1. 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

2. 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

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

4. NHS Wales Shared Service Partnership (NWSSP)

5. Shared Services in NHS Wales
Evolution of
Shared Services in NHS Wales
All Wales Hosted Services
Business Service Centre – 2003
Business Service Partnership
SSP
SSP (Virtual)
WHTSO/WHCSA

6. 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.

7. 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

8. Procurement Services

9. 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

10. P2P and Links to Procedures

11. 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

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

13. 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

14. 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)

16. 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!

17. Local Procurement

18. (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

22. 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

23. Cardiff & Vale Health Board

24. Velindre NHS Trust

25. Category Management

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

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

28. 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

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

30. 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

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

32. 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

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

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

35. A worked example
All Wales Orthopaedic Implants Programme

36. 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

37. 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.

38. What is the strategic direction of stakeholders?

39. 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

40. 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.

41. Qlikview LFR3 Overview
This presentation is based on the 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.

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

43. Selecting the Health Board name allows interrogation of expenditure.

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

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

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

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

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

49. Prudent Healthcare/Innovation

50. 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

51. 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

52. 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”.

53. 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

54. QUESTIONS