Procurement, Better Value, Better Care, DOH Guidance Document Procurement Development Programme for NHS. 1.1 Non-pay expenditure, QIPP and CIP o The Trust expends approximately £32.7m/annum on goods and services
(non-pay expenditure). This comprises 23% of the Trust’s operating cost (year 2013/14).
o All applicable non-pay expenditure should be subject to QIPP/CIP scrutiny. o 72% of non-pay expenditure (£23.6m/annum) is processed by the Supplies
Department Team through established official purchase order contracting and stock systems which are underpinned and supported by strategic and collaborative procurement processes. This expenditure is subject to QIPP and CIP scrutiny.
o 28% of non-pay expenditure (£9.1m/annum) is processed independently of the Supplies Department by the Pharmacy Department; this expenditure relates solely to Pharmaceuticals.
o During 2014-15 and 2015-16, the Supplies Department supported by the Trusts Procurement working group will work with Pharmacy colleagues to support their future tendering requirements.
1.2 Shared Procurement Service and the Procurement Team o The Trust’s Supplies Department provides a Host Shared Service
provision with Bradford District Care Trust which was established approximately eleven years ago (BDCT-ANHSFT client-host). The shared service has released significant efficiency savings to the health community since its establishment. The Supplies Service also provides procurement services to the local CCGs, and is working collaboratively with Bradford Teaching Hospitals Foundation Trust (BTHFT) and Bradford Metropolitan District Council (BMDC). The collaborative develops joint procurement arrangements targeting benefits and savings from scale. For example, Estates’ plumbing services and parts and electrical services and goods contracts require review and, accordingly, the collaborative is developing a joint procurement plan. Joint-working is also taking place on development of a managed service for agency locums, nursing, admin and clerical staff.
o Bradford District Care Trust contributes £478k/annum to the shared service; the Procurement Team element comprises £230k/annum. The remaining £248k funds the Care Trust’s Receipt, Distribution and Depot, and the Logistics stock team operation (see organisation chart in Appendix-1).
1.3 The Supplies Department Team Performance Developments o The Supplies Department Team has robust procurement and governance
systems in place and provides significant value and assurance to the Trust’s operations.
o The Trust has assessed the Supplies Department Team’s performance against the 18-Standards of Procurement and allocated a substantive Level-2 performance rating in almost all the categories of measurement. Level-2 performance (achieving transformation requirements) and is consistent with the over-arching transformation milestones provided by Better Procurement, Better Value, Better Health) and the necessary transformation building blocks are in place. The Supplies Department aspires to achieve full level 2 compliance by March 2016.
o An approach to achievement of Level-3 (excelling/outstanding procurement performance) will be communicated in subsequent Procurement Strategy refreshes. Although it must be noted that significant investment by the Trust may be required to attain Level-3. The first priority is to complete the outstanding requirements to achieve Level-2 on all of the standards.
o The Supplies Department demonstrates good performance against the new National Procurement Dashboard and is targeting further improvements, e.g. working with Pharmacy and Trust staff to achieve savings from elements of non-pay expenditure not currently processed by the Procurement Team.
1.4 Procurement CIP o Between 2011-12 and 2013-14, The Supplies Department Team have
achieved a CIP of £2,402,063 o During the 5-year period 2014-15 and 2018-19, and possibly beyond, the
Supplies Department` Team will achieve further CIPs of £800k/annum. This comprises a further £4m savings target.
o The Strategy provides a rationale for the £800k/annum CIP targets drawn from DOH guidance (Better Procurement, Better Value, Better Health).
1.5 Procurement Strategy Objectives o The Procurement Strategy identifies 14 Strategic Objectives to be
achieved by 31st March-2016. highlights include: o Optimise any potential opportunities by working closely with
Pharmacy colleagues on non-pay expenditure through the Procurement Team (appropriate elements).
o Target CIP savings of £800k/annum during each of the next five years.
o Work jointly with Finance and HR to progress to achieve the DOH’s 4% (of non-pay) agency-staff target.
o Strengthen procurement relationships with other Trusts/public-sector organisations.
5
o Scope health community-wide lead arrangements across provider Trusts for improved joint-working and achievement of efficiencies from scale.
o Further develop the performance of the Procurement Team, achieving Level-3 performance by March-2017.
