Procurement blocks innovation: report

The Policy Exchange has attacked the government for not doing enough to drive innovation in the NHS and called for a shake-up of financial incentives and procurement processes to drive new technologies and working practices into the service.

The right-leaning think-tank says that as things stand, new drugs, devices and other technologies “inch” their way into the health service and “this is one of the reasons our standards often fall below those of comparable countries.”

It also argues that although the final report of Lord Darzi’s Next Stage Review of the NHS focused on improving quality through information and choice, it could have been “bolder.”

The report says NHS organisations should be given more freedom to innovate and given financial incentives to do so.

It also identifies procurement as a particular problem, arguing that the NHS spends significantly more on developing innovations than on spreading and adopting them and that there are “huge inefficiencies” throughout its supply chain.

The report, All Change Please, says that although the NHS has a number of bodies to advise trusts on procurement issues, trusts are “under no obligation” to listen to their advice, which often goes unheeded.

It also identifies a lack of common descriptions or codes for items purchased by the NHS and the wide range of purchasing systems in use by and within trusts as problems.

“Neither the trusts nor the central and regional bodies have accurate data on costs,” it says. “This damages relationships with suppliers, who do not know how many of a product they will sell and must factor this into their prices.” Improving procurement would save between £0.8bn and £2.1bn annually, it claims.

The report’s conclusions are not new. Audit Commission reviews of procurement in 1996 and 2002 identified areas for improvement, with the latter noting that trusts had been slow to adopt computer systems for ordering, invoice matching and payment despite government targets.

The NHS Purchasing and Supply Agency also found that trusts lacked awareness of purchasing and costs in developing an e-procurement strategy. It further found that they were generally failing to following goods to their final use so they could analyse their effectiveness and safety.

NHS PASA has been running an NHS Procurement e-Enablement Programme since the strategy was published in late 2007. This has a number of work-steams, including programmes to develop common data and messaging standards for NHS procurement systems, and to encourage interoperability between NHS and supplier systems.

The strategy itself is aligned with other projects to ensure the consistent use of standards across the NHS, such as Coding for Success, which encourages trusts to use the GS1 system of codes in both clinical and business processes.

However, the Policy Exchange report makes no mention of this work, and may not have been aware of it. One of the 80 people interviewed for the report was critical of the NHS PASA, claiming that “if it ceased to exist tomorrow, nobody would notice.”

Other ideas put forward by the Policy Exchange for improving the uptake of innovation in the NHS include scrapping the procurement hubs which sit below PASA, creating a new “best practice tariff” to encourage trusts to innovate and to make sure they are not penalised for raising efficiency, and building pay for performance bonuses in clinician and manager contracts.

Link: All Change Please: putting the best new healthcare ideas into practice. The Policy Exchange.