£10m in ten months: the savings being achieved in cardiology
Within just ten months of the launch of the NHS Total Cardiology Solutions Framework Agreement, in May 2015, 37 cardiology centres have already saved the NHS £10m.
This national framework, a first for the NHS, was developed by the four NHS collaborative procurement hubs (NHS London Procurement Partnership, NHS Commercial Solutions, East of England NHS Collaborative Procurement Hub and NHS North of England Commercial Procurement Collaborative), working together as the NHS Collaborative Procurement Partnership (CPP).
The original problem
Cardiology procurement has always been fragmented into its various sub categories (such as ICDs and Pacemakers, Stents and so on), in spite of the fact that a number of suppliers work across more than one category. It is one of the highest areas of NHS non-pay spend (the LPP member spend on products within scope of the contract is around £100m) but there are serious issues such as a lack of pricing transparency, poor contract compliance, and vastly varying prices paid by different trusts.
Many factors are at play: inefficiencies in the supply chain, local deals, cost per case, inefficiencies within the patient pathway, clinical results, innovation (with products generally replaced in two to four year cycles) and of course clinician preference. Industry’s drivers are mainly profit but NHS trusts want to secure the best possible deal or price for products. Over the years this has created a problematic and fragmented landscape in which most pricing agreements and contracts are put in place in isolation by NHS trusts. Trusts have been told by suppliers that they have secured the ‘best possible deal’, and many deals are either non-compliant or feature on- and off-contract products or suppliers.
£10m in ten months: the savings being
achieved in cardiology.
Taking a step back, CPP realised the size of the prize for the NHS from a concerted, coordinated approach to revolutionising procurement in cardiology.
As Tom Wynne, senior lead in LPP’s Medical, Surgical and Supply Chain workstream explains, “We adapted our approach and that of trusts to force the supply market to change its behaviours. Trusts have been willing to change suppliers. That work, combined with a pro-active and collaborative customer-driven approach to implementation of the framework, has seen cardiology centres achieve striking savings.”
As part of the implementation process, a strategic purchasing guide was created,
enabling a standardised approach to market for each NHS trust. This allows for best practice improvement, long term planning, commitment, future changes in the market, process rationalisation, cash releasing savings and value-added mechanisms.
The creation of a detailed comprehensive specification removes the requirement for repetitive tender processes.
A significant number of suppliers provide products in more than one cardiology sub category. If managed professionally, this provides the opportunity to leverage
cross-category deals to the benefit of both the NHS and suppliers. Suppliers covering more than one sub category will offer attractive commercial terms across a number of categories, if trusts bring together their different cardiology requirements into one award of business.
At the other end of the scale, smaller, niche suppliers of medical and surgical products are often highly innovative, but unable to meet the compliance requirements or compete in frameworks against major providers. To
address this, and so encourage SME suppliers to apply for a place on the framework, CPP took a ‘multi lotted’ rather than ‘single lotted’ approach to the structure of the framework – effectively breaking potential trust requirements down into their component parts, where it was sensible to do so.
Consequently, each lot was specified independently in the tender documentation with individual pricing structures and criteria allowing separate evaluation but also allowing for cross-lot leverage where appropriate. The lots are:
Lot 1 - Implantable Cardioverter Defibrilla- tors and Pacemakers
Lot 2 - Electro Physiology
Lot 3 - Cardiac Stents and Transcatheter
Aortic/Pulmonary Valves and Insertion
Lot 4 - Interventional Radiology Products used in Cardiology
Lot 5 - Hypertension - including Renal
Lot 6 - Heart Valves
Lot 7a - Perfusion
Lot 7b - Perfusion Packs
Lot 9 - Beating Heart Surgery Products
As a consequence of this pro-active and collaborative customer-driven approach to implementation of TCS, the annualised cash releasing savings achieved through the use of the framework for LPP members alone were, as of March 2016, £6,618,788 with a further £16-17m identified.
Practical benefits of the contract include:
• a single framework solution for the full range of cardiology products
• a strategic framework agreement which improves trust spend and usage data
• a massive reduction in the volumes of
tenders conducted by individual NHS
• greater assurance of product availability
• facilitates access to the latest technology.
Barts: full clinical engagement turns target savings of £2m into £2.4m
Barts Health NHS Trust has used various LPP cardiology frameworks in recent years (including ICDs and Pacemakers, Cardiac Stents, Heart Valves) and these have delivered good savings. As a result of this, Barts had an expectation of savings to be made from the new national framework, and forecast £2m within their CIPS for 2015/16. This was higher than anything previously delivered but Barts had recently taken over the majority of cardiology work from University College London Hospitals NHS Foundation Trust making the Trust the biggest cardiology centre in the NHS and in Europe, so the spend volume and appeal of working with a Trust of this size would be key to unlocking significant cost savings from suppliers.
When the framework went live, LPP carried out analysis of the combined Barts/UCLH profile for ICDs/Pacemakers, Heart Valves and Cardiac Stents spend. These have the highest spend among Cardiology sub categories and offered good opportunities for product switching. The Trust team understood that they would need to look at rationalising the supplier base to achieve their targets. This led to a number of scenarios based on – for example - switching suppliers; selecting two suppliers; and moving 100% of their cardiology business to leverage better deals – not something a trust would necessarily pursue but useful information for the procurement team to prompt debate and show the ‘art of the possible’.
What then followed was engagement with the clinical team to ensure that the scenarios met the clinical needs of the Trust. The team focussed on a two supplier scenario and potential suppliers were told about the process, the strategy and the rationale. At that point a number of suppliers submitted revised offers – lower pricing through an innovative offer which was then made available to other NHS trusts through the framework, as well as other non-price related solutions. (Downward-pricing is permissible under the framework if transparent.)
An agreement between the Barts clinical and procurement teams to rationalise the supplier base resulted in a full year saving of £2.4m – significantly more than the £2m CIPS target. This in turn equates to 22 per cent of the Barts spend in these Cardiology areas.
Lucie Jaggar, Director of Procurement at Barts, said of the framework, “this was a great example of a Trust working
together with LPP to get the best supplier outcome. LPP provided robust analysis, great market insight and visibility of other trusts’ successes, and the Barts procurement team led the stakeholder engagement, supplier meetings and implementation strategy. The result exceeded our expectations and cemented the role of our Procurement team as a key enabler within the Cardiology Team strategy.”
22-04-16    Medical Surgical Supply Chain
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