1.6 Implementation of the Procurement Strategy The Supplies Department is responsible for leading this strategy. The Trust Procurement Working Group, Medical Devices Policy Group, Medical and Surgical User Group, and the Drug and Therapeutics Committee will support the delivery of the Procurement Strategy. Accordingly, the Procurement Strategy actions will be delegated to the Groups for action. Action will include preparation of detailed project implementation plans and milestones commensurate with Strategy completion dates. 1.7 Periodic review of the Procurement Strategy The Procurement Strategy will be periodically reviewed and its effectiveness evaluated to reflect performance improvements achieved and to include new objectives as these are identified. 2. Introduction In 2013-14, the Trust expended £32.7m on goods and services, which accounts for approximately 23% of the Trust’s operating costs (the NHS as a whole spends over £20bn each year which typically accounts for around 30% of the operating costs of each hospital). Effective management of the Trust’s non-pay resource is vital. In totality, the NHS’ purchasing power is greater than any other UK organisation and locally, as well as nationally, NHS Trusts could do more to harness this joint buying power. Fundamental to this approach is: o Ensuring staff are aware of and utilise standardised procurement routes to
acquire goods and services which are fit-for-purpose and offer value-for-money to the Trust and thus the tax-payer.
o Reducing product variation and encouraging use of products from a standardised range which have been quality and value-for-money approved, helping prevent different solutions to the same problem with different prices being paid for the same product.
o Accessing national procurement frameworks to secure nationally negotiated best quality and value.
o Increased joint-working within and between Trusts and procurement bodies to better harness NHS purchasing power within the health community.
o Ensuring the capacity and capability of the procurement function, including appropriate resourcing and use of technology; also including e-procurement and integrated financial systems.
6
Excellent procurement supports the Trust to continue to improve its quality and safety of care whilst maximising value for money. Doing so reduces the Trust’s costs and provides improved patient outcomes. This approach is consistent with the national perspective described within Better Procurement, Better Value, Better Health (NHS England Procurement Guidance). The guidance recommends Trusts stabilise and, where possible, reduce non-pay spending, contributing in real terms to £1.5 billion of procurement savings nationally by 31st March 2016, with further improvements subsequently. In August 2013, David Nicholson articulated a clear responsibility and vision for procurement in the NHS: “Transforming procurement should be a priority for every NHS Board. Our collective ambition should be for a modern, effective and efficient procurement function in the NHS that is among the best in the world – one that truly delivers taxpayer value, supports innovation, stimulates growth, and most importantly, delivers the highest quality patient care”.
Better Procurement, Better Value, Better Health recognises this is a significant challenge for Trusts and one in which Trusts need guidance and support. Accordingly, NHS England has established NHS Procurement Development Oversight and Delivery Boards and a National Procurement Development Programme. The National Procurement Development Programme will oversee achievement by Trusts of four key initiatives: o Achievement of immediate efficiency and productivity gains. o Actions to improve data, information and transparency. o An initiative to fundamentally re-think clinical engagement in the
procurement of medical devices and the subsequent relationship with the device industry.
o Creation of a new national enabling function to support leadership and build better capability throughout the procurement system, but primarily focused on Trusts’ capability and how they work with procurement partners (the National Procurement Development Programme).
The Trust’s approach to implementation of the 4 key initiatives is described within Section-3 (Trust’s Vision, Aims and Objectives). It is also important that there are strong linkages between this Procurement Strategy, and the Trust’s 5-Year Financial Strategy – particularly regarding integrated contribution to the Trust’s Cost Improvement Programme. Finally, Better Procurement, Better Value, Better Health requires executive directors, non-executive directors and Trust boards to play a stronger role in both championing improved procurement and overseeing performance improvement locally. This Procurement Strategy describes the Trust’s approach to achievement of the national and local objectives with a key aim being to embed the procurement priorities within Trust Board and Committee agendas going forward, further supporting delivery of the Procurement Strategy.
7
3. Trust Vision, Aims and Objectives 3.1 Trust Vision The magnitude of the challenges facing health and social care is well documented and understood and requires a radical response. We have to think differently if we are going to better meet the needs of the communities we serve, set against unprecedented efficiency challenges. In developing our 5 year Strategic Plan we have risen to the challenge to be bold in the relentless pursuit of our Right Care vision. Right Care is a health and social system-wide approach to care with the patient, around the patient and for the patient. Driven by the needs of each person, not those of professionals or organisations, Right Care wraps itself around the individual in a way that is right for them and makes them feel empowered, active and safe. Care is provided by a range of care providers - dependent upon the needs of the individual - utilising community assets and enabled by technology to both improve the patient experience through a more integrated, right first time offer that makes the best use of tax payer resources. This plan is bold and ambitious and builds on our track record of improving patient experience; delivering low cost, high quality, safe care; driving innovation and integration including providing more care at home; system leadership; effective partnerships; transforming the workforce and strong corporate and clinical governance. Despite our success, we know more of the same will not be enough to achieve what we need to do to guarantee sustainable services. Together with our partners we need to step up a gear and transform at pace and scale if we are to realise our Right Care ambitions over the next five years. We are committed to making the changes that are within our direct control. We will do everything within our power to support, influence, enable and lead (where necessary) the local system. For those changes that are not within our control and sphere of direct influence, we will take every opportunity (including this submission) to lobby for change including alignment of incentives and creation of the right levers and enablers so we can achieve our Right Care vision and deliver sustainable services for our local population.
