Health secretary Matt Hancock and prime minister Theresa May launched the NHS Long Term Plan at Alder Hey Children's Hospital in Liverpool © PA Images
Health secretary Matt Hancock and prime minister Theresa May launched the NHS Long Term Plan at Alder Hey Children's Hospital in Liverpool © PA Images

Plan to 'free NHS' from Public Contracts Regulations

11 January 2019

Fundamental reforms to the way in which the NHS does business are being proposed which would see the organisation abandon government procurement rules and have greater freedom over how it chooses to spend its money.

The proposals are outlined in the NHS Long Term Plan (LTP) released this week, which calls for a radical shift in how commercial relationships are conducted.

Current “rules and processes for procurement, pricing and mergers are skewed more towards fostering competition than to enabling rapid integration of care planning and delivery”, it said.   

In a bid to change this, the NHS has created a new centralised procurement organisation, Supply Chain Coordination Limited (SCCL), to help use its “purchasing power on a national scale to get the best deals and deliver high quality affordable care for patients”.

The plan stated: “By 2022, we will double the volume of products bought through SCCL to 80%, extend the number of nationally contracted products and consolidate the way local and regional procurement teams operate.”

But it goes far further than just this, for the plan also reveals the intention to “cut delays and costs of the NHS automatically having to go through procurement processes”.

It should be up to NHS commissioners to decide when they should use procurement, it said. “The current rules lead to wasted procurement costs and fragmented provision, particularly across the GP/urgent care/community health service workforce.”

The plan noted: “This would mean repealing the specific procurement requirements in the Health and Social Care 2012 Act. We also propose to free the NHS from wholesale inclusion in the Public Contract[s] Regulations. We would instead set out our own statutory guidance for the NHS to follow.”

Another area of change being proposed is to put a greater proportion of the NHS budget in frontline services by “simplifying costly and overly bureaucratic contracting processes, supported by reforms to the payment system as we progressively move away from episode-based payments”.

It added: “We will require commissioners and providers to continue to redesign and reduce the costs of transactional services. All core transactional services, such as processing invoice payments, will be automated over the next five years.”

Commenting on the proposals, Melinda Johnson, commercial director, Department of Health & Social Care, told SM that: “The Long Term Plan encapsulates the commercial work the DHSC and its ALBs [arm's length bodies], in partnership with commercial colleagues across the health system, has been doing over the course of the past 18 months so ‎we are confident in delivering the commercial aspects of the LTP.”

Greater unity is at the heart of the new approach, with a new target operating model being developed “that will organise our commercial resources to the best effect and enable the procurement function across trusts to reach its full potential.”

She added: “We will build our collective capability and work as one high performing function, with shared goals around a clear ambition to deliver increasing value to the front line.”

This will involve not only streamlining processes but also “building our capability around contract management”.

Johnson admits the plans are ambitious but says “this is a collaborative effort involving all commercial colleagues – and whilst there will be challenges, we are determined to make this once in a generation opportunity – a reality – and a sustainable one at that”.

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