Presentation on theme: "Background to Tendering for NHS Services"— Presentation transcript:
1Background to Tendering for NHS Services Tim ParsonsBusiness Adviser
2Outline for this evening Background to tendering – when, why etcThe process involvedWhat are PCOs looking for?Pricing your services and understanding costsPutting together a good case
3When PCOs tender When practices are sold When practices go private Patient Charge RevenueWhen dental budget increases (9% increase in 2008/09)Capital budgetsBudget has to be spent!
4Why PCOs will tender Achieve particular outcomes: Improve oral health for a particular group or within a particular localityImprove access for a particular groupUse a new form of GDS contract/PDS agreementEstablish a new practice in a particular location
5Why PCOs will tender Legal/governance reasons: The NHS is not legally required to put dental services out to tender butA PCO’s Standing Financial Instructions will have a term that says that medical services above £x should be tendered although the Board/PCO CEO/Chair may override thisRecent EU ruling muddying the waters
6Why PCOs tender Transparency: Provide fairness and help protect the PCO from legal actionSets clear quality criteriaPuts the provision of dental services on a commercial footing
7Why PCOs will tender Promote competition: Create a market Increase value for moneyImprove quality by providing a specification and preventing providers that do not reach the minimum quality requirements from tenderingMost importantly it is now the norm for PCOs
8Who is going to tender?Large corporate bodies with managers whose job is to win new businessAssociates wanting to have their own practiceEstablished commercially focussed practices wanting to expandNew providers, for example not for profit organisations and medical corporate bodiesAnd the people sitting around you now!
9NHS tendering process must ensure. Fair competition and that no potential supplier is disadvantaged by the processContract decision is based on evaluation criteria linked to specification requirementsSpecification must include all technical and professional requirementsAward notice is placed in the OJEU
10Restricted tendering Advertisement for expressions of interest There may be an information event to explain the process and answer questionScreening against pre-qualification questionnaire to obtain a shortlistShort listed providers (normally four to eight) given full tender documents and invited to submit a tenderShort-listed providers invited to interview
11Open tenderingAdvertisements appear and providers invited to apply for tender documentsApplicants submit full tendersAward is made or shortlisting occurs and an interview process is heldMay be used for awarding capital grants
12Negotiation More rarely used PCO draws up a list of preferred providers using a tendering processNegotiates contracts with providers who wish to take part, there may be another tendering process if only one contract is to be awarded
13Components of the tendering process: Example quality criteria A track record in the provision of primary care dental services under GDS or PDSProvide evidence of the following: eligibility to hold a GDS contract/PDS agreement and entitlement to carry on a business in the UKFor specialist services, specialist qualificationsA reference from an NHS commissioner, no breach or remedial notices issuedOn target with current contracts
14Components of the tendering process: Example quality criteria (cont’d) More than one dentist within the practiceExperience of setting up a brand new dental practiceExperience of recruiting, inducting and supporting dentists and dental care professionalsAbility to implement the new service within the minimum timescalesClinical governance systemsIT
15Components of the tendering process: Service specification might contain Amount of UDAs to be providedContract value availableOral health outcomes expectedClinical processes for example fluoride varnishes, diet advicePractice location for a new practiceCommencement dateClinical governance system
16Components of the tendering process: Service specification might contain (cont’d) Business continuity planOpening hoursNumber of patients to be seenIdentification of performersPatient involvement and patient satisfactionEnsuring equality and diversityIT
17Contract that is offered May not be the standard GDS contract/PDS agreementMay contain specific additional conditions such as access sessions, opening hours from 8am to 18.30pm, provision for efficiency savingsMay be fixed term but could be a rolling PDS
18Components of the tendering process: Evaluation Panel will evaluate offers according to written criteria that tie in with the specificationMark scheme may be givenPanel members will be identified and will include a financial, commissioning and public health representationEconomic criteria may include price, quality, delivery performance, risk and overall cost effectiveness
19Components of the tendering process: Interviews Where there is restricted tendering short listed providers may be asked to submit a draft proposalInterviews by the Panel with detailed and possibly difficult questionsMay have to make a presentation of minutes