8
3.2 Realising our Right Care ambitions
3.3 Achieving the Vision and Aims: Procurement The Trust’s vision is to achieve excellence in procurement, supply chain and e-procurement solutions with a focus on quality, safety, innovation and best value for money. The Trust’s Supplies Department will identify and deliver the right products and services to meet the Trust’s requirements through best procurement practice, innovation and market knowledge. The tables below show how the Supplies Department will achieve the Trust’s vision by aligning key procurement objectives to the Trust’s Vision and Aims. The tables also references national and local priorities, particularly Better Procurement, Better Value, Better Health.
NHS Procurement Development Oversight and Delivery Boards will be the engine room to ensure all NHS organisations, including NHS England, the NHS Trust Development Authority, Monitor and the Foundation Trust Network, are working to a common strategy for NHS procurement, drawing in private sector expertise and best practice.
The National Procurement Development Programme is leading implementation of the 4-key procurement initiatives. These are described below along with the Trust’s approach to implementation by 31st March2016
9
Procurement Initiative-1: Achievement of immediate (and on-going) efficiency and productivity gains.
In 2011, the National Audit Office (NAO) targeted £500m potential savings for the NHS, or 2.5% (from £20bn total non-pay expenditure), by embracing better procurement. The Trust has achieved and continues to implement the following procurement CIPs:
Year
Procurement CIP
achieved (£k)
Status
2011-12 677 Achieved
2012-13 749 Achieved
2013-14 975 Achieved
2014-15 800 In-progress
2015-16 843 Planned
2016-17 865 Planned
2017-18 885 Planned
2018-19 905 Planned
Total 6,699
The Trust aspires to achieve savings of £4.3m Over the coming five year period. Objective-1 Is to optimise all non-pay expenditure through the Supplies Department, increasing exposure to the Procurement Team for increased savings potential. This will be achieved through new policy and improved communication of the requirement to all Trust staff. Practically, this means use by all staff of the Trust’s established purchase order (PO) and stock systems, and direct involvement of the Procurement Team.
The DOH also proposed Trusts should target limitation of agency-staff expenditure to 4% of the total pay bill. During 2013-14, the Trust expended approximately 5% of its annual pay bill on agency staffing. Objective-2 Is to progress towards achievement of the DOH’ 4% agency-staff target. Actions include: o Filling or disestablishing vacancies, as
appropriate. o Improved VAT efficiency of agency staff
expenditure (some categories of agency staff expenditure are VAT recoverable).
o Implement and roll out the HB Retinue managed service contract to include medical locums and nursing staff, whilst improving the efficiency of the staff bank arrangements.
10
Procurement Initiative-2: Actions to improve data, information and transparency
Trusts should have data covering over 90% of their non-pay expenditure, across geographies and different business categories. This enables visibility of spend which is essential to understand buying patterns and to forecast supply requirements, enabling the Trust to secure better deals from its suppliers. Objective-3: In addition to Objective-1, the Trust will continue to develop connections between key procurement applications including Oracle, NHS SC, Ascribe and MICAD (Estate Maintenance’ application) to enable preparation of comprehensive expenditure reports which will inform/ensure broader analysis of non-pay spend.
Across the NHS, the essential building block for improving data and transparency for the longer-term is the adoption of GS1 as the supply chain coding standard. GS1 comprises a common global standard which enables Trusts and their suppliers to capture and share procurement data using the same barcode driven technology used by retailers and industry to eliminate errors and waste in the supply chain. Full implementation of GS1 requires the engagement of all NHS suppliers, an initiative currently being progressed by the Procurement Development Programme. Objective-4: To instigate and implement the Procurement Development Programme recommendations and guidance and to prepare, develop, and commence implementation of a board-approved GS1 Adoption Plan. Achievement of the Objective requires clear guidance and policy recommendations from the DOH and Procurement Development Programme Board.
