The Future Operating Model for NHS procurement

1 The Future Operating Model for NHS procurement Transforming the landscape of NHS procurement June 2017. More info: 1. The Future Operating Model for NHS Supply Chain will flex the tremendous buying power of the NHS saving 615m annually a major contribution to healthcare efficiency. 2 DH Leading the nation's health and care THE Future Operating Model . is the transformation and re- procurement of the current NHS Supply Chain is a strategic response to enhancing procurement efficiency and effectiveness across the NHS, as laid out in the Carter report. The FOM will . Benefit the NHS as a whole Benefit all Trusts, regardless of size Benefit the procurement profession Benefit patients The procurement Transformation Programme (delivering the FOM) is one of the highest profile programmes in government. benefits all Trusts benefits benefits the profession benefits patients the NHS.

2 3 DH Leading the nation's health and care THE BIG PICTURE WHY WE ARE DOING THIS. Headline news . NHS has the potential, through greater collaboration, to leverage the NHS's purchasing power on a national scale and deliver better value for money for NHS Trusts and the taxpayer. The Carter Review called for adoption of the procurement Transformation Programme (PTP). The Future Operating Model is a key outcome of the PTP. Picture from: Daily Mail Article, By Stephen Adams and Mark Wood For The Mail On Sunday, 18 Feb 2017. 4 DH Leading the nation's health and care THE Future procurement LANDSCAPE. 10%. 10%. 20%. Effect 40% of 40% 80%. FOM. Hubs Hubs NHS Supply Chain NHS Supply Chain Trust procurement Teams (200+) Trust procurement Teams Currently only 40% of the NHS's spend in everyday hospital consumables common goods, high value healthcare consumables and capital equipment goes through NHS Supply Chain.

3 The FOM will double this is 80%. 5 DH Leading the nation's health and care THE Future Operating Model STRUCTURE. Future Operating Model Intelligent Client Coordinator 11 procurement Category Towers Logistics BSA. Move to DHL. Transactional Services Current contract expires at the end of September 2018 with the ability to remove some, or all, of the procurement services prior to that date. supporting Technology Infrastructure 6 DH Leading the nation's health and care THE PRINCIPLES OF THE FOM. Single national price Top slicing - Central payment for supply chain services Buy price = Sell price Open book contracts Savings baselined on a 3-year cycle to encourage innovation and price reductions 7 DH Leading the nation's health and care THE CATEGORY TOWERS. The Future Operating Model is organised into eleven Category Towers, covering medical, capital and non-medical areas of the procurement spend.

4 Office Solutions (Category Tower 9) will be the first of these to go live. Medical Capital Non Medical Tower 1 Tower 4 Tower 7 Tower 9. Ward Based Orthopaedics, Large Diagnostic Office Solutions Consumables Trauma & Spine, Capital Devices incl. Ophthalmology Mobile &. Consumables Tower 2 Tower 5 Tower 8 Tower 10. Sterile Rehabilitation, Diagnostic Food Intervention Disabled Services, Equipment and Equipment and Women's Health Associated Associated & Associated Consumables Consumables Consumables Tower 3 Tower 6 Tower 11. Infection Control Cardio-Vascular, NHS Hotel And Wound Care Radiology, Services Audiology & Pain Management 8 DH Leading the nation's health and care THE INTELLIGENT CLIENT COORDINATOR. The Future Operating Model will be supported a new performance management and customer engagement function, the Intelligent Client Coordinator (ICC), and by a new transactional services, logistics and IT infrastructure.

5 9 DH Leading the nation's health and care THE SAVINGS THE FOM WILL ENABLE. 700. 615m 615m 615m 600. 535m 500. Million 400 Estimated Market Share 308m 18/19 40%. 300 19/20 50%. 20/21 80%. 183m 200. 100. 0. 18/19 19/20 20/21 21/22 22/23 23/24. Savings in real terms Year 10 DH Leading the nation's health and care THE FOM WILL DELIVER . Right product Right time Right price The new procurement Category Towers in the NHS Supply Chain will have product-focused teams acquiring the right products that better meet the needs of clinicians and patients. Flexing buying power Releasing funds The Future Operating Model for NHS Supply Chain will make the most of the tremendous buying power of the NHS aggregating national demand and releasing funds. 11 DH Leading the nation's health and care THE FOM WILL DELIVER . Range management The Future Operating Model for NHS Supply Chain will optimise choice based on clinical requirements and remove price variation.

6 A move to specialist providers The new procurement Category Towers in the NHS Supply Chain will include teams of specialist buyers informed by continuous evaluation from front-line clinicians who will create star ratings of catalogue items to ensure user and patient requirements are met. 12 DH Leading the nation's health and care THE FOM WILL DELIVER . Benefits to the profession The Future Operating Model for NHS Supply Chain will implement expert sourcing and procurement practices, supporting the NHS and individual Trusts' ongoing procurement programmes. Transparency The new procurement Category Towers in the NHS Supply Chain will deliver overall system savings to the NHS and will be transparent by making the price you pay for the product the same as the price it was bought for. 13 DH Leading the nation's health and care IN SUMMARY. procurement Transformation Increasing uptake/volume of products Programme purchased via NHS Supply Chain A strategic response to the Carter Achieve report significant Increasing use by the NHS of a standard benefits range of clinically appropriate products for the Delivery of a Future Operating NHS by: Model (FOM).

7 Using increased buying power to affect purchasing behaviours and lower product costs for the NHS. 14 DH Leading the nation's health and care 15 DH Leading the nation's health and car