NHS Supply Chain Medical Supplier Board Meeting BIVDA Offices, London 15 October 2015 Meeting Notes Attendees Chair: Secretariat: Paul Clarke, Head of Supplier Management, NHSBSA Louise Hillcoat, NHS Supply Chain Ray Hodgkinson MBE, BHTA, Rob Clark, BAREMA Tony Reed, BDIA Barbara Fallowfield, BIVDA Ila Dobson, AxREM Mike Hoskins, SDMA Nishan Sunthares, ABHI Gwyn Tudor, Medilink Tracy Stewart, AHPMA Chris Holmes, NHSBSA Supplier Management. Sandra Barrow, DH Jason Lavery, Capital Trading Director, NHS Supply Chain P/T Mark Hart, Clinical Trading Director, NHS Supply Chain P/T Apologies Steve Harwood, UTA 1
Meeting Notes Item 1 Welcome and Introductions led by Paul Clarke Paul Clarke read out Competition Law guidelines to the Board as a Standing item requirement The Board members are reminded that, with the exception of commercial in confidence slides, all Key Documents will be produced and posted on the Supplier Board website in full and in line with its Transparency Objective. As all Suppliers will have access to the website, the documents will be produced in such a way that the un-initiated reader will have some understanding of the documents and content, even without having all the background. All attendees and guests were welcomed to the BIVDA offices and introductions were shared. 2 Inform on the NHS Supply Chain contract extension Paul Clarke and Chris Holmes, NHSBSA explained the new landscape and how NHS Supply Chain and the NHSBSA would be working closely together to deliver the 300m savings target. The contract review, which had consulted Supplier Board members, resulted in a 2 year extension, on more advantages terms to the NHS being signed on the 19 th August.This is a 2 year extension, which has been implemented within the final year of the contract. Effectively this means a 9 + 3 year contract under new terms Some of the key terms are: A requirement for NHS Supply Chain to deliver 300m savings, made up of the 150 million previously committed to being achieved by March 2016, and an additional 150 million to be achieved by September 2018. The majority of DHL profits are now linked to the generation of savings, The move to an open book contract management model controlled by the NHSBSA The removal of the MSA exclusivity clause The production by DHL of detailed category management plans aimed at improving efficiencies and delivering savings on healthcare consumables Members received assurances that intellectual property belonged to the NHSBSA, not DHL and all third party licences carried a novation of licence clause to the NHSBSA. Information management and some key strategic workstreams would be transferring to the NHSBSA. Further details will be shared at future meetings. Members were reassured that all current frameworks would operate as currently and their terms would still fully apply. 2
2 DH Update Sandra Barrow, Head of Innovation Procurement, Commercial Division Department of Health shared a brief overview of the evolving structure within the Department of Health. David Williams, Director General, Finance and NHS at the Department of Health replaced Richard Douglas. There are two divisions within his team, which have been formed since the publication of Lord Carter s interim review of Operational productivity in NHS providers. The Commercial Division is headed up by Patrick Mills, Commercial Director at UK Department of Health. His responsibility is split into two workstreams: Procurement Policy headed up by Alicia Pickering, with responsibility for NHS Procurement Policy and Department of Health Policy. This team also has responsibility for Commercial Capability and Litigation. Sandra works within this team. Procurement Supply Chain, which includes work on the New NHS Catalogue and e-procurement strategy. This work is in close collaboration with the NHSBSA and includes the core list, core range and national catalogue workstreams. The division which has responsibility for the implementation of the Lord Carter report recommendations is headed up by Jeremy Marlow, Director of Productivity and Efficiency at UK Department of Health. John Warrington and Elena Terraneau, both previously involved in the Supplier Board are working on this workstream. It includes the Model Hospital analysis of best practice in 32 trusts, production of associated metrics, recommendations for cost savings and efficiency opportunities and will demonstrate where each individual hospital trust can benefit from adopting model procurement and operational practices. There is a 7bn target savings figure. Members sought clarification of the source of this figure. Paul Clarke shared that the NHSBSA were responsible for the delivery of 1bn savings and other NHS organisations had similar targets. He confirmed that through adoption of more efficient ways of working, such as the digitalisation of services, and the procurement savings pipeline, the NHSBSA were confident that they had visibility of their target. 3
3 Inform on NHS Supply Chain s Capital business unit Jason Lavery, NHS Supply Chain gave an update on the NHS Supply Chain Capital business unit, with particular emphasis on the analysis of ageing equipment within trusts and the asset management assistance now being offered through the department of health initiatives. Jason explained how working with trust Directors of Finance at 14 regional workshops had already delivered clarity and visibility of a national asset management profile. This has led to further work to identify opportunities for efficiencies and process improvements, price comparison tools and on-going support for NHS Trusts. Rob Clark, Barema asked about the complexity of service contracts that added costs into the supply chain and whether NHS Supply Chain could support the aggregation of maintenance contracts across the product range. Jason Lavery replied that NHS Supply Chain were looking to use the DH Fund to manage and aggregate the maintenance contracts. These are more complex in the lower value, more fragmented contract areas but there was a realisation that significant supply chain savings can be made with improved efficiencies. The team has conducted a report into inefficient asset management within the NHS. The 300m DH Fund is being used to provide commitment aggregation to the industry and