Procurement Initiative-3: An initiative to fundamentally re-think clinical engagement in the procurement of high-value medical devices and the subsequent relationship with the device industry by improving outcomes at reduced cost through clinical procurement review partnerships
The Procurement Development Programme will focus on high-value/high-acuity medical devices within acute hospitals in the first instance. Trust clinicians must also make the right choices, in partnership with Supplies, to ensure patients receive the best treatment and outcomes, including use of appropriate medical devices. However, Trust clinicians purchasing decisions may sometimes be made with a lack of knowledge about costs and prices. Objective-5: The Trust’s Medical Devices Working Group, which includes clinicians and budget holders, will ensure medical device purchases are fully equipped with necessary specification and cost information to help them
11
make the right medical device choices both in terms of outcomes for service users and value for money. The Group will also require all such purchases to be transacted through the Supplies Department which is an existing Trust policy requirement. The Group will also require a member of the Procurement Team to participate within its activities.
Procurement Initiative-4: Creation of a new national ‘enabling function’ to support leadership and build better procurement capability throughout the system, but primarily focused on Trusts capability and how they work with procurement partners.
The National Procurement Development Programme will engage and support NHS leaders at three levels:
o At national level the Programme will have in place governance for the NHS Procurement Development programme.
o Work with the Royal Colleges to provide a package of support for clinical leaders across the NHS so that they develop greater awareness of procurement and its benefits.
o Work with the Chartered Institute of Purchasing and Supply (CIPS) and the Health Care Supply Association (HCSA), ensuring that all levels of NHS procurement professional are engaged in the development programme.
o At regional or Trust group level, build on existing networks. Procurement Development Networks will be established to encourage Trusts to come together to assess their collective capacity and capability and to build stronger partnerships with their chosen procurement partners such as NHS Supply Chain and the Government Procurement Service.
o At local level, the Programme will provide a package of support for Finance Directors and Non-Executive Directors (NEDs) to equip them with the tools to champion procurement and to hold the Board to account. The Programme will also explore the relevant levers and incentives which may be introduced to ensure this becomes the norm for all Trusts.
Objective-6: The Head of Supplies will further develop working relationships and key contacts with the National Procurement Development Programme and co-ordinate the full support of all staff across the Trust for the Programme’s initiatives, ensuring these are implemented within the Trust, as required by the Programme Board.
The National Development Programme clearly states Trusts will need to invest in resources to further develop procurement capabilities. However, the Programme also recognises Trusts need support to help deliver truly
12
world-class procurement standards. The National Development Programme has researched many of the leading organisations in both the private and public sectors to determine which of the key, relevant characteristics will need to be developed and embedded across the NHS. These include: o Senior Executive ownership of the procurement
development agenda. Procurement must continue to be an Executive and Trust Board priority.
o Non-executive directors and Trust boards must play a stronger role in championing improved procurement.
o Talent management and development must take place utilising the Trust’s appraisal process.
o Process excellence in strategic sourcing, category management, and supply chain management.
o Key supplier management including the management of supply risks.
o Provision of accurate and timely procurement information.
o Participating in mechanisms for sharing procurement improvements and knowledge.
o The development of meaningful and relevant performance measures.
Objective-7:
o The Head of Supplies will be the key contact with
the National Procurement Development Programme and co-ordinate the full support of all staff across the Trust for the Programme’s initiatives, ensuring these are implemented within the Trust, as required by the Programme.
o The Trust should confirm appointment of a board executive director to be accountable for procurement with day-to-day responsibility delegated to the Director of Finance, and a non-executive director to sponsor the Supplies Department.
o The Trust will continue to strengthen procurement relationships with other Trusts/public-sector organisations, achieving the collaborative procurement requirements of the Trust and National Procurement Development Programme, and achieving economies of scale from procurement. The Supplies Department already makes effective utilisation of the Government’s Procurement Service, NHS Supply
13
Chain, and national/regional procurement frameworks, and collaborative hubs.
o Scope Bradford Health Economy looking at potential shared contracting opportunities across provider Trusts, namely it may be appropriate that individual Trusts share lead responsibilities amongst themselves, e.g. one Trust could lead on Receipt and Distribution efficiencies for all Trusts; one Trust could lead on energy/water efficiencies for all Trusts. There may also be linkages with BMDC’s initiative of One Public Estate (e.g. for an integrated R and D/Depot).
o Continue to effectively partner BDCT to further develop the structure and performance of the Procurement Team, e.g. increasing the Procurement Team’s knowledge and experience of infrequent, specialist, and high-value IT procurements. This will further enable the Procurement Team to provide effective procurement support to Trust project managers leading change projects.
o The Trust cannot afford inflationary pressures on its non-pay expenditure if it is to protect and maintain front-line services. The Trust’s Supplies Department will expect its suppliers to work with it to reduce costs and prices whilst encouraging innovation and growth. Suppliers will be required to play their part in supporting the Supplies Department and Trust with this agenda.
o The National Development Programme clearly states Trusts will need to invest in resources to further develop procurement capabilities, e.g. increased resources in both the Supplies Department and Finance may be necessary in response to significant challenges, demands and expectations of this Strategy. A proposed structure and resource plan will be prepared.
