NHS Procurement: Concerns raised over stakeholder management for new operating model

By Allan Watton on

When setting up any transformational programme or partnership, one preliminary aspect that can’t be overstated is the need for stakeholder communication and collaboration. Unfortunately, there seem to be many in the NHS procurement community who believe that the Department of Health has left them out of discussions while developing a new procurement strategy. In turn, it is perceived that this will directly affect them and the projects they will be responsible for, and there are others who question the need for a new model in the first place.

NHS Procurement Future Operating Model (FOM)

The Department of Health’s new initiative is named the NHS Procurement Future Operating Model (FOM) and consists of “11 category towers, [and] a new 200+ person Intelligence Client Coordinator” among other facets. The concern is that there seems to be some confusion over:

  • exactly what this all means
  • why more key people in the NHS procurement community were not involved in its development
  • whether this FOM will impact on current relationships and arrangements.

As a result, there are some who have been speaking out against this initiative in private and in the media.

Over the last quarter of a century, due in part to numerous reports from the Public Accounts Committee (PAC) and the National Audit Office (NAO), the NHS procurement process has been overseen by a succession of organisations. The two primary organisations involved have been the NHS Supplies Authority, followed by the NHS Purchasing and Supply Agency (NHS PASA).

When this agency was dropped in 2010 it left what some would call a vacuum in procurement leadership within the NHS, as PASA was perceived as the central hub for best practice and procurement intelligence for the whole of the NHS. However, through a process of collaboration between the NHS Supply Chain and Trust Heads of Procurement, significant cost savings have been achieved. Some trusts now report securing product price reductions of between 20 and 60% or more through their own efforts.

Sustained change is continuing to raise levels of nervousness across the NHS. However, with what seems to be a good degree of success in the current strategy – utilising a collaborative approach to procurement – the question of ‘why?’ hangs over the Department of Health’s decision to push forward with this new Future Operating Model.

Hospital Consultants & Specialists Association

At the centre of media reports on this question is the Hospital Consultants & Specialists Association (HCSA), the association which represents NHS procurement and supply professionals. In a recent statement to the Department of Health they explained the worries they and their members had about the planned FOM:

“HCSA members and key procurement stakeholders are concerned about the current plan and approach to restructure the NHS procurement system in England which will see significant elements of the existing NHS procurement and supply chain operating model subject to potential fragmentation through a competitive approach rather than a collaborative one.”

They then highlighted a number of key issues. Most significant among them were:

  • the fear that such an initiative might put the current supply chain at risk
  • the perception of a lack of engagement and consultation with key stakeholders
  • a widespread lack of understanding of what FOM consists of
  • and the threat to successful negotiations by trusts that had won them significant cost reductions.

Certainly, given the successes which seem to have been experienced by the NHS supply chain, it seems unusual that their input and expertise was not sought in the formation of the FOM. The reported lack of communication and collaboration between the Department of Health and the people who stand to be affected by their new model is leading to vocal concern about their lack of involvement.

In their statement, the HCSA said that they “must be engaged in the design of the operating model, and given access to key information, including the strategic options analysis and shortlisting process which has led to the current, proposed model”.

They also requested that they be “engaged before any Outline Business Cases are taken forward for approval and any subsequent, related OJEU(s) are published”.

Given how crucial collaboration and open dialogue are in the implementation of change programmes, these comments seem to give logical rise for concern.

In spite of calls for open discussion, the Department of Health appears to be pressing ahead with acts of its own volition which gives rise to concerns about the likelihood of this sowing seeds of discontent. And, is their approach really the most effective manner to begin a successful business change programme?

If the Department of Health continues on its current path, there does appear to be a risk of throwing the baby out with the bathwater. Given how well the NHS supply chain is reportedly doing, despite a succession of “top-down” initiatives over the past 25 years, the implementation of a new model may threaten the positive outcomes they are currently achieving.

This is a thought that coincides with the view of the HCSA:

“NHS Trusts have embraced the need to pursue savings in the immediate term and want to work together to build the momentum in maintaining and accelerating efficiencies. In view of the above, there is an immediate need to urgently evaluate the benefits of a further extension to the NHS Supply Chain contract in order to maintain the momentum of these savings initiatives, at a time when savings are critical to NHS stakeholders.”

It would be natural to think that collaborative dialogue between the Department of Health, other professionals within the NHS supply chain and the HCSA will be valuable in informing the design or redesign of the FOM. This should ensure that all opportunities to add value are realised and existing methods that appear to be working are adopted and worked into the model to ensure that current progress and expertise isn’t lost.

There are still many questions to answer, such as:

  • what are the intentions of the Department of Health around these 11 towers?
  • what is their function and purpose?
  • what skills will be required to oversee each of these?
  • how will they be measured?
  • how many suppliers will make up each tower?
  • will it adopt a model based upon the principles of SIAM?
  • how do existing methods of service delivery fit into all this?

Anyone who has been engaged in major change programmes within the NHS will know that it is vitally important that these details are discussed and shaped by the NHS procurement community to encourage buy-in and to assure the benefits of any business change proposed.

Similarly, all affected stakeholders need to have an opportunity to weigh in to highlight adverse potential issues with the FOM that can be prevented by making alterations at the design phase, rather than waiting for these challenges to materialise while the programme is ‘in-flight’.

If the Department of Health continues to work in what is perceived to be ‘relative isolation’, it may find a successful implementation of the future operating model particularly difficult to achieve and significant resistance to its adoption.

Photo credit: Shutterstock

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