Procurement: engage and save

Despite the additional funding promised to the NHS in England over the next five years, the government has made it clear that the service must continue to increase its efficiency. It must continue to bear down on costs – and with spending on goods and services second only to pay costs, the focus will remain on procurement.

At national level, there are developments in this area. The new NHS Supply Chain operating model (previously known as the future operating model) aims to deliver savings of £2.4bn over five years using the collective buying power of the health service (see box).

Locally, there may be a feeling that the major savings opportunities have either been taken or are now tied up in the national operating model. But how can a trust keep identifying new savings?

University Hospitals of Leicester NHS Trust (UHL) believes the answer lies in greater engagement with clinicians, widening the influence of its procurement specialists, making procurement an integral part of its cost improvement programme (CIP) and measuring the performance of its procurement department and clinical directorates, known as clinical management groups (CMGs).

In 2017/18, the trust spent almost £184m on goods and services, but its procurement team also has some influence over a further £50m spent on purchased healthcare, agency, managed equipment services and capital equipment.

The trust’s vision is to achieve upper quartile productivity across all areas, including procurement, to ensure it provides the best care possible. In doing this, it is striving to clear its deficit, which was £34.5m in 2017/18, by 2021.

Its core CIP this financial year is a saving of £51m, including £8m of cash-releasing savings targeted in procurement.

Trust director of efficiency and CIP Ben Shaw says the savings target allocated to procurement has more than doubled over the past few years and the procurement team is currently working towards a stretch target of more than £10m, when non-cash releasing savings are included.

The Model Hospital cost per weighted activity unit (WAU) shows productivity is generally good, but the trust’s finances are unsustainable.  However, there are still significant efficiency opportunities – an average of 6% across the trust based on 2015/16 reference costs. Some specialties lose money, and national productivity data shows potential productivity improvements in some areas of 30% or more.

Mr Shaw says: ‘Trusts should have procurement as a core part of their CIPs, but care needs to be taken to ensure that CIP reporting for procurement is aligned to the trust-wide process.’

Both must be recorded in the same way, he says. ‘If you aren’t careful, there can end up being a mismatch between what procurement claims as their total CIP contribution and what’s reported centrally by a trust.

‘We don’t have that problem here – over the years we have developed a really well run CIP process and tracker, which makes sure the figures reported by the procurement department are exactly what we report nationally to NHS Improvement. 

‘A key part of this is that the budget-holding teams within UHL are held accountable for reporting their CIP and teams like procurement are allocated what we call ‘enabling targets’, which helps hold them to account for their contribution to the overall trust programme.

‘This has worked very well and has certainly improved the way our teams work together – rather than competing to record CIPs as their own.’

Name change

The trust has also changed the formal name of its programme from a CIPs programme to an efficiency and productivity improvement programme, Mr Shaw adds. ‘In the past, we only reported to the board our progress against our CIP target. But now, as well the financial cost improvement measure, we also focus on those measures that contribute to our wider productivity improvement. This is a range of 15 key measures – from attendees on our Lean programme, logins to Model Hospital, to procurement engagement.’

David Streets, the trust’s head of procurement and supplies, says: ‘We didn’t know how we were performing, but our vision is to be the best procurement team in the NHS. We also want to increase our engagement, so we have recently added metrics around our engagement across the organisation.’

Engagement between procurement and each of the trust’s clinical management groups is measured in four categories.


The categories include ratings on:

• The regularity of meetings with the procurement department to discuss progress on CIPs
• Attendance at the clinical procurement group
• Best value consumables group.

In the fourth category, the trust measures the volume of ‘free text’ transactions that the procurement team believes could be ordered via a catalogue. The ratings are 0-5, with 5 being the best, and are added together to produce an overall score. This is translated into a RAG rating, which is reported to the trust’s performance board, allowing senior managers to see at a glance which directorate requires more attention, for example.

Mr Shaw continues: ‘To understand what is happening, we hold meetings with CMGs. The chief finance officer, medical director and I will challenge them on why they haven’t engaged, and the actions needed to rectify that.’

But meetings are not just about how a CMG can improve performance against its procurement CIP – better engagement means clinicians can help design incentives into a tender or contract, as happened recently over the retendering of an orthopaedic supplies contact.

This approach has led to improvements, not just in procurement but other elements of the trust’s CIP, Mr Shaw says. ‘The expectation is that if you engage more with procurement you will see greater benefits. We have taken the same approach with coding with a PLICS engagement measure, and our Lean programme. People are competitive – they don’t want to be seen as the bottom performers.’

As a result of its partnership working and engagement with its staff, the trust achieved level 2 accreditation in the NHS Standards of Procurement last November – the first in the East Midlands – and is aiming to reach the highest level (3).

The standards, which were launched by the then Department of Health in 2012, are a tool to support trusts to develop their procurement function and spread best practice.

Mr Streets says the trust procurement team is also trying to increase its influence nationally. He sits on the Procurement Skills Transformation Programme working group, which is part of the Skills Development Network. 

National benchmarking work is also having an influence on the trust’s procurement processes. ‘We are getting involved in the Model Hospital and Getting it right first time work at the trust,’ Mr Streets says. ‘We want to ensure we are at the table when every efficiency decision is taken. We want to see what else we can do to improve services and get better value.’

The national GIRFT work on orthopaedics highlighted a good example of the progress the Leicester trust has made on procurement, Mr Shaw adds.

‘Working with local partner trusts, Leicester has driven down costs and increased standardisation by procuring 70%-80% of hip and knee prostheses from a single supplier.

‘Working with local trusts and our partners at NHS Supply Chain in the new operating model, we will produce further savings as a consequence of working better,’ he adds.

Mr Streets says the trust has good contacts with NHS Supply Chain and hopes even closer working will realise further savings. Individually, savings may look small or relatively insignificant, but they can soon add up.

‘There will be lots of little successes, but that’s what we need to do now,’ Mr Shaw says. ‘All the big opportunities have gone years ago, but in orthopaedics, for example, the small savings can add up to big numbers.’

Mr Streets adds: ‘We have a lot of supplies that go through Supply Chain and lots of things that would have come through procurement hubs historically that will now be procured through the new NHS Supply Chain category towers (see box).

‘It’s good for us as we will be able to use national buying power and it will allow us to start focusing on other areas that are not included in the category towers. We can, for example, get more involved in contract management to ensure we get better value.’

The remaining big opportunities to make savings in the procurement of goods and supplies will probably lie mostly at national level, with the NHS using its buying clout to cut costs. However, opportunities will remain at trust level, and the Leicester trust hopes that engaging its clinicians and measuring its progress will help it continue to chip away at its procurement costs.