Provide the Trust with fit-for-purpose products and services when it needs them, and at best value for money.
Objective-8: The Trust’s Supplies Department will provide fit-for-purpose goods and services to the Trust responsively, achieving Trust CIP and Quality/QIPP requirements whilst also achieving good procurement governance, i.e. SO/SFI and Procurement Regulations compliance.
Objective-9: The Trust’s Supplies Department will protect the Trust and minimise procurement risks through implementation of appropriate managerial and contractual arrangements, ensuring national
14
procurement legal arrangements are adhered to at all times.
Objective-10: Like Facilities, some IT procurements may be infrequent, highly specialised, and high in value. Whilst the Procurement Team must be expert on procurement governance, processes and transactions, certain functions including preparation of infrequent and complex technical specifications, along with identification of associated costs, may require separate specialist resources to be commissioned on an individual project basis, e.g. in the same way Estates commission the services of external architectural and cost advisory services for major capital schemes.
Objective-11: Where procurements are infrequent and specialised, the Procurement Team will recommend to appropriate project managers that independent legal review of procurement documents and independent assurance of their fitness-for-purpose is acquired prior to implementing procurement. The Supplies Department will work with project managers to co-ordinate receipt of legal assurances.
Objective-12: The 18-Procurement Standards and the NHS Procurement Dashboard comprise national mechanisms to support continued improvement of procurement functions. From 1st April-2014, the Supplies Department is making full use of both tools, which are populated and presented within this Procurement Strategy. 12.1: Update the performance assessments against the 18-Procurement Standards and include within this Procurement Strategy to share with Trust Board/Board Committee, on a quarterly basis. 12.2: Update the NHS Procurement Dashboard and include within the Procurement Policy to share with Trust Board/Board Committee on a quarterly basis. 12.3 Publish appropriate procurement data (see Better Procurement, Better Value, Better Health), including opportunities, expenditure and contracts on the Trust’s website at the appropriate frequency (typically monthly). Publication information includes: o Contracts currently active. o Forthcoming procurement opportunities
including tenders and contract renewals. o Monthly expenditure with all suppliers. o Non-pay expenditure over £25K made publicly
available. o Opportunities to supply with a value of £25K or
Stabilise/reduce non-pay spending by 31st March-2016, and beyond.
These are challenging times for the Trust. With service demand continuing to grow the pressure to contain costs is now significant – none more so than in managing non-pay expenditure. Therefore achievement of immediate (and on-going) efficiency gains (Procurement CIP Plan) and delivery of the five year Procurement CIP plans are essential.
Shared Procurement Service: BDCT-ANHSFT: review capacity, competence, and VFM being delivered.
The BDCT-ANHSFT Client host shared service was established approximately eleven years ago. The total annual income to the Trust of the shared service is £478k (the procurement element of this cost is £230k/annum). Whilst the Supplies Department focus should target National Procurement Development Programme actions and quality-CIP targets, the Supplies Department must continue to meet the demands and expectations of ANHSFT and BDCT. Objective-13: The Supplies Department will continue to meet the demands and expectations of ANHSFT/ BDCT by ensuring compliance to the SLA key performance indicators Objective-14: Participate in Procurement Benchmarking exercises, e.g. the NHS Benchmarking Network. Include appropriate KPI performance, e.g. numbers of qualified staff, within the local Procurement Dashboard.
3.3.4 Patient Experience
Procurement must contribute to the best possible patient experience.
Achieving Excellence in Procurement through implementation of the Objectives will further support the Trust’s core aim of providing the local community with excellent health care whilst maintaining its competitive advantage to be a Trust of choice.
16
4. Procurement Strategy Action plan (to achieve strategic objectives) The Procurement objectives have been developed into a Strategy Action Plan. The Action Plan will be progressed through the Procurement Working Group. The Action Plan will look to deliver the 14 Strategic objectives. The Action Plan is contained within APPENDIX-1 5. The Trust’s Non-Pay Procurement Profile A key objective of the Procurement Strategy is to continue to identify and deliver CIP savings ensuring delivery of the 5 year CIP savings Plan. This will be achieved through the continued use of the Trust’s established CIP Procurement teams, supported and underpinned by NHS SC and various collaborative purchasing routes. The tables and chart below show the Trust’s current non-pay procurement profile for 2013-14. The tables and chart provide visibility of spend which is essential to understanding buying patterns and to forecast supply requirements, enabling the Supplies Department to secure better deals from Trust suppliers. The Trust’s Supplies Department will make further use of this and supporting information to support preparation and achievement of CIP savings plans going forward. Trust’s Non-pay expenditure profile 2013-14…
Category and Non-pay spend 2013-14 (£k)
Supplies and services - clinical 11,840
Supplies and services - general 3,114
Research and Development 1
Transport (Business travel only) 420
Transport (other) 109
Drug costs 9,150
Rentals Under Operating Leases 1,603
Audit services- statutory audit 68
Legal fees 196
Consultancy costs 126
Training, courses and conferences 448
Patients travel 4
Hospitality 30
Insurance 113
agency spend 5,295 NHS Charitable funds: Other resources expended 282
Total 32,799
17
The chart below presents this information graphically.
