Mark Roscrow Director of Procurement Services, NWSSP NHS Wales Shared Services 19th February 2015 NHS Scotland Procurement Review Mark Roscrow Director of Procurement Services, NWSSP

NHS Wales Organisational Structure Welsh Ambulance Service NHS Trust Abertawe Bro Morgannwg University LHB Cardiff& Vale University LHB Velindre Aneurin Bevan LHB Cwm Taf LHB Powys Hywel Dda Betsi Cadwalader Public Health Trust WALES NHS Wales Organisational Structure

Content NHS Wales Shared Services Procurement Services Central Sourcing Local Procurement Category Management Prudent Healthcare/Innovation

NHS Wales Shared Service Partnership (NWSSP)

Shared Services in NHS Wales Evolution of Shared Services in NHS Wales All Wales Hosted Services - 1996 Business Service Centre – 2003 Business Service Partnership - 2009 SSP - 2012 SSP (Virtual) - 2011 WHTSO/WHCSA - 1974

Governance Arrangements for SSP Velindre NHS Trust Legal Framework Chair Shared Services Committee Director of Shared Services WOD WEDS Counter Fraud Audit and Assurance Primary Care Procurement Services Facilities Services Employment Services Legal & Risk Underpinned by Velindre NHS Trust - using the overarching Velindre NHS Trust policy and assurance framework including audit committee arrangements.

Governance Framework - SSP Owned by NHS Wales Hosting agreement Accountability Agreement Memo of Cooperation SOs & SFIs Audit Committee Scheme of delegation Internal Audit Wales Audit Office Independent Chair Ring fenced budget

Procurement Services

So what is Procurement Services all about then? Some numbers first Budget for 517 staff (£12.6m) Non Pay - £2m Contract Value of over £500m Special WG Projects £100m Stores service with an annual trading value of £36.6m and over 4500 customer NHS expenditure on goods & services (influenceable spend) 13/14 - £800m

P2P and Links to Procedures

e-Procurement INVESTED IN TECHNOLOGY: 2001 – Oracle FMS, across all NHS organisations 10,800 users of the system 546,000 Orders processed £932m order processed Bravo for E-tendering and E-auctioning systems, utilising web tendering across all Procurement sites Electronic payment of invoices OCR Scanning System Procserve GHX Invested in Qlikview Management Technology– intelligence on price & product benchmarking, plus scorecard for measuring all aspects of performance

Move from the ‘Current Position’ Move to the “Vision”

Procurement Services Structure 2015 NWSSP Director Finance Support (Link into SSP Corp Finance team) NWSSP Director - Procurement Services Corporate (PA/Quality/IT) Deputy Director PS/Head of NHS Engagement Heads of Sourcing Head of Supply Chain Head of Accounts Payable Accounts Payable Teams E-Enablement Team Heads of Procurement Medical/ Clinical Team Non-Medical/ Maintenance Team Projects/ Capital Team Pharmacy, Appliances & Home Services Team Local Procurement Teams South West Region South East Region North Region

Sourcing Contracting part of Procurement 1000’s of Contracts £500m approx value Covers Medical/Clinical Non Medical/Maintenance Projects/Capital Pharmacy, Appliances, Drugs and Community (PADAC)

Collaboration / National Sourcing Strategy Common policies and best practice across Health on expenditure c£800M Adopt or Justify National Sourcing strategy adopted, utilising National, All Wales, local contracts where appropriate Savings £115m 2011/2015 Significant standardisation of products: Common NHS Standing Orders & Financial Instructions Common and repetitive spend ONCE for Health!

Local Procurement

(aim to reduce this significantly) Purchasing Locations across Wales All utilise Oracle system Catalogue request self generate through approval process Buyers action non catalogue requests (aim to reduce this significantly) Key focus going forward – base for Procurement Managers

Cardiff & Vale vs. Velindre HB/Trust Total Revenue Expenditure Number of Staff Hospital Sites Cardiff & Vale uHB £1,181m 14,000 6 Velindre NHS Trust £417m 3,176 1

Cardiff & Vale Health Board

Velindre NHS Trust

Category Management

Heads of Sourcing Andrew Smallwood - Medical/Clinical Russell Ward - Non Medical/Maintenance Nic Cowley - Projects/Capital Bethan Jenkins - Pharmacy, Appliances, Drugs and Community (PADAC)

Objectives How Category Management is being used in NWSSP Realignment of teams A example Category

Definition: Category management is a process that utilises cross functional teamwork to deliver procurement outcomes that address the needs of stakeholders. It is not: A different way to do a contract

Category Management is only part of the picture NWSSP Business Plan Sourcing Strategy Category Mgt plans Medical Clinical Individual KPIs & PADR

We may not realise it, but we are already thinking differently Mental Health strategy and direction is akin to a Category Management approach Ortho & Cardio strats built with approach in mind We may not realise it, but we are already thinking differently Food team approach is well established and has good customer engagement Health Boards moving to CPGs Stapling tender scope broadened to accommodate Category approach Heads of Sourcing responsibility split

Getting a clearer view of the data Oracle Savings plans CMS Non-med Med/Clin PAD Projects Theatre Consumables Ophthalmics Wound closure Cardio

Category levers and drivers Which ones to use and when? Market share growth Rationalisation Collaboration Commodity tracking Clinically driven negotiation Standardisation Benchmarking Unit of purchase Terms of business New market entrants Which are valid for your portfolio? Logistics route Innovation Auctions Contract type Volume or value Commitment Product re-engineering Bulk deals