therefore savings to the NHS Trusts. Now 33% of suppliers to the Capital business unit have taken advantage of the DH Fund initiatives. There is a concerted move towards smoothing demand throughout the year, by deterring trusts from panic buying at year end. Whilst improvements have been realised, there is still a culture of year end budget protection that creates inefficiencies in procurement. Rob Clark, Barema, commented that some suppliers could not benefit from economies of scale due to the product mix that they were being asked to aggregate, rather than multiple purchases of a single equipment model. Jason explained that this was in less than 50% of orders and was aimed at delivering savings to the trusts, whilst securing sales to the supplier that may otherwise be fragmented. Nishan Sunthares, ABHI, questioned the sample size of trusts from which the asset management statistics had been drawn. Jason stated that this is a national picture, using both sales through NHS Supply Chain plus other national statistical sources. Ila Dobson, AXReM, confirmed that the picture was recognised by the Capital equipment suppliers and stated that a significant amount of equipment was over 10 years old. This figure can be mapped to patient pathway statistics, which state that the equipment in the UK is older than elsewhere in Europe, the patient pathway figures are the lowest in Europe and the spend on equipment is less per population head than elsewhere in Europe. 4
Jason confirmed that NHS Supply Chain, in cooperation with the NHSBSA and Department of Health are working towards one national databse of spend in the Capital area. NHS Supply Chain has 90% of the large equipment market and 60% of the lower value equipment market, which means approximately 75% share of the Capital market. 4 Inform on NHS Supply Chain s Procurement business unit Mark Hart, Specialist Product Procurement Director at NHS Supply Chain gave an introduction to the new one team, on goal structure within NHS Supply Chain which has brought the Procurement and Customer Engagement business units together with clear accountability for the delivery of the 300m savings target, through category action plans, whilst continuing to manage EU Procurement Law compliant frameworks and deliver an efficient logistics solution to the NHS. The Consumables Procurement Director will take accountability for the Core Range strategy (including generic specifications) and Mark s area, Specialist surgical and consumables items used in specialist clinical practice, will take accountability for the implementation of specialist product revenue growth and retention Mark gave an update on the recovery programme in response to delivery issues currently being experienced at the Rugby RDC where the implementation of a new logistics management system had presented some operational challenges. No members had received reports of service disruption from their membership. Mark described the Category Management approach adopted by NHS Supply Chain to deliver a customer-centric product and service offering that delivers savings to the NHS. 27 categories have been identified as focus area. Members asked that this subject be explored in more detail at the next meeting Action: Mark Hart to provide a Category Management update at the January board meeting Mark introduced Generic Specifications, a new work stream being led by the Department of Health, the NHS Clinical Reference Board and being implemented through NHS supply Chain. The first Generic specifications workshop had taken place two days before this meeting. The initial workshop was on Dressings and Woundcare and SDMA attended to represent the relevant suppliers. Generic specifications are to be written by a National Wound Care Formulary Working Group which includes a network of TVNs, burns management and infection control nurses, medicine management practitioners from community trusts with facilitation by NHS Supply Chain. Department of Health and Clinical Reference Board sponsorship and leadership is being provided by Directors of nursing Suzanne Hinchcliffe, Leeds Teaching Hospital (Acute) and Dee Roach, Lancashire Care NHS FT (largest Community, MH and LD Trust in the country) Timescales are for the clinical specifications to be complete by December 2015 CRB ratification and sign off and DH and BSA endorsement by January 2016 NHS Supply Chain to publish technical specifications in Q1 2016 and the procurement process will begin in 2016. Mike Hoskins, SDMA, asked why the Dressings and Woundcare sector had been 5
selected as the initial programme. the response is that the NHS spends 302m on dressings and wound care annually, 43% is through NHS Supply Chain (95% in the acute market) 126M. Some products are already generic (eg: Cotton Wool) and there is a high price difference between similar functioning products (most expensive to cheapest). The clinical reference board consider that many products are over specified for clinical usage and that there is a need for more transparent pricing and removal of complex pricing and rebate structures. Nishan Suthares, ABHI, stated that premium pricing should not always be interpreted as profiteering. He called for the supplier voice to be heard at all stages of the Generic Specification process. Mike Hoskins had received a report from his Secretariat Nigel Brassington who had attended the workshop. Whilst it was too early to obtain detailed member feedback, Mike shared his opinion that good short term savings could be achieved with the rationalisation of products, but the potential removal of competition and stifling of innovation could lead to longer term cost inflation. Therefore the savings delivery is not sustainable. The stated objective: Production of completed generic national specifications that are classed as good enough and fit-for-purpose for the identified wound care and dressings lines caused members concern. Most significantly the terminology used in this statement was challenged by members who objected to the use of good enough. Rob Clark, Barema asked whether this workstream was clear what the problem was that they were trying to solve. Paul Clarke, NHSBSA responded that there are vastly different pricing for similar products in the market and full transparency is essential. Chris