The chart shows contract and agency staff approximately £5m per annum and clinical supplies and services (£12m/annum) comprising large expenditure categories. Accordingly, the categories will remain a significant CIP focus for the Supplies Department. 6. The 18-NHS Procurement Standards and Action Plan 6.1 Introduction to the Standards The 18-NHS Procurement Standards provide a framework for consistent approaches and practices to improved procurement, delivering benefits across the NHS system. The Standards serve as a useful reference tool for Trust Boards, Heads of Supplies, and the Procurement Team as they seek to further develop their procurement functions and performance. The Standards are not in themselves mandatory, nor will performance against them be measured by the DOH/NHS England. Each Trust will, therefore, be able to improve its performance against the standards in accordance with its own development agenda. The 18-Standards comprise the following 4-Domains: Domain-1 Leadership
Domain-2 Process
Domain-3 Partnership
Domain-4 People
18
The Domains and corresponding key criteria are illustrated below
Each of the Domains contains standards. For example, the requirements of Standard 1.1 are: ‘Trust Board is fully accountable and understands the contribution of non-pay spend on the wider Trust and is committed to delivering best value for the taxpayer’. For each Standard, performance maturity levels have been established. The levels are cumulative, i.e. to achieve Level-2 “Achieving”, the attributes in Level-1 “Building” first need to have been achieved. The Trust’s proposed approach to achievement of the Standards is described within the table below: 18-Procurement Standards and DOH achievement requirements
Performance Level
Performance Status
Is achievement mandatory or discretionary?
Timescales for achievement…
Level-1: Building
Awareness and building blocks in place
Mandatory
Discretionary. There will be no performance monitoring of achievement by DOH/NHS England. Performance improvement timescales for all Levels may be set by Trusts individually. This must
Level-2: Achieving
Making good progress
Mandatory
19
Level-3: Excelling
Outstanding procurement performance
Discretionary. Trusts may target achievement of some/all of Level-3 requirements. However, the priority should first be to achieve Levels 1 and 2.
work in parallel with and mirror Better Procurement, Better Value, Better Health: the 31st March-2016 comprises a key date by which significant performance maturity should be achieved by Trusts. Accordingly, this Procurement Strategy targets achievement of Level-2 (the mandatory compliance requirement) by this date.
The Trust has self-assessed its performance against the Standards based on the characteristics in the maturity matrix (see Appendix-2: 18-NHS Procurement Standards Performance Assessment). Trust performance is summarised below: 6.2: Trust Performance against the 18 NHS Procurement Standards The 18-Standards assessment tool allows Trusts to set their own aspirational performance level, which are required to be Level-2 as a minimum, although need not necessarily be Level-3 for all Standards. In carrying out the performance assessment, the Trust’s Supplies Department recommends the following achievement plan: o Firstly, consolidate Level-1 performance, addressing all Level-1 non-
compliances by 31st March-2015. o Secondly, achieve Level-2 performance by 31st March-2016 (the target
date aligns substantive achievement of the Standards with the savings achievement date for Better Procurement, Better Value, Better Health).
o Having achieved Level-2 performance for all Standards, subsequent Procurement Strategy reviews will recommend an approach to be adopted to Level-3 achievement, i.e. commitment to achievement of all or part of the requirements as appropriate to the Trust. For example, Standard 3.3 requires that contracts are managed, key suppliers are considered business partners, and relationships are suitably managed. To achieve this, Trusts should achieve or follow the principles of BS11000 – Collaborative Business Relationships. At Level-3 inception, a scoping exercise would be undertaken on BS11000 to assess the extent to which this requirement is appropriate to the Trust and, hence, whether the Trust should target Level-3 compliance for the particular Standard. Scoping exercises are also proposed on the extent to which asset tracking technologies are implemented across the Trust along with appropriate investment timescales. In summary, it may be appropriate to target achievement of all or part of Level-3, as appropriate, during the outer-years of the current business cycle.
