• Deputy director for procurement transformation programme says savings from new model “running ahead” of business case
  • Winning bids for six medical goods “category towers” have been identified
  • DH working with NHS Supply Chain providers to move staff to new procurement management body

The NHS’s new procurement model could result in greater savings than planned, a Department of Health official has said.

Jim Craig, deputy director of the procurement transformation programme, said suppliers were prepared to commit to savings beyond the DH’s business case for the “future operating model”, though he did not give a figure of how much.

Speaking at the P4H conference last week, Mr Craig said the future operating model business case committed the DH to saving “over £600m annually for the NHS”, which would stay within trusts’ budgets.

Giving an update on the development of the model, Mr Craig said:

  • the DH has identified the winning bids for the provision of six “category towers” responsible for the procurement of medical goods;
  • every trust will be assigned an “account manager” who works for the new Intelligent Client Coordinator, which will oversee the new model; and
  • procurement transformation is “one of the highest profile programmes in government”.

The programme comprises several initiatives to improve efficiency in NHS procurement and aims to save the health service £750m a year.

The FOM is a major part of the programme, which will see the dissolution of NHS Supply Chain in 2018 and the implementation of a disaggregated model where numerous providers are chosen to procure goods, equipment, logistics, and transactional and IT services for the NHS.

It is hoped this will double the amount of goods and services the NHS procures centrally from 40 to 80 per cent.

The DH is running a series of procurements throughout 2017 to recruit the providers. Mr Craig said bids for the category towers were from public and private organisations, as well as public-private partnerships.

HSJ has previously reported that two major procurement organisations have not bid, while an academic health science network is among the bidders.

Mr Craig said: “The savings suppliers and service providers are prepared to commit to are actually, as we stand right now, running ahead of our business case, so the market is confirming what we thought: that there is this opportunity there.”

He said he was unable to reveal who the successful bidders for the six medical goods towers were, but added: “That will very much be coming out in the next few weeks and we’re looking to award those contracts in September.”

Mr Craig said the FOM aimed to deliver benefits for every trust, regardless of size.

He said: “I know that if you’re a smaller or medium sized trust you haven’t got the same purchasing powers of a Barts Health and you can’t get the best deals from the market or even the NHS Supply Chain.

“We’re looking to move away from that. We’re looking for a national pricing process so that everyone shares in the gains that we’re able to achieve.”

Key to the success of the FOM is the establishment of the body overseeing the model, the ICC.

Mr Craig said the ICC would be “the face of the supply chain of the future” and would drive the strategic direction of the FOM, especially in regards to the evolution of sustainability and transformation partnerships.

He said the ICC existed for three reasons:

  • To make sure all the component parts of the FOM work together to give trusts a joined up service.
  • To drive best value for the NHS through contract and performance management, and by holding suppliers to account for the savings they have committed to.
  • To work with trusts and be the point of contact for any issues, which will free up trust procurement chiefs’ time to deal with other tasks such as estates and agency staff.

“The ICC has been defined, at least in high level terms, and approved by the department and ministers, and we are now moving very much into the build activity of setting that organisation up,” Mr Craig said.

“We are working with NHS Business Services Authority and DHL [the private organisation which runs the NHS Supply Chain] as we move people out of those organisations into this new organisation, and we will be building significant new capabilities in there as well which don’t exist today,” he added.

Last week the DH, in response to a question from Justin Madders MP, said the cost for the ICC would be between £7m and £16m.