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Maximise your budget, buy more for less
The NHS Supply Chain discusses best practice for managing medical equipment in a financially constrained environment
Having access to the right medical equipment is critical for the delivery of safe and efficient patient care, with advancements in technology delivering improvements in both productivity and health outcomes. However many NHS Trusts have ageing medical equipment which is exacerbated by the current financial position of the NHS. Understanding the pressures facing trusts, NHS Supply Chain’s Capital Solutions team are working to help trusts maximise their budgets to help acquire the latest medical equipment.
The extent of the Capital funding challenge facing trusts was highlighted in a report from The Kings Fund, published last July. The report spoke of the ‘growing tendency to redirect capital spending to shore up revenue budgets and support day-to-day running costs with £640 million switched from capital to revenue in 2014/15 and £950 million in 2015/16.’
Jason Lavery, vice president of Capital Solutions at NHS Supply Chain, explains: “Managing capital expenditure is an on-going challenge that every Trust faces. The NHS is faced with significant financial challenges. Yet at the same time, more and more medical equipment needs replacing to ensure clinicians can access the latest technological advancements. We understand this and are working across the NHS to help trusts maximise their budget, deliver savings and make the right spending decisions.”
By purchasing their capital equipment through NHS Supply Chain, individual trusts can use the combined buying power of the NHS to share in leveraged savings, driving best value for money and deriving maximum benefit for patients and staff.
Capital Equipment Fund
Since March 2012, over £61 million in incremental savings have been delivered back to the NHS through the Department of Health’s Capital Equipment Fund. This fund, developed by the Department of Health (DH), the NHS Business Services Authority (NHSBSA) and NHS Supply Chain, was implemented to allow NHS Supply Chain to buy medical equipment in bulk and make the best possible use of NHS buying power. It is accessible for all NHS Supply Chain Medical Equipment frameworks and has delivered significant incremental savings back to the NHS, particularly on the Radiology and Radiotherapy frameworks where there has been increased focus due to the high cost of purchasing this equipment.
Although the benefits of large scale procurement on areas such as Linear Accelerators and MRI scanners are more visible, the importance of lower value medical equipment is also recognised. Following the mantra ‘pennies make pounds’ a specialist team of Capital Planning Coordinators have developed aggregation techniques for lower value equipment categories, utilising the DH Fund as a financing vehicle to establish Multi-Trust Aggregation (MTA).
MTA is a mechanism which combines the requirements for a particular device from a specific supplier across multiple trusts and aligns procurement activity to allow customers to take advantage of volume discounts. Since the first MTA deal in November 2014, participation has grown to include 135 trusts and 18 suppliers who have supported the delivery of procurement aggregation across 21 different equipment areas. In total an incremental saving of £1,441,195 has been delivered back to the NHS.
East Kent Hospitals NHS Foundation Trust is one of the 135 trusts that have benefitted from MTA. Since June 2015, the trust has achieved £36,735 savings due to participating in eight MTA deals across five equipment areas which Adam Booth, buyer for the trust, believes wouldn’t have been possible without the support of NHS Supply Chain.
Booth commented: “I am very happy with the service provided and the proactive approach that NHS Supply Chain has adopted for the MTA and DH deals. It has helped us to achieve savings that otherwise would have alluded us.”
The increasing success of MTA is largely attributed to the introduction of the Regional Collaborative Workshops. Hosted by NHS Supply Chain, these workshops bring together stakeholders from procurement, Electro Bio Medical Engineering (EBME) and finance to discuss purchasing requirements and aggregation opportunities in order to generate savings back to their trust.
Andrew Hawkins, category manager at University Hospitals of Leicester NHS Trust, said: “The workshops have been very informative and have provided insights to equipment modalities where potential savings can be achieved by aggregating demand across the collaborative.”
University Hospitals of Leicester NHS Trust has benefitted from the workshops so much so that future opportunities are already being considered. Andrew Hawkins adds: “To date we have been involved in eight MTA’s, however, this has the potential to increase as we look to the wider collaborative sharing 2016/17 plans.”
To further develop the MTA process, an Aggregation Calendar has been produced which combines trust requirements on a larger scale in order to drive further savings. An example of this is the aggregation of neonatal and diathermy equipment where 11 Trusts from four different regions aligned requirements and benefitted from a total incremental saving of £17,900.
NHS Supply Chain is committed to supporting the NHS to achieve savings across medical equipment categories using various savings levers including MTA. Sharing requirements and working in partnership allows the Capital Solutions team to continue to deliver and improve the savings achieved enabling trusts to fully utilise their Capital expenditure.
Case Study: Leeds Teaching Hospital NHS Trust
Leeds Teaching Hospitals NHS Trust recognised the need to meet rapid advances in medical technology across multiple clinical areas in order to future proof their patient services for the long term. They had to overcome budget restraints, and needed to reassess requirements, and prioritise replacement within challenging timescales.
Their project sought to replace the obsolete and ageing medical equipment, introduce innovative technologies to future proof patient services for the long term, and optimise savings to ensure best value.
The trust worked in partnership with NHS Supply Chain to benefit from their framework agreements, that are compliant with EU Public Procurement regulations, gain access to the Department of Health (DH) Capital Equipment Fund, and extend potential savings by leveraging national demand with multiple trusts (multi-trust aggregation).
Leeds Teaching Hospitals NHS Trust consequently achieved £1.3 million in total savings from MTA, the DH Capital Equipment Fund and framework discounts. Utilisation of savings realised were reinvestment back into clinical areas with budget limitations, to procure additional equipment which would not have otherwise been purchased. Innovative equipment and technologies were also rolled out trust-wide.
By adopting a partnership approach with NHS Supply Chain and providing a dedicated working group with the power to make decisions, Leeds Teaching Hospitals NHS Trust, successfully delivered the project with minimal difficulties. Combining their procurement arm, with NHS Supply Chain’s knowledge, insights into routes to market and access to additional savings opportunities, opened up new possibilities.
This provision of information, dialogue across multiple stakeholders and NHS Supply Chain’s engagement enabled maximisation of savings through framework volume discounts, the DH Capital Equipment Fund and MTA; alongside the evaluation and delivery of ‘best fit’ equipment. All of which added value to the Trust, enabling successful project delivery.
Through Leeds Teaching Hospitals NHS Trust sharing their equipment plan data, NHS Supply Chain were able to cross check this with other Trusts nationally, and identify trends and requirements that could be aggregated to achieve additional savings.
David Brettle, head of Medical Physics and Engineering, Leeds Teaching Hospitals NHS Trust, said: “Providing best in class medical equipment and service to patients demanded we update our asset base as a priority. NHS Supply Chain has the skill and flexibility to deliver savings. They are best placed to flex their muscles and have the skills to negotiate MTA deals.”