Benchmarking analytics gap filled by NHS procurement collaborative

The NHS London Procurement Partnership develops analytics service to ensure NHS organisations get the best value out of benchmarking procurement data

A new analytics programme that measures best value in NHS purchasing has helped one trust to save more than half a million pounds.

The NHS London Procurement Partnership (LPP) developed the analytics service to ensure NHS organisations get the best value out of benchmarking procurement data. It is on track to benchmark 90% of the estimated £12billion spent in London alone by the end of this year.

And a pilot of the service turned benchmarked savings for one trust of £131,000 into £531,000.

LPP workstream lead, David Walach, said: “The need for transparency in, and benchmarking of, NHS spend has become something of a mantra as we deal with rising demand and falling income - but there’s little point in benchmarking without analysing the detail to identify how to get best value from procurement.”

This new service, for the NHS and by the NHS, addresses the gap in meaningful procurement information by pooling analytical resource, and aims to enable members to drive value for the NHS and patients through price alignment and process efficiency

In response to demands for a benchmarking and analytics service that overcomes inconsistencies in data reporting and a reluctance to share data, LPP has developed a tool that covers everything from data cleansing, benchmarking and analysis, to developing work packages enabling organisations to take advantage of the real, qualified opportunities identified.

Walach said: “This NHS-led service goes the extra mile; it doesn’t simply identify price variation. There are many factors at play determining why an organisation buys the products it does at the price it does, and our analytics service makes use of external business and market data, plus spend data from the largest and most diverse collection of NHS organisations in England, Wales and Northern Ireland to provide us with that essential contextual analysis.

“Even if an organisation is on a framework there can be as much as a 100% variation in the price paid to one supplier. Best volume does not guarantee the best price. You have to check compliance with the contract, and need someone to do the detailed analytical work to deliver the opportunity.

“Having that analysis which puts the procurement into context enables us to identify leverage and aggregation opportunities, spot where supplier rationalisation would improve procurement efficiencies, look for spend opportunities which exist outside current collaborative frameworks, or indeed look at collaborative sourcing, and review an organisation’s current procurement processes for compliance checks and efficiency opportunities.

“We’re underpinning this service with our team of analysts who can work with NHS organisations and provide that much-needed resource to identify and deliver hard cash-releasing opportunities.”

Best volume does not guarantee the best price. You have to check compliance with the contract, and need someone to do the detailed analytical work to deliver the opportunity

Analysing ‘uncleansed’ data will identify potential