20What are PCOs looking for? Value for money innovationCertainty of supplyGood relationshipsEvidence based practicePractice organisation tailored to patient need
21Final Legal IssuesFreedom of Information Act applies PCO should have a policy on FOIA and tendersCompetition Law and price fixing. Suppliers must not share information about prices and LDCs must not pass on informationSuppliers cannot act together to prevent, restrict or distort competitionTUPE if UDAs are tendered which previously belonged to a practice with employees, these employees may have the right to transfer to the winner of the tendering process under TUPE: take advice from the BDA
23Firstly… Be realistic when tendering! Can you: Deliver UDAs On time Whilst making a profit
24Overheads, Breakeven and Price Setting The Basic Financial StatementsOverheads and CostsFixed and Variable, Direct and IndirectBreaking EvenThe impact of changing costs and overheadsThe impact of changing contract valuesHow to decide what your price is
25The Basic Financial Statements Rank the following in terms of day to day running of a small business:Balance SheetCashflow StatementProfit & Loss Account
26The Basic Financial Statements And the answer is:Cashflow StatementProfit & Loss AccountBalance Sheet
27Cashflow Statement“A statement that shows the sources and uses of cash for a period”In short, the statement that shows you whether you have access to real funds and whether you are living within your means
28Cashflow Statement Net cash inflows from operating activities 55 £ £Net cash inflows from operating activitiesReturns on investments and servicing of financeInterest receivedInterest paid (2)Net cash outflow (1)TaxationCorporation tax paid (4)Net cash outflow (4)Capital expenditurePayments to acquire intangible fixed assets (6)Payments to acquire tangible fixed assets (23)Receipts from sales of tangible fixed assetsNet cash outflow (25)Etc., etc.,etc.,Increase in cash
29Profit & Loss Account“A financial statement that measures and reports the profit (or loss) the business has generated during a period. It is derived by deducting from the total revenues for a period, the total expenses associated with those revenues”A tool to help you understand what your earnings are and what it is costing you to generate them. Something you can work with
30Profit & Loss Account Turnover 126,000 Less Cost of Sales 68,000 £ £Turnover ,000Less Cost of Sales ,000Gross Profit ,000Less Distribution Costs 10,000Administrative Expenses 8, ,00040,000Other operating income ,000Operating Profit ,000Interest receivable and similar income ,80057,800Less Interest payable and similar charges ,600Profit on ordinary activities before taxation ,200Less Tax on profit on ordinary activities ,600Profit on ordinary activities after taxation ,600
31Balance Sheet“A statement of financial position that shows the assets of a business and the claims on those assets”Shows who has contributed what to the business and how the investments have been distributed – and importantly the value of the business at a given point in time
32Balance Sheet £ £ £ Fixed Assets Capital £ £ £Fixed Assets CapitalFreehold premises 45,000 Opening Balance 50,000Plant and Machinery 30,000 Add Profit ,000Motor Vehicles , ,00094,000 Less Drawings (4,000)60,000Long-Term LiabilitiesLoan 50,000Current Assets Current LiabilitiesStock-in-trade 23,000 Trade Creditors 37,000Trade Debtors 18,000Cash at Bank 12,00053, , ,000
33Overheads and CostsFixed cost – “A cost that stays the same when changes occur in volumes of activity”Variable cost – “A cost that varies according to volume of activity”Direct costs – “Costs that can be identified with specific cost units, to the extent that the cost can be measured in respect of each particular unit of output”Indirect costs – “All costs except direct costs, i.e. all those that cannot be measured in respect of each particular unit of output” - OVERHEADS
34Overheads and Costs Fixed cost – e.g. Property, Rent Variable cost – “A cost that varies according to volume of activity”Direct costs – “Costs that can be identified with specific cost units, to the extent that the cost can be measured in respect of each particular unit of output”Indirect costs – “All costs except direct costs, i.e. all those that cannot be measured in respect of each particular unit of output”
35Overheads and Costs Fixed cost – e.g. Property Rent Variable cost – e.g. Electricity, Phone BillsDirect costs – “Costs that can be identified with specific cost units, to the extent that the cost can be measured in respect of each particular unit of output”Indirect costs – “All costs except direct costs, i.e. all those that cannot be measured in respect of each particular unit of output”
36Overheads and Costs Fixed cost – e.g. Property Rent Variable cost – e.g. Electricity / Phone BillsDirect costs – e.g. Consumable MaterialsIndirect costs – “All costs except direct costs, i.e. all those that cannot be measured in respect of each particular unit of output”
37Overheads and Costs Fixed cost – e.g. Property Rent Variable cost – e.g. Electricity / Phone BillsDirect costs – e.g. Consumable MaterialsIndirect costs – e.g. Utilities, Depreciation Charges etc.
