A new lease of life

All government departments are looking for efficiency savings as the coalition endeavours to reduce the country’s national debt. It has promised to protect the overall budget of the NHS but the service must make efficiency savings of around £20 billion by 2014.

Alongside this; the NHS capital budget will fall by 17 per cent in real terms between 2010-11 and 2014-15 to help fund social care. This will have an effect not only on new hospital builds but more importantly on access to large scale medical equipment such as MRI scanners and ultrasound machines.

New hospitals can be put on hold, but replacing a vital piece of medical equipment cannot. With an ageing population, the demands on the NHS are set to increase, and diagnostic machines are critical to meeting these needs. It is therefore paramount that effective high spend capital is properly planned for in trusts’ budgets.

Proper investment and preparation
It may sound like a simple task, but acquiring large scale medical equipment can seem like an un-climbable mountain right now; with imminent spending restrictions and a system that is uncoordinated. NHS Supply Chain understands the difficulty that NHS trusts are currently facing and has developed an all encompassing solution to meet their needs.

“Capital medical equipment plays a vital role in delivering patient care, so proper investment and preparation should be made,” says Andy Brown, managing director of diagnostics at NHS Supply Chain.

“The problem is that asset management is dealt with reactively by the NHS at the moment. This means that the best deal is often not reached. For capital equipment, this can result in overspending by hundreds of thousands of pounds – something that is especially pertinent when trusts are looking for cash releasing savings.”

Financing capital equipment can put enormous pressure on trusts’. The process can also be time consuming if trusts have not undertaken the necessary research and forward planning required.

Capital programme
To simplify the process NHS Supply Chain has made a significant investment to develop its capital offering. Andy Brown explains: “Our aim is to transform the way capital equipment is planned, purchased, financed, maintained and managed in the NHS. We aim to provide a one-stop shop for medical equipment given the vital role that it plays in delivering patient care.”

One aspect of NHS Supply Chain’s capital programme gives trusts the option to lease high cost medical equipment. This overcomes the problem of having to find the substantial amount of money it would cost to fund such machines.

“NHS trusts are able to procure the most up-to-date medical equipment without any initial capital outlay,” continues Andy. “Leasing can often be the most sensible choice within the NHS to finance medical equipment as technological advances often outpace the life of the equipment. It gives trusts the peace of mind that they can upgrade to a newer model, should the need arise, without incurring major capital investment.”

Andy adds: “We are helping to drive best practice for lease management and our process ensures full compliance to EU procurement regulations. It can save NHS trusts time and money that otherwise would have been spent through tendering and ensures a competitive market for lease providers.”

Louise Hamilton, Chair of the Finance and Leasing Association’s Healthcare Group, says: “Much of the equipment used to deliver healthcare services could be owned more efficiently by the private sector, saving capital outlay as well as operating cost. Introducing new technology using leasing could also facilitate efficiency improvements, without needing structural reorganisations. NHS Supply Chain has an important role to play in helping trusts with the leasing procurement process.”

Cost transparency
Through the new contract, 20 companies provide their leasing services to the NHS. Trusts will be able to compare and contrast deals to ensure that they find the most cost effective solution to meet their needs.

The contract offers full cost transparency and complete administrative support from NHS Supply Chain’s specialist team, who complete all price comparisons and the necessary paperwork for trusts. It can be used to fund all types of equipment ranging from MRI scanners to basic equipment.

The capital team provide advice throughout the process and are on hand for continued support throughout the lifetime of leasing agreements. Cheryl Cordon, leasing manager at NHS Supply Chain says: “Our leasing process helps to reduce the amount of administration required for the supplier and trust, as we complete all paperwork on their behalf.”

“We can provide prospective costs within 48 hours and provide trusts with mini competition results within ten working days. So that trusts can be sure that leasing is the best solution for them, we can also provide a detailed comparison between leasing and purchasing so that they can make a proper informed decision.”

Dartford and Gravesham NHS Trust are currently benefitting from the leasing option. Lynne Clemence, acting capital project manager for Dartford and Gravesham explains: “One of our current projects is for the installation of a second MRI at the trust. I dealt with NHS Supply Chain’s leasing team to obtain indicative costs for the business case. The service was extremely impressive, they provided a very rapid response to our enquiries, and we were kept regularly up to date with progress.”

The trust is now about to enter the mini competition stage as a precursor to obtaining firm leasing prices for the new machine.

Identifying equipment needed
To obtain a quote for leasing, trusts identify the equipment that they require for business case purposes. This includes: the capital costs, preferred supplier, lease period required and payment plan (quarterly or annually). The leasing team at NHS Supply Chain then provide the trust with potential costs for the equipment.

Once a decision has been made to go forward with the lease, a mini competition is completed by NHS Supply Chain’s leasing team to obtain the best deal from the leasing providers. The trust can then make an informed decision about which offer is the best.

Andrew Gordon from Plymouth Hospitals NHS Trust tells of his experience: “The team were pro-active in providing the new lease mini-competition processes, along with daily updates on how the tender was proceeding. Excellent communication throughout.”

The leasing contract forms part of NHS Supply Chain’s wider capital equipment solution that helps NHS trusts prepare for the future. The capital planning service covers the purchasing of equipment as well as its maintenance and ultimate disposal.

Andy concludes: “We want trusts to understand that proper capital planning can provide clear benefits. The idea behind it is very simple: with thorough preparation, substantial savings can be achieved through reduced costs.”

For more information:
Cheryl Cordon, senior buyer
Tel: 07850 931538
E-mail: cheryl.cordon@supplychain.nhs.uk
Web: www.supplychain.nhs.uk