20
The Trust’s assessment is, therefore, currently based upon an aspirational score of Level-2 (making good progress) rather than Level-3. However, the assessment provides current performance scores against both Level-2 and Level-3 standards for completeness. The Trust’s assessment results are shown within the tables and chart below: 18-Standards Performance Summary Tables
Domain Standard
Ref Trust Target Performance
Trust Actual Score (Level) Remarks
Leadership
1.1 2 2
-
1.2 2 2
1.3 2 2
1.4 2 2
1.5 2 2
1.6 2 2
Policy
2.1 2 2
2.2 2 3
2.3 2 2
2.4 2 2
2.5 2 0.75
2.6 2 0
Partnerships
3.1 2 2
3.2 2 3
3.3 2 2
3.4 2 2
People 4.1 2 2
4.2 2 2
21
Radar Chart Showing Current Performance
In summary, the assessment indicates that current Trust procurement performance is, substantively, between Level-1 and Level-3. However, actions are also required to consolidate Level-1 performance, e.g. o A published and communicated procurement policy should be prepared
which covers all non-pay expenditure. Current Trust controls comprise those contained within Trust SFIs.
o Non-pay expenditure should be reported to and reviewed by Trust Board. o The Trust should have a ‘no purchase order, no payment’ policy which
should be formally communicated to all staff and suppliers. The assessment will be periodically updated to reflect performance improvements achieved during implementation of the Procurement Strategy action plan. 6.3: 18 NHS Procurement Standards Action Plan The 18-NHS Procurement Standards performance assessment contained within Appendix-2 forms the basis of the Trust’s actions to consolidate achievement of Level-1 performance, followed by achievement of Level-2. The Procurement Strategy comprises the management tool which will drive achievement of performance improvement to the following timescales: o Consolidate Level-1 performance, addressing Level-1 issues (ambers) by
31st March-2015. o Achieve Level-2 performance by 31st March-2016 (the target date aligns
substantive achievement of the Standards with the savings achievement date for Better Procurement, Better Value, Better Health).
22
o Having achieved Level-2 performance for all Standards, subsequent Procurement Strategy reviews will inform of the approach to be used to achieve Level-3 standard e.g. it may be appropriate to target achievement during the outer years of the current business cycle.
7. NHS Procurement Dashboard The NHS Procurement Dashboard contains the following 3-key Procurement domains and corresponding criteria:
Dashboard Domains
Metric Ref.
Criteria
Doing it Well C1
Number of instances where patient outcome, experience or safety has been adversely affected by a lack of product or service availability
C2 Percentage of non-pay expenditure captured electronically through purchase-to-pay systems
Doing it Efficiently
C3 Value of contribution to cost improvement as a percentage of non-pay expenditure
C4 Cost to procure as a percentage of non-pay expenditure
C5 Percentage of non-pay expenditure through national and/or collaborative purchasing arrangements
Doing it Right C6
Progress against the 18-NHS Procurement Standards
C7 Percentage of recognised procurement staff with an appropriate formal procurement qualification
Current Trust performance against the National Procurement KPIs (C1-C7 inclusive) is presented below: C1: Doing it well: Number of instances where patient outcome, experience or safety has been adversely affected by a lack of product or service availability
Reporting period 01/04/2014 onwards
23
There have been no instances reported to the Supplies Department of a patient outcome, experience or safety having been adversely affected by a lack of product or service availability. However, the Supplies Department is developing improved joint-working with Risk Management, Health and Safety and Complaints to ensure completeness and consistency of reporting between appropriate Trust functions and the Procurement Team going forward. C2: Doing it well: Percentage of non-pay expenditure captured electronically through purchase-to-pay systems
Reporting period 01/04/2014 onwards The KPI shows orders captured through NHS Supply Chain, Oracle purchase order system, including orders via purchasing card and the Trusts local stock inventory system. The target line of 70% is in line with annual non pay expenditure not placed through the Pharmacy order system. Objective-1 of the Procurement Strategy is to optimise non-pay expenditure through the Supplies Department, increasing exposure to CIP scrutiny for increased savings potential.
24
C3: Doing it efficiently: Value of contribution to cost improvement as a percentage of non-pay expenditure
Reporting period 01/04/2014 onwards During 2014-15, forecast non-pay expenditure passing through the Supplies Department will be 23.6m. During 2014-15, the Supplies Department has the following CIP targets derived from non-pay expenditure. Procurement CIP targets based on influenced spend
Procurement CIP target %
CIP target 2014-15: 3.4% (800k)
However, the National Procurement Dashboard calculates savings contributions using the Trust’s total non-pay spend value. The table below shows the approximate savings percentages linked to the Trust’s total non-pay spend, £32.7m, rather than the 23.6m transacted by the Procurement Team. The Supplies Team is working with the Pharmacy Department to include recording their savings performance which will then be included in the dashboard which should show a more accurate, and improved, reflection of the actual savings made. Procurement CIP targets based on Trust’s total non-pay spend
CIP target 2014-15: 800k (*2.44%
approx.)
