As one of the top five largest employers in the world and an average annual expenditure of £130bn, the NHS, and how it spends its budget is a widely debated topic. And at a time of severe budgetary pressures and extreme demand for services – not to mention healthcare targets and league tables putting GPs and hospitals under greater scrutiny – the pressure to deliver more with less, has never been more acute for our healthcare sector.
Harsh restrictions on the public purse mean that healthcare procurement professionals are tasked with providing best value for every pound spent while still protecting the quality of frontline care. And while we often see pressure on resources and cost of care making the media headlines, procurement professionals in this sector face a host of other challenges too:
1. Spend visibility…or lack of it!
The 2015 Lord Carter report on productivity in hospitals revealed that only a few NHS Trusts could demonstrate a basic level of spend control and visibility over total inventory, or compliance with purchase orders.
2. The rise of buying consortia
The Carter report also highlighted the need for greater collaboration among NHS Trusts, as decentralised procurement activities result in different Trusts paying different prices for the same products to a large number of suppliers. As a result, we’re now seeing buying consortia emerging in the NHS to maximise collective buying power and standardise costs. However, to operate effectively, the choice of buying platform for buyers in the consortia is essential.
3. Ageing, legacy procurement systems
A growing number of NHS Trusts are now considering new procurement technology to automate many of their processes. However, many are restricted by existing legacy systems used at different stages of the purchasing lifecycle, which are often not compatible with each other and can’t integrate with financial and back-office systems. And when investment in new technologies proves to be difficult to manage and demonstrate an ROI case for, further upgrades are likely to be difficult to justify.
4. Compliance with purchasing standards
In addition to meeting clinical governance assurances, complying with clinical safety standards, and following OJEU requirements, any product or service procured by an NHS Acute Trust in England must be compliant with Global Standards 1 (GS1) and with Pan European Public Procurement Online (PEPPOL).
Spending pressures remain entrenched within the NHS. It’s imperative for procurement professionals to control spend and drive efficiencies yet enable those who offer frontline patient care to do their job effectively. As a result, more and more Trusts are now looking to implement eProcurement to automate the complete Source-to-Pay cycle.