Study to examine value in NHS procurement launched

30 January 2015

A joint research project to examine what effect value-based procurement could have on the NHS has been launched by NHS North West Procurement Development and the University of Liverpool’s Management School.

The feasibility study will examine how managing categories in the NHS horizontally across patient pathways – procurement’s involvement throughout the patient’s experience – rather than vertically down categories and costs, could help identify value through procurement for the NHS.

Focusing on three areas of spend – primary hip and knee prostheses, pressure area care (such as mattresses) and print management – it will consider how procurement tools such as life-cycle costing and pricing models could help drive value in complex NHS procurement.

This could include sourcing products that focus on reducing the time spent in the operating theatre, or examining the dominance of large suppliers in the NHS whose power could reduce their incentives to innovate.

“There are different types of cost in the NHS – suppliers’ costs, time, people and revenue – and they are not all equal,” said Jo Meehan, lecturer in strategic purchasing and operations management, who is leading the project with two other academics on behalf of the University of Liverpool.

“And while there is a great deal of measurement and management within the NHS, the right data is not necessarily being measured nor linked effectively to procurement processes. We want to question what value means to a range of NHS stakeholders, how can we measure it, how we destroy it and how suppliers destroy value,” she added.

Brian Mangan, assistant director of NHS North West Procurement Development, who is leading the six-strong project team from the health service, highlighted the pressures to cut costs in the NHS that have affected how procurement works: “We can look to making savings based on price cuts but eventually we are going to reach a plateau.”

The project, running until August 2015, will examine ‘downstream’ issues, such as the where cost is picked up through the internal supply chain, and ‘upstream’ concerns such as assessing supplier markets and the impact of NHS procurement on suppliers’ ability to innovate.

A range of clinical and non-clinical stakeholders in the NHS and suppliers will be researched via focus groups and individual interviews.

“Clinicians are really enthusiastic about the work we’re doing and we’re hoping that by doing this exercise we will break down the barriers between procurement and the rest of the organisation, and make procurement more inclusive,” Mangan added.

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