38The Relationship Between Costs and Overheads Fixed costsVariable costsIndirect costsTOTAL OR FULL COST OF A PARTICULAR JOBDirect costs
49Fixed Price Contracts (UDA) Value Decreases Profit reducesBreak even point takes longer to achieve
50How to decide what your price should be Relating the price to your running costsRelating the price to your earning expectationsRelating the price to how hard you want to workRelating the price to how long you want to workRelating the price to what the market will stand
51How to decide what your price should be So what do you do?Gather informationAllocate expensesExpress preferencesRelate realities to desiresFactor-in downtimeFactor-in lower value timeReview the price producedIterate!
52General process Advert Reply PQQ ITT - Business Plan/Further informationPanel Presentation and QuestionsDecisionWin - hard work starts from here!
54When looking at tender docs What is the length of the contract?What services are they asking for?What is the timescale for opening?Where do they want services to be provided?Are there any penalties built into contract?£/UDAWho will patients be – where will they come from?
55Consider:Does it make economic sense given the contract conditions and oral health of the population?Can you compete on price and how will this effect profits given that quality criteria must be met?What are the contract terms are they more onerous than the present standard GDS contract?Is it a useful exercise to go through to establish a practice in the NHS market?Can you form a corporate consortium with other practices?
56Detail Research: Go visit area – Ferrari or Fiesta? Use internet Get costings:StaffPropertyPotential for private practiceWould you want to live/work thereArea on up?How many dentists in area?
57Detail Take time over documentation! Time shows, rush shows Ensure all formatted correctlyEasy to read?Friends/family to check (not partner!)Deadline is exactly that!Have you answered all the points?Use photos/maps/appendicesContents = actual titlesKISS
58PCOs also like… Quality awards (e.g. IIP, BDA Good Practice Scheme) Early/late opening hoursWeekend openingAccess for allWide skill mix within dental teamExperience in setting up/running of practicesContingency plansHigh NHS mixNHS brandingLow staff turnoverInnovative ideas
59Business Case – Responding to ITT Title pageContents pageBusiness caseAppendices
60Title Page Title Include PCO and Business name Contact details - address, telephone, , websiteWho proposal is written forLogos?Don’t overcomplicate
61Contents page Leave until last Ensure accurate page numbering Just main headings – not all subtitles
62Business Case Overview of tender application Current practice situationProposed solutionFinancial requirementsImplementation schedule
63Business Case - Overview Reason behind proposalBreakdown of oral heath needKey PCO driversKey PCO criteria
64Business Case - Practice Situation Experience of Management TeamType of dentistryNumber and location of practices/surgeriesNumber of dentists, DCPs and other staffOwnership StructurePatient baseUDAs delivered annually (and on target?)Additional services currently deliveredExplain Unique Selling Points (USPs)How long established? Did you set up?Awards – BDA Good Practice Scheme?
65Business Case - Proposed Services What are you offering to undertake- Details of services (e.g. full mandatory NHS dental services)- How much – X UDAsHow will services be marketedRelate back to oral health of populationBenefits of solution and USPsDemonstrate that tender priorities have been metDemonstrate commitment to NHSDemonstrate quality service provision and clinical governanceInnovative ideasQuote information back at themSELL YOUR CONCEPT
66Business Case - Financial Requirements Detail total contract value and how this will be broken down for expensesDetail investment into practiceCapital Funding- Don’t assume you are going to be awarded- Show improvements if wonDon’t show profitEnsure that income will sustain business though
67Business Case - Implementation Schedule Outline timescales for implementation, including:- Acquisition of premises- Planning permission- Renovation and instillation of equipment- Marketing- RecruitmentSteps taken to speed up implementationTimelineRequirements from PCODay one dateBe realistic
68Business Case - Summary Review benefitsStress experienceEmphasise USPsDemonstrate ability to meet PCO’s requirementsShow commitmentDemonstrate desire to fulfil contract
69Business Case – Appendices MapsPhotosCVsPoliciesMarketing materialLetters/references from PCOsAny other information required from PCO
70Implementation Ensure requirements are met Deliver what you said you are going to deliverCommunicate with PCO at all times:- Problems- Successes- Innovations- Key milestones- MarketingKeep good relationship with PCO – repeat business?Request feedback from PCO
71A blatant plug… BDA Tender Training Workshops £550+VAT for BDA members 2 day workshopHeld in association with Henry Schein5/6 June
72Thank you for listening Any questions?Tim Parsons