The recent National Audit Office report on consumables procurement by NHS acute and Foundation trusts (http://www.nao.org.uk/publications/1011/nhs_procurement.aspx) highlights the immense potential for procurement cost reduction in the NHS.
At Phillips Consulting, we have been engaged at many levels of the procurement tree in the NHS - acute trusts, procurement hubs, PCTs - and our experience certainly supports the findings of the NAO report. The report highlights bizarre and costly procurement practices. For example, no less than 652 different types of surgical and examination gloves were used across the 61 trusts examined, and 1,751 different types of cannulas were used.
As far as medical consumables and devices are concerned, the root of the problem is clinicians, and particularly consultant surgeons. In the NHS, surgeons are gods. I guess it is not necessarily surprising that the most senior doctors are revered in a healthcare organisation but I would suggest that there are organisational factors that give consultants greater power in the NHS than they have, for example, in private healthcare organisations. In the UK, the debate around the cost of healthcare often revolves around the need to get rid of managers and give more power to clinicians. This is exemplified by the government's intention to scrap PCTs and replace them with GP consortia. In the acute sector, however, this revering of doctors and bordering on contempt for managers results in a situation where chief executives are replaced much more often than surgeons. And surgeons are highly intelligent individuals. They know that if the trust presents proposals that they do not much like, if they tough it out for long enough, the management of the trust will very likely change and then the entire process will have to begin again.
In fairness, many consultants are not this cynical but a small and significant proportion are. And it is very rare for reasonable consultants to take on their more bolshy colleagues - it is just not the way the medical profession works. In orthopaedics, an area where we have very wide experience, it is not unusual for one difficult surgeon in a typical team of 5-6 surgeons to scupper a deal that could save the trust many hundreds of thousands of pounds. Because of the clinical supremacy culture in the NHS, very few chief executives are able or willing to override the clinical team, which usually closes ranks when confronted.
However, it can be made to work. A few years ago, we assisted a procurement hub in the south east with the development of an orthopaedic implant contract. At one particular trust in the region we were extremely successful in engaging the clinicians, who even attended negotiations with suppliers. Some of the consultants threw themselves into the commercial side with great enthusiasm, playing the roles assigned to them in the pre-meeting briefings fantastically, and a saving worth hundreds of thousands was delivered to the trust. The look on the faces of the implant suppliers during the negotiation meetings was a joy to behold - the shock at the close teamwork between the procurement staff and the clinicians was palpable.
This success was largely attributable to very careful and skillful management of the characters involved. There were one or two difficult surgeons - and there are always one or two - but they were relatively relaxed about which products would be used and largely disengaged from the process. I should say that this is not the norm. Difficult surgeons will normally aggressively defend their inalienable right to use whatever implants they see fit to use. However, the key in this was the amount of time and effort invested in bringing the more positive surgeons into the process. The establishment of mutual respect is vital. The buyer must avoid at all costs any claims to clinical knowledge but should also politely but assertively establish their own commercial expertise. The formula is 'I will not tell you which implant to use, if you do not tell me how to negotiate'. Assertiveness and confidence is essential because of the hierarchical nature of the medical profession. If you are not considered an equally professional person, you have lost the vital respect element.
For a negotiator, this type of process is a double negotiation. Firstly, with the clinical team and then with the suppliers. The negotiation with the clinicians is not only the most important but is also the most difficult. However, get it right and the negotiation with the suppliers will be a breeze.
This may appear a lot of time and effort to invest. However, the payback makes it very worthwhile. Orthopaedic implant expenditure at even quite modest trusts can run into several millions per annum and, if clinical engagement is successful, savings of at least 30% are not at all unusual.
For more information of the healthcare cost reduction services of Phillips Consulting contact:
Phillips Management Consultants LLP
Hydon House
Partridge Green
West Sussex RH13 8HR
Tel: 01403 711129
Fax: 01403 711654
Email: enquiries@phillipsconsulting.co.uk
Web: www.phillipsconsulting.co.uk
