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The Future Operating Model for
NHS procurement
Transforming the landscape of NHS procurement
June 2017
More info: [email protected]
2 DH – Leading the nation’s health and care
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.
3 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 the
professionbenefits
the NHSbenefits patients
4 DH – Leading the nation’s health and care
THE BIG PICTURE – WHY WE ARE DOING THIS
• 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
Headline news…
5 DH – Leading the nation’s health and care
THE FUTURE PROCUREMENT LANDSCAPE
40%
40%
20%
Hubs
NHS Supply Chain
Trust Procurement Teams (200+)
80%
10%
10%
Hubs
NHS Supply ChainTrust Procurement Teams
Effect
of
FOM
Currently only 40% of the NHS’s £5.7bn spend in everyday hospital consumables
common goods, high value healthcare consumables and capital equipment goes
through NHS Supply Chain. The FOM will double this is 80%
6 DH – Leading the nation’s health and care
THE FUTURE OPERATING MODEL STRUCTURE
BSA
Future Operating Model
Intelligent Client Coordinator
Logistics
Supporting Technology Infrastructure
Transactional Services
11 Procurement
Category Towers
DHLMove to
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.
7 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
8 DH – Leading the nation’s health and care
THE CATEGORY TOWERS
Non Medical
Tower 11
NHS Hotel
Services
Tower 4
Orthopaedics,
Trauma & Spine,
Ophthalmology
Medical
Tower 3
Infection Control
And Wound Care
Tower 5
Rehabilitation,
Disabled Services,
Women’s Health
& Associated
Consumables
Tower 2Sterile
Intervention
Equipment and
Associated
Consumables
Tower 10
Food
Tower 9
Office Solutions
Capital
Tower 7
Large Diagnostic
Capital Devices incl.
Mobile &
Consumables
Tower 8
Diagnostic
Equipment and
Associated
Consumables
Tower 1
Ward Based
Consumables
Tower 6
Cardio-Vascular,
Radiology,
Audiology & Pain
Management
The Future Operating Model is organised into eleven Category
Towers, covering medical, capital and non-medical areas of the
procurement spend. Office Solutions (Category Tower 9) will be
the first of these to go live.
9 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.
10 DH – Leading the nation’s health and care
THE SAVINGS THE FOM WILL ENABLE
£183m
£308m
£535m
£615m £615m £615m
0
100
200
300
400
500
600
700
18/19 19/20 20/21 21/22 22/23 23/24
£M
illi
on
Year
Estimated Market Share
18/19 – 40%
19/20 – 50%
20/21 – 80%
Savings in real terms
11 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.
12 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.
� 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.
13 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.
14 DH – Leading the nation’s health and care
IN SUMMARY
Procurement Transformation
Programme
• A strategic response to the Carter
report
• Delivery of a Future Operating
Model (FOM)
� Using increased buying power to affect
purchasing behaviours and lower
product costs for the NHS
� Increasing uptake/volume of products
purchased via NHS Supply Chain
� Increasing use by the NHS of a standard
range of clinically appropriate products
Achieve
significant
benefits
for the
NHS by:
15 DH – Leading the nation’s health and care
