This summer, in response to the Carter recommendation to reduce product price variation, we developed and implemented the first national NHS product price benchmarking solution. The service takes order data from 136 trusts each month and provides trusts with full visibility of over £2bn of orders, enabling comparison of price paid and highlights areas to save money. It has the potential to save between £50m and £250m a year. The most significant achievement is having the tool live with data from all provider trusts within 3 months from start with over 300 NHS Buyers trained and savings already delivered.
Challenges
- no visibility of product price variance across NHS trusts, regions and at a National level
- anecdotal evidence of variation in price paid for same product / same supplier but no way of easily validating or calculating this variance (and hence savings opportunities)
- Pressure to do more with less and reducing variation though the Carter report
- Previous attempts failed, so this solution had to work
- Lopsided markets with Suppliers in control of information and Buyers in the dark regarding price / value.
Actions
- Created a steering group made up of trust procurement heads to direct the project
- The project team consulted and engaged with Heads of Procurement across England to develop the solution (the Carter cohort).
- Intentionally took an approach to solution development that was pragmatic and light touch on trust resource.
- NHS Improvement appointed experts that understood the NHS, procurement and data to help deliver the project (AdviseInc Ltd).
- Maintained tight timescales and high levels of engagement.
Started in July and the project was implemented 3 months later across all provider trusts.
Results
- Implemented, contract signature to full rollout, in less than 3 months
- The tool almost paid for itself within the first month of use. Examples include Northampton General Hospital saving £150k on ICDs and Barts Health NHS Trust saving £150k across various procurements that were checked and renegotiated ahead of contract signature.
- Identified additional opportunities for trusts to improve the quality of their purchasing / catalogue data.
- Got the procurement community engaged and sharing ideas on how to save money / collaborate, including the validation of their data in the tool before release
- Opportunities identified to support many other national / regional and local initiatives, including NHS England Excluded Devices, BSA with National Contracted Products and GIRFT (Get It Right First Time) with Professor Tim Briggs. The data is now central to many NHS efficiency initiatives.
Value
The Purchase Price Index and Benchmarking (PPIB) tool costs just £3,500 per trust per year. The cost is less than any other tool on the market (typically £20,000 per trust per year). Some trusts have already saved over £150,000 through better understanding of market price and by being able to collaborate with other trusts to negotiate an improved price with suppliers. The project is also working with the National Joint Registry to tie their clinical outcome data on Orthopaedic products and procedures to the cost contained in the PPIB tool.
By doing this we can show clear evidence that the lower cost products do not necessarily mean lower quality outcomes. In fact, for some hip procedures, the lower cost item delivers a better patient outcome. By working together we can bridge the gap between clinician and procurement by talking the same language and by evidencing the need to change with factual information. The scope for savings in this area dwarfs all other benefits and will mean patients get the best outcome at the best price. For the first time delivering a true picture of value for both patient, clinician, procurement and the health system at large.
In detail
AMBITION
In recent years, there have been a number of reports produced highlighting product purchase price variation across the NHS, but little had been done to address the issue. In 2011, the National Audit Office published a report ‘The procurement of consumables by NHS acute and Foundation trusts’. The report stated that: “There is limited data on what is purchased by individual trusts, and there are no practical ways of examining the variation in prices being paid by different trusts, across England, for the same commodities” and “NHS hospital trusts pay widely varying prices for the same items”. In June 2015, Lord Carter published a report, ‘Operational productivity and performance in English NHS acute hospitals: Unwarranted variations’.
The report, again, highlighted unwarranted variations across many aspects of health care provision including the procurement of medical products. The Carter report set out a series of recommendations to address the variation in prices paid across the NHS. One of the recommendations was to create a purchase price index and use price transparency to better manage market price and hold trust boards to account for their performance against the index. To deliver this recommendation, NHS Improvement selected an industry partner, AdviseInc Ltd.
The contract was awarded in July 2016, and we jointly delivered the first product price benchmarking solution in September 2016 (less than 3 months later). All 136 NHS acute provider trusts submit monthly purchase order data, giving the NHS access to more than 700,000 product prices across 25,000 suppliers with full visibility of what was bought, from which supplier, by which trust / group of trusts and at what price or prices.
Lord Carter commented: ‘The purchase price index benchmarking tool, one of the key recommendations from my report to help save the NHS £700m through better procurement, has been delivered effectively, efficiently and is already helping trusts to save money this year. “This is the first time the NHS has seen full transparency of prices paid for products bought from more than 25,000 suppliers. No other health system in the world has this capability or transparency which means the NHS is armed with knowledge to reduce variation and secure the best deal.”
Key to the success of the project was the strong governance we established from the outset. Previous attempts to deliver price transparency across the NHS have failed due to insufficient stakeholder engagement, and a lack of procurement and big data knowledge. NHSI wanted to ensure the mistakes of the past weren’t repeated. The specification and plan was developed and overseen by a steering group made up of key stakeholder representatives from across the NHS in partnership with AdviseInc.
OUTCOME
The result was an easy to use, web-based tool, accessible to every NHS Acute Provider trust, providing access to product prices across the entire NHS. Trusts use this data to identify opportunities to secure better prices at a product, supplier or category level. The tool is also being used to help develop regional procurement workplans by understanding the aggregate opportunities across the various collaborative groups operating across the NHS. VALUE In the first month of use, Barts Health NHS Trust reported over £150k of savings and a trust in the East Midlands saved over £150k on Cardiology. The project has received anecdotal feedback from many provider trusts regarding saving money.
The next phase of the project is to collate these savings. The following quotes were shared by Heads of Procurement from across the NHS. “The PPIB tool is a welcome introduction. We have already identified areas of clear opportunities for us”. “I have been using the tool over the past couple of weeks and have been pleased with its ease of use. I think the tool is a big improvement on what we have had in the past”. The project has exceeded expectations and the data in the PPIB tool is proving to be beneficial to many other national NHS projects, including the BSA, NHS England and a number of internal NHS Improvement projects, such as GIRFT and the National Joint Registry.
SPREAD
The project was delivered on time and within budget and due to the success in the acute provider sector we are looking to increase the scope and include specialist acute providers and care trusts. The solution works across all NHS Trusts and could easily be repeated across other parts of the NHS and Wales / Scotland. “The first real and significant game changer for NHS procurement in my 33-year career. A key Carter recommendation, the PPIB tool was delivered by AdviseInc in under 3 months and is already delivering savings to NHS Provider Trusts across England. The tool is being continually developed by AdviseInc based on end user feedback and working with NHS Improvement, including the Model Hospital programme. What’s been achieved in such a short space of time is truly ground-breaking for the NHS and will have a major impact on trusts’ ability to control variation in price paid.’ John Warrington, Deputy Director NHS Improvement
INVOLVEMENT
In addition to our procurement-led steering group (see contact details), we also engaged with heads of procurement through the national NHS Carter Cohort (44 acute provider trusts) and wider to ensure we delivered a fit for purpose tool that key stakeholders would use in their day to day procurement roles. We were also very aware of past failures / attempts to benchmark data so ensured as many heads of procurement and analysts as practical were engaged in the development.
The result is a tool that people want to use and will transform the way the health system will go about procuring products. Ben Shaw, Head of Procurement at Leicester says: ‘the team has so far surpassed all my expectations; not only have they managed to get the tool delivering results extremely quickly but they have also identified and created some really exciting enhancements. In particular, they have developed a way of identifying potential product switches which could be a further game changer for procurement in the NHS’.
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