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Bringing healthcare procurement into the 21st century

Tuesday December 4th, 2012

At the forefront of supply chain transformation in healthcare, Portsmouth Hospitals NHS Trust has brought hospital procurement into the 21st century. Alan Hoskins, director of procurement and commercial services at Solent Supplies Team, reveals the key to its success.

Alan Hoskins

Alan Hoskins

Portsmouth Hospitals NHS Trust’s vision is to be recognised as a world-class hospital, and it is taking positive steps towards ensuring this becomes an imminent reality. A number of new ways of working have recently been implemented in a bid to improve the quality of services for the Trust’s patients, reduce costs and increase productivity; all against the myriad external pressures that the healthcare sector currently faces.

In response to the ever increasing demands placed on the NHS to reduce spending, a major change in practices and procedures is essential. For Portsmouth this is an enormous challenge, and one that it is tackling with considerable success.

The Trust, which serves a population of more than 600,000, completed a major PFI redevelopment in 2009. Furthermore it is in the process of working towards Foundation Trust status, which all Trusts must complete by 2014. It is a modern hospital boasting transformed services across several disciplines. Procurement and supply chain management is one such area.

External pressures

The pressure for Trusts to address this area has grown significantly in the past 12 months, and the Government has stated that the NHS must save £20 billion by 2015. Therefore scrutinising a Trust’s expenditure is a natural place to start. Further reports on NHS spending and associated wastage have accentuated the need to step up to the challenge. After all, everyone is set to benefit: the Government, the Trusts themselves and ultimately the taxpayer.

A National Audit Office report has highlighted the amount that Trusts pay for items; it estimated that £900,000 per Trust could be saved by paying the lowest available price at the point of purchase. The report also analysed other areas of procurement such as the issue of multiple small orders and the subsequent high administration costs. Of the 61 Trusts in the NAO’s dataset, more than 1000 orders each were placed per year for A4 paper.

Leveraging commercial practices

New advances in technology are facilitating a new era of efficiency for Portsmouth. Although inventory management solutions have long been used in a commercial setting, only recently have they begun to be implemented in a hospital setting. Selecting Smart Use to implement a trial of its inventory management solution in the theatres department has positioned Portsmouth Hospitals NHS Trust as an early adopter.

A scalable, flexible and robust solution, Smart Use has revolutionised the way in which inventory is requisitioned, stored, managed and utilised. The inventory management solution from Smart Use has enabled the Trust to overcome many of the procurement and supply chain issues it previously faced.

Procurement team

Procurement team

Control, purchasing accountability and visibility has been totally turned around. Clinical staff no longer order products as and when needed from their own choice of suppliers. Instead, requests are automatically captured and purchase orders raised for repeat items. For new or specialist items these are submitted to a procurement board made up of clinicians, finance and procurement staff to grant approval depending on whether there is a financial or clinical need for the product. Clinical staff have therefore been able to transfer these administrative duties back to the procurement team, freeing up time to reallocate back to frontline duties.

This has reduced unnecessary wastage and costs as the Trust knows exactly what has been ordered, where it is and even which patient it has been used on for high-cost, patient-specific items. So in the instance of high-value medical implants, for example, all the data is at the fingertips of both the procurement team and the clinical management team.

Returning to the issue of hospitals making a high number of small purchases, Portsmouth Hospitals NHS Trust has also been able to control this. Inventory levels are now optimised regularly and re-order points automatically reviewed, utilising the data and trends that the Smart Use solution provides.

Data accuracy, and the amount of data available, has been greatly improved so the Trust now has a powerful management tool. It can go to market equipped with robust data on product values and volumes before committing expenditure, meaning cost-effective prices can be secured. Supply chain management knowledge is no longer embodied in individuals. The solution captures, shares and exploits knowledge to help with strategic decision-making. If an individual leaves, data and knowledge does not leave with them; it is embedded in the hospital’s systems, practices and procedures.

Hospital

 Inventory is effectively managed, which is crucial. If Trusts without an inventory management solution look into this area more closely, they will certainly find room for improvement, as Portsmouth did. There can be products that are overstocked, which apart from the obvious wastage can lead to further wastage if expiry dates are exceeded. In other instances there may be insufficient stock, which causes its own problems and can even affect the level of patient care, if for example an appointment has to be rescheduled.

While operational and management benefits have been outstanding, there have also been significant financial benefits.

A significant return on investment

Portsmouth’s theatres department, which was where the Smart Use implementation commenced, has generated a significant return on investment, exceeding expectations. Other benefits have been equally as impressive. More than £1.78 million in balance sheet savings has been secured, along with consignment stock savings of £395,000; three whole time equivalent clinical posts have been released back to the front line at a saving of £108,000; £31,000 has been made in space savings; and waste has been reduced by £75,000.

The evolving healthcare landscape

The Trust couldn’t have asked for a better result, and Smart Use has since been implemented in a number of other departments including cardiology and is currently moving into audiology, renal and ophthalmology. Taking the project to the next stage, the solution is now planned to be rolled out across the entire Trust, with further benefits yet to be realised. Notably, Portsmouth is one of the first Trusts to implement a full inventory management solution, and it is therefore able to share its experiences to benefit other Trusts that are at the start of their journey.

Inventory management is a nationwide issue for the NHS, and through implementing an innovative inventory management solution, Trusts can secure significant financial and operational efficiencies. Portsmouth Hospitals NHS Trust will continue to review and change its practices and processes to reflect today’s constantly evolving healthcare landscape. It has set the benchmark. For further information visit www.smartuse.co.uk.

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