Rob Hoad, SVP, Proxima in conversation with Jeremy Marlow, Healthcare & Life Sciences Partner in Bain & Co.
The NHS is a public service delivered for the most part by the public sector. While this is the case for most of what users of NHS services see, behind the scenes the NHS relies on doing business with huge diversity of companies through which it spends about a third of the NHS budget – roughly £60B a year.
The NHS’s recent ten-year plan assumes an ambitious £20bn of productivity and efficiency gains are to be reinvested in frontline services, a large share of which depends on smarter spending and supply management. Add to this new transparency duties under new regulations, such as the Procurement Act and PSR, and there is an even greater need to ensure value for every public pound spent within the healthcare system.
However, amongst the inflationary pressure, regulatory divergence, and supply fragility, the NHS longs for change. Procurement offers a unique position within NHS trusts; it is both the gatekeeper of costs and the enabler of transformation.
In this context, Jeremy Marlow, Healthcare & Life Sciences Partner in Bain & Co shares his perspective on the near and longer term priorities of NHS procurement.
1. SHORT-TERM FOCUS FOR NHS PROCUREMENT
With bandwidth stretched, many procurement teams are swamped with daily tasks and responsibilities, reacting to the challenges and requirements in front of them.
While alleviating measures will vary from trust to trust, commonality lies in the themes; automating routing tasks, improving inventory management, honing in on contract management, leveraging supplier performance, and helping their colleagues across the NHS spend better. It’s about optimising the existing workforce and procurement ways of working before seeking new routes to further efficiency.
2. EYES ON LONG-TERM COMMERCIALITY
Sustained improvement to NHS finances is not reliant on a quick fix nor a few ‘good deals’. To date, temporary solutions like contingent labour and benchmark services have only improved matters to a certain point. Instead, success will rely on long-term commerciality throughout the life of the goods and services procured; and that relies on acquiring the right capability to do so across the Trusts.
It is likely that training the existing team alone will not be enough. Instead, a mix of hiring talent and building on capability will be the right combination. However, that highlights the challenges faced by NHS procurement around attracting the right talent. There’s often a perception in the job market of NHS procurement’s workload, stress, regulatory burden, compensation gap, and lack of a clear pipeline being barriers to acquisition. Further compounding, then, is the need for procurement leaders across the trusts to target the root causes and consider what the employer value proposition they are offering really is.
Can career paths and retention strategies be improved? Can capability and upskilling be offered to support personal and professional progression? Can external support and shared services be better leveraged?
Of course, training will form part of an improved talent management strategy. For NHS procurement teams, a focus on commercial acumen and negotiation will be critical for effective budget management, control, and helping finance teams and individual budget holders optimise value.
3. RECOGNISING DIFFERENT STARTING POSITIONS
Rarely does a one-size-fits-all approach work for procurement teams, and the unique challenges and priorities across the NHS make it no different. This means procurement should help leaders assess service lines and support them to outsource specialist services (e.g., by conducting make vs buy analysis). For example, outsourcing radiotherapy services to specialised firms can result in better technology adoption and more efficient operations.
These partnerships require well-structured commercial agreements that benefit both parties, further compounding the importance of the two previously mentioned focus areas. However, when done successfully and managed so, outsourcing services can allow NHS procurement teams to focus on core functions and acing them, while benefiting from the expertise and resources of specialised providers.
The ongoing role of tech in the future of the NHS landscape
Undeniably, whether part of the ten-year plan or separately, technology plays a critical role in shaping procurement and the NHS. Advanced tools across spend analysis, inventory management, supply chain planning, and contract management systems are poised to revolutionise the NHS’s efficiency and commercial management game. The challenge is the readiness of the system and of the teams responsible for implementing and using it.
Outside of procurement, in the tech stack in general, procurement still has the onus of delivering the needs of the CTO. By working together, CPOs can help their tech-expert counterparts be even more commercially aware, helping them achieve great operational and commercial outcomes by leveraging the latest market knowledge and insight into what good – or great – looks like.
From Plans to Practical Action
While the vision of the NHS of the future must drive the direction of the trusts, CPOs must focus on what they can do today, tomorrow, and next week to continue to move the dial towards great commercial practice. Procurement sits in that cross-section. Without better procurement, there is no credible path to delivering sustainable finances or modernised services.