Holmes, NHSBSA, referred to the product proliferation that existed within the NHS Supply Chain catalogue, which has led to wide and confusing choice for clinicians, and a fragmented market place. He said that if a product on the NHS Catalogue is not selling it does not necessarily mean that it is not needed, but that the route to market may need revisiting. He confirmed that it was not the intention of the workstream to award contracts to a single provider, but to maintain competition and agility within a framework. Gwyn Tudor, Medilink, called for assurance that Innovation would be protected throughout any range rationalisation programme. Sandra Barrow, DH, responded that the DH and NHS England are committed to innovation and SME support for the long term and all programmes would be operated with this in mind. Mark Hart added that in the Category Action Plans, innovation featured highly, particularly in areas such as orthopaedics and audiology and was recognised as a key savings delivery lever. Nishan Sunthares, ABHI called for this Supplier Board to be used as a forum for debunking the myths that surround the new savings initiatives, to agree appropriate terminology and to ensure that the Category Management programme should be used to obtain the best possible price for the best possible outcome. He asked that supplier organisations should be involved from the outset and a glossary of terminology should be agreed by Supplier Board members. Action: Paul Clarke asked all members to consider how the Supplier Board forum could be used to debunk myths and to agree acceptable terminology. All members to report back via Chris Holmes. Nishan Sunthares, ABHI, asked how the Supplier Board will link into the Customer 6
and Clinical Reference boards in the new landscape. Paul Clarke agreed to consider this question and report back to the next meeting on plans to share learnings and align objectives. Mark shared detail of the DH Consumables Fund and drew members attention to the way suppliers can benefit from engaging in the commitment deals that result. These are then published for customers to see which suppliers are offering. Louise Hillcoat, Secretariat was asked to share the link to the DH Consumables Fund web page in order that members can explore this further: http://www.supplychain.nhs.uk/savings/dh-consumables-fund/ Mark then demonstrated the value he felt his business unit had gained from collaborative working in the Supplier Board. Reference to the Terms and Conditions consultation where over 90% of member suggestions had been incorporated into the documentation was met with the meeting s agreement. Likewise the acknowledgment that the SME Special Interest Group, set up by our late and much missed colleague John Vinuesa, had been so effective that sales figures demonstrated that SME representation had increase from 24% by value in 2012 to 31% in 2015. Mark concluded that this board was an excellent forum for working together to the joint aim of delivering savings to the NHS. 5 NHS Supply Chain Supplier Board Review - Terms of Reference, Membership, Chair Paul Clarke, Chair, opened up a dialogue with Supplier Board members to understand the current construction and purpose of the NHS Supply Chain Medical Markets Supplier Board and stimulate a debate on proposals for change to its terms of reference going forward. A question that has been raised on previous occasions is how to coordinate all providers to the NHS, ensuring that they have equal access to DH priorities and activities, whilst ensuring that the voice of the customer and suppliers are heard going forward. Members are asked to consider the current Terms of Reference, which can be viewed at: http://www.supplychain.nhs.uk/suppliers/supplier-board/usefuldocuments/ and suggest what amendments they would like to see. Rob Clark, Barema, stated that as the board had been initially established to provide a forum for discussion of NHS Supply Chain as their route to market, he wanted to see that focus preserved. 8 Future Agenda Items and AOB The BSA to share how they will deliver their 1bn savings pipeline NHS Supply Chain and NHSBSA to share the road maps for delivery of 7
savings in line with the 27 Category Action Plans Generic Specifications Update Discussion regarding future Chair Any other Business GS1 Barcoding Ray Hodgkinson discussed the GS1 barcoding activity and said that this forum should be used to bring the conversation and action plan to the forefront of all stakeholder s future operating strategies. It was agreed that GS1 should feature on future agendas. Ray reference a GS1 roundtable event that had taken place on the previous day where savings of between 5-7% had been realised by the use of barcoding (see below). Ray said that with the proposals for range rationalisation, in the context of Lord Carter s NHS Catalogue, making a core range available via a GS1 enabled catalogue and enabling monitoring of compliance to the range would deliver measurable savings. Derby are one of the shortlisted 12 demonstrator sites that if chosen will implement GS1 over the next year and be used to showcase best practice across the NHS. Derby are using Lord Wolfson s team, Health Logistics who bought an Australian system HTRAK in April this year. They started in General Surgery (5-7% savings), have implemented in cardiology (10-12%) and intend to roll out to every department by the end of next year. It may be that savings are coming from procuring less and better, or a significant portion may be allowing them to track activity, enabling Derby to get paid for work undertaken. They do not yet have all products GS1 barcoded on receipt, the system is supplier agnostic and uses a translation table to recognise any product barcode. It is too early to showcase Derby who have not yet got data to support how going GS1 compliant has impacted patient outcomes. There is a proposal to work closely with Supplier and Customer Boards to get traction. Ray suggested that this issue should be raised with the Treasury to gain traction. The date of the December Meeting is proposed as 21 st January 2016 Members are asked to submit proposals for agenda items to Chris Holmes that are considered relevant to the audience and scope of the Board. 8
Close Meeting Closed at 16:00 9