Clinical categories Categorised as products purchased and used solely by Clinical directorates without crossover

Clinical categories Orthopaedics Cardiac (cardiology & surgery) Radiology Pathology Endoscopy Urology Ophthalmics Neuro

A worked example All Wales Orthopaedic Implants Programme

Establish Category Goals Where we are… Where we want to be Industry confused as to which is the chosen supply route, NHS SC, Wales, HB specific. Inconsistent pricing across Health Boards Debate is contract not price and service focussed Clinicians not engaged and not cost focussed Significant spend across Wales not covered by a compliant contract Poor quality data in Oracle preventing accurate analysis of spend and trends Many procurement teams having to be involved in pricing Surgeon choice is final Single co-ordinated portal to access business in Wales Structured pricing allowing for further savings as strategy unfolds Clinicians fully aware of the cost impact of their product selection Multi-lot framework, reducing bureaucracy and allowing for commitment where available Products coded consistently and categorised within a common structure A centrally managed catalogue Clinical evidence built into the system and available to all

Category Characteristics Scope of the category to be covered i.e. What is included in this Category group? Category characteristics, breakdown into subgroups. Understand the history.

What is the strategic direction of stakeholders?

Product Categorisation Orthopaedics £37.8m Joint Replacement £20.2m £9.6m Hips £9.64m Knees Extremities £882k NJR Fees £53k £5.67m Trauma Internal fixation £4.9m External fixation £273k Maxillo Facial £500k £3.2m Spinal £2.6m Biologics £589k Instrumentation £4.92m Instruments & consumables £2.94m £1.98m Loan kits Arthroscopy £3.48m Other £399k Carriage £179k Maintenance & Repair £13k £207k

Summary Transparent, structured pricing and data derived from a framework agreement, allowing for informed transformation with each of the key stakeholder groups facilitating the move from Chaos to Control Targets 10% savings per annum Switch effort from contract to spend focus Establish centre of excellence Supplier drivers High value of annual spend Surgeon focussed engagement model Intentional Confusion Trojan horse sales techniques Levers Multi supplier Framework Clinically driven negotiation Transparency Benchmarking Volume/value commitment Rationalisation Bulk buys Logistics Stakeholders Surgeons Suppliers Finance Welsh Gov Procurement Theatre nurses Theatre Managers Market £38m pa ‘000 of products Multinational suppliers High on political agenda Barriers Access to and quality of data was poor. Health Boards had their own plans. Surgeons had their own plans. No ownership. 3rd Party orgs in market. No single view of category.

Qlikview LFR3 Overview This presentation is based on the 2014-15 LFR3 Summary and NON PAY expenditure being selected. The highest spend Health Board has been selected ‘Betsi Cadwaladr University Health Board’. Selecting the ‘Summary by Directorate’ or ‘Summary by Category’ allows the user to investigate expenditure. The tables demonstrate Committed Purchase Order expenditure and NON Purchase Order matched invoices. The expenditure is split into ‘Catalogue PO Value’, ‘Stores PO Value’, ‘Non Catalogue PO Value’ and ‘Non PO Invoice Value’. By selecting a subjective category in L7 e.g. ‘ALAC: Wheelchairs’ and Catalogue Type ‘NONCATALOG’ the line level PO detail in displayed in the ‘PO Summary’ tab. Further drilldown ability is possible e.g. By Supplier, ‘Transfer Point’, ‘Buyer’ etc. This drilldown ability is also available on the ‘Invoice Summary’ tab.

Below shows the highest spend by Health Board for NON PAY Expenditure.

Selecting the Health Board name allows interrogation of expenditure.

With Health Board selected it is possible to view expenditure by Directorate...

...or Category broken down by committed PO spend and Manual Invoices.

Below shows expenditure outside of the ‘Health Board Catalogue’ for ‘ALAC: Wheelchairs’

Selecting ‘PO Summary’ allows visibility of these NONCATALOG Purchase Order lines.

Selecting Supplier ‘BES REHAB’ returns line level detail of these NONCATALOG Purchase Order lines.

Prudent Healthcare/Innovation

Vision for the Future Strategic Governance - Establish Clinical Consumable Board (All Wales – similar to Pharmaceuticals) WHO? Clinical/Medical Leadership Robust reporting arrangements back into CEO/DOFs ? Contracts let once only for Wales – One Wales approach, and robust understanding and reporting for any deviation A Contracts Programme linked to the Savings Delivery Plan Products and Services that deliver value for money and represent acceptable quality Clearly understood system for designing contracts, partnered between HB/Trusts and NWSSP

Vision for the Future Products and Services that provide a safe Clinical outcome to meet the patients needs Evidence that price and quality benchmarking has been undertaken and is robust within ‘the system’. A Service that reflects the Welsh Government Procurement Statement – ‘A route to consider Innovative Products’ in particular the Welsh Economy and Community Benefits

Procurement What Works – What Doesn’t Cost of freedom of choice Example 1: Where leadership is needed to bring about clinical change and release value! Laryngoscope Blades, Handles & associated consumables is due to be awarded for 1st March start with £50k savings. However, if Health Boards migrate to lower cost alternatives on the framework then the savings rise to £200,000 Comment made by Health Minister when signing the award paper was: “Collectively we could save £150,000 by adopting the best value products in this contract.  It is just one example of the prudent healthcare approach in practice.  While comparatively small at each LHB level it amounts to a sum significant sum collectively”.

Ingredients for Success Clear vision for the future Top level support for the change Leadership to drive the change Structure and resources to move forward Clear timescale for change

QUESTIONS