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GO interview – Andrew Rudd

Friday June 24th, 2011

By Morven MacNeil, GO Content Editor

The Department of Health has developed a draft procurement strategy for the NHS, which aims to achieve ‘best-in-class performance’.

In addition to the national policy direction, there has been significant progress with eProcurement technologies at all levels in the NHS. Suppliers need to understand what leading trusts and contracting organisations require and how suppliers need to adapt to these latest developments in the ever-changing NHS. GO speaks to Andrew Rudd, Former Chief Operating Officer, NHS Purchasing and Supply Agency about his thoughts on procurement, especially eProcurement, in the NHS in England.

What are the most significant changes that you have seen in recent years in the health sector from a procurement perspective?

At a structural level the major changes with regard to the NHS in England have been, in no particular order the closing down of NHS PASA and the distribution of their national procurement work to other organisations; the establishment of NHS Supply Chain for national logistics and consumables procurement; and the establishment of Collaborative Procurement Hubs on a geographical basis within the NHS.

How important is effective commissioning in the health sector?

It’s vitally important, especially with the changes currently proposed to the NHS in England. Obviously we’re talking about the commissioning of health services as opposed to product or non health delivery related procurement, but health services are at the heart of the NHS and commissioning is essentially strategic procurement. Currently we’re heading towards a situation where the responsibility for commissioning services within the NHS will lie with general practitioners (GPs) and the bodies they will set up to deliver that commissioning. The quality of health services and the price and affordability of health services are the two key elements going forward. Procurement professionals have a lot to offer in the commissioning process.

There have been reports recently on the opportunities for greater productivity and efficiency within the health care supply chain through improved data management and eProcurement processes. What are your thoughts on this?

The National Audit Office (NAO) reported earlier this year on the procurement of consumables within the NHS. One of its major findings was that there is a limited amount of data generally available about what is being purchased by individual trusts, and that leads to significant variation in prices paid. eProcurement can clearly help with that as it provides increased productivity and efficiency for both buyers and suppliers. In other words, eProcurement makes it easier for buyers and suppliers to do business; that’s one half of it. But equally, an effective eProcurement system also provides the data which enables better business decisions as well, and that’s where the issue with the lack of data will hopefully be taken up. The NHS has some good examples of effective data management but the picture is far from consistent, as you might expect from a large and decentralised system. One of the things the NHS needs to do is bring everyone up to the level of the best.

What are your views on the role of collaboration in delivering greater efficiency savings?

A major issue is that there is no adequate comparison between trusts’ procurement performance, and consequently that leads to a variation in the quality of services provided and the prices paid across common goods and services. There is currently a move towards Foundation Trusts which allow for greater independence from the centre. So we’re working in an environment where many major decision makers in the NHS are to be found at a more local level, but that need not stand in the way of improved efficiencies, greater collaboration in regard to procurements and prices paid, and increased data in the system which will help buyers and suppliers to make better decisions.

There has been a lot of focus on efficiency savings and job cuts following the Spending Review and the recent Budget. Where do you believe opportunities lie for the procurement profession?

Whilst procurement is not just about reducing price, there is an enormous overall efficiency savings target to be achieved and procurement has its part to play.. There is no doubt that procurement organisations will be under pressure from their customers whether they work within a trust or are part of a collaborative body. The targets will be high -, some trusts are now looking at targets as high as 20 per cent. That means it’s no longer enough to simply renew a contract or carry on doing what you’re doing: that way what you’ll get is what you’ve always got! It requires taking an innovative approach to procurement and looking at forging new relationships with suppliers. We need to work with suppliers who can actually make health service delivery more efficient and productive. It’s not simply about buying a product anymore but rather by working with suppliers we can affect that patient pathway and make it more efficient.

What can the public and private sectors learn from each other with regard to procurement?

The private sector on a day-to-day basis has always had to work in an environment where financial return is a key part of delivery. While the public sector is not for profit, it still has to learn to be productive in the way it operates. I think the private sector can add a lot of value to that in terms of how the public sector manages its supply chain.  It’s about demand management – ‘do we need this product?’; ‘can we do this in a different way?’ It’s also around innovation, the private sectorhas to adapt and be innovative. Whilst the NHS is full of innovative ideas it is not good at translating innovation into productivity. The public sector can learn a lot from the private sector on that.

However, the private sector needs to learn from the public sector what their key drivers are and what the public sector customer wants from the private sector provider. Rather than simply delivering what has always been delivered, suppliers need to step up to the mark here, particularly in health care which is a very specific market. It’s very important that suppliers understand what the NHS changing requirements are and adapt its delivery models.

Andrew Rudd will be speaking at the eProcurement and the NHS Data Challenge GO Conference at the Marriott Heathrow, London on 28 June 2011.

Profile

Andrew Rudd was the Chief Operating Officer for the NHS Purchasing and Supply Agency (NHS PASA), part of the Department of Health. NHS PASA was responsible for purchasing and supply strategy for the NHS in England and also managed national contracts covering £3.2bn of the NHS’s £20bn total of non-pay expenditure. Andrew has 25 years’ NHS purchasing experience at local, regional and national level. At PASA, he was also the Director responsible for eProcurement, sourcing and data analysis and programme and uptake management. His wider corporate responsibilities included performance, quality and information. Andrew has a Masters Degree from the University of Birmingham and is a member of both the Chartered Institute of Purchasing and Supply and the Chartered Institute of Marketing.

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