NHS Supply Chain – Key messages briefing

25 October 2019

Update
NHS Supply Chain acknowledges the difficulties customers have faced by not having access to savings reporting information. Additional resources have been deployed to ensure that identified issues are resolved by the end of December 2019.

The following provides an update on savings [reporting and delivery], EU Exit, the funding model and our future focus to help address some frequently asked customer questions.

What is the funding model for NHS Supply Chain?

  • Under national tariff changes for 2019/20, NHS Supply Chain’s costs (including logistics and procurement activities) will mostly be funded from central funds.
  • With the mark-up removed from product prices through the introduction of Buy Price=Sell Price as of 1 April 2019 any trust working with us before the move to Buy Price=Sell Price will see those savings from margin removal.
  • This is a national policy introduced by NHS England & Improvement and implemented by NHS Supply Chain.

How is NHS Supply Chain progressing towards its savings delivery?

  • The business case setting out the rationale behind the new operating model was that there would be a £68 million annual saving. But in the last financial year, savings of £286 million were achieved by elements of the new model that were up and running, such as the category towers, plus the old DHL model.
  • Our target is to deliver cumulative savings of £2.4 billion by 2022/23. Currently, our cumulative savings are standing at £800 million – a third of the way to the target and way above our trajectory
  • At the end of June this year £122 million savings had been generated nationally against the £150 million business plan and the stretch target of £187 million (capital and revenue savings).
  • Our revenue is currently up more than 20% vs last year.

What is the status of NHS Supply Chain’s savings reporting for individual trust

  • In June this year we provided each trust with their savings statement for the financial year 2018/19. To date, we have published monthly reports for April and May of this financial year.
  • We ceased issuing manual customer facing reports in June 2019 as customers required a rolling baseline rather than the static baseline used in tower reporting.
  • We are planning to provide a sample of pilot trusts with June 2019 savings statement shortly to seek assurance on the format and calculation of the incremental savings. Subject to suitable assurance from the pilot trusts we plan to provide reports to all trusts during Q3.
  • We are having discussions with trusts and through the Regional and National Customer Boards about the technical issues which we have identified.
  • Internal savings team are working hard to ensure that monthly reporting to trusts can continue as we acknowledge that this is a critical issue that needs to be fixed as soon as possible.
  • Additional resources have been deployed to ensure that all identified issues will be resolved by the end of December 2019. At a national level the issues identified will have no significant impact on the savings numbers.
  • The savings methodology is being audited by KPMG.

How is NHS Supply Chain preparing for EU Exit on 31 October 2019?

  • We continue to work with the Department of Health and Social Care (DHSC) to ensure that any supply disruption is mitigated in the event of a no-deal EU exit on 31 October 2019.
  • We are responsible for supporting the DHSC with preparing supply chain resilience for Medical Devices and Clinical Consumables (MDCC) products. Specifically, the MDCC products that are available through our catalogue. Ensuring the continued supply of these products is central to ensuring that patients continue to receive the care they need.

What is NHS Supply Chain current focus?

  • Increased investment into the account management team to improve communications and productivity at a trust level. In addition, a new team is being established to develop the service for non-acute customers to meet their requirements.
  • Individual account plans are being developed for each trust which identifies where product savings are available.
  • A new website has been launched to make it easier for customers to use and search for information on the site.
  • Clearer route for innovative products into NHS Supply Chain through better links with national research bodies and regional networks.
  • A move towards a uniform incentivised approach to Value Based Procurement across all Towers, increasing value and quality. We are looking at whether we can contract for outcomes and the benefits this could bring e.g. this could mean fewer days before discharge. This is important as if you keep driving prices down, you come to a point where a supplier can’t do any more, so we need to look at whether value can be driven by increasing productivity.
  • We are working closely with other national programmes, such as Getting it right first time (GIRFT), as well as the national wound care and excellence in continence care strategies.
  • Our Clinical and Product Assurance (CaPA) team are working closely with CTSPs to ensure procurement is clinically led by delivering clinically assured, high quality products at the best value for patients
  • We are opening a new Regional Distribution Centre (RDC) located in Bury St Edmunds, scheduled to go live in May 2020. This investment will provide additional warehouse capacity thereby enabling NHS Supply Chain’s strategic objective of securing purchasing savings through increased use of the new operating model over the next five years.
  • Our logistics service provider, Unipart Logistics has introduced a new fleet of temperature managed trailers for dedicated use within the NHS Supply Chain, as part of its logistics contract. The new fleet enhances temperature-controlled collection services from NHS Supply Chain suppliers nationwide, as well as onward delivery to NHS Supply Chain distribution centres.