*Full-year averages rather than the monthly values shown in chart. The Procurement CIP Programme has been in place since 2011-12 and by 31st March-2015 will have achieved savings of £3.2m. Savings include those achieved from Purchase Order, NHS Supply Chain and collaborative purchasing, e.g. savings from renewed contracts implemented within Estates and Facilities like the gas and electric contracts (the Supplies Department provides procurement
25
support making collaborative procurements and communicates savings achieved to Finance). C4: Doing it efficiently: Cost to procure as a percentage of non-pay expenditure
Reporting period 01/04/2014 onwards The National KPI in its current form is not useful as it doesn’t provide a National benchmark comparator; this gap will be communicated to the Procurement Development Board. However, the Trust’s Procurement Team benchmarks separately with the NHS Benchmarking Network, which provides the following favourable comparison for 2012-13 (most recently available data) in relation to the Trust’s cost-to-procure: NHS Benchmarking Network Data 2012-13: element
ANHSFT Level
High Level Cluster Average
Cost of procurement function per 100m turnover
*£148k £552k £173k
*Cost of Procurement Team (purchasing only) £208k/annum divided by £1.4m (1/100th of the Trust’s income during 2012-13).
The KPI indicates cost-efficient performance by the Procurement Team.
26
C5: Doing it efficiently: Percentage of non-pay expenditure through national and/or collaborative purchasing arrangements
Reporting period 01/04/2014 onwards The KPI indicates substantial expenditure commitment using PO, stock and collaborative purchasing (50-55% range). The residual (45-50%) is associated with non-collaborative purchasing and comprises a performance improvement opportunity which will be achieved by implementation of Objective-1. See also C3 (CIP savings targets). C6: Doing it right: Progress against the 18-NHS Procurement Standards See Section 6.2 (Trust Performance against the 18 NHS Procurement Standards). C7: Doing it right: Percentage of recognised procurement staff with an appropriate formal procurement qualification
Reporting period 01/04/2014 onwards The National KPI in its current form is not useful as it doesn’t provide a National benchmark comparator; this gap will be communicated to the Procurement
27
Development Board. However, the Trust’s Procurement Team benchmarks separately with the NHS Benchmarking Network, which provides the following favourable comparison for 2012-13 (most recently available data) in relation to the requirement to have professionally qualified staff:
NHS Benchmarking Network Data 2012-
13: element
ANHSFT Level
High Level
Low Level
Cluster Average
Professionally qualified procurement staff
100% 100% 0% 39.2%
N.B. The 39.2% cluster average has been inserted into the C7 KPI to indicate a useful and measurable benchmark target pending development of an appropriate National target by the Procurement Development Programme. The Trust’s Procurement Team comprises 100% appropriately qualified staff. However, Objective 7.5 identifies the need to further develop the performance of the Procurement Team, e.g. increasing the Procurement Team’s knowledge and experience of infrequent, specialist, and high-value IT procurements. This will further enable the Procurement Team to provide effective procurement support to Trust project managers leading major change projects. This requirement will be achieved by implementation of Objective-7.5. 8. How the Supplies Department will Support Trust Staff and Projects in their Procurement Needs The Supplies Department responsibility is to lead and support Trust staff and teams through the optimum procurement process to achieve the necessary functional and project objectives. Procurement Standard 2.6 requires Trusts to have a published and communicated procurement policy in place which covers all non-pay expenditure. The Procurement Policy will include detailed procurement responsibilities of the Procurement Team and staff to ensure optimum procurement outcomes for Trust functions and projects and describe how this will meet Standard 2.6. 9. Implementing the Procurement Strategy
The Procurement Working Group and the Medical Devices Policy Working Group will be key to the delivery of the Procurement Strategy. Accordingly, the Procurement Strategy will be delegated to the Groups for action. Action will include preparation of detailed project implementation plans and milestones commensurate with Strategy completion dates. Further fundamental actions include preparation and agreement of the Trust Procurement Policy reflecting Procurement Strategy requirements, e.g. the requirement for Trust staff to ensure that they use the Supplies Department for their purchases, and further progress reporting to Trust Board/Committee.
28
The Procurement Strategy will be periodically reviewed and evaluated to reflect performance improvements achieved and to include new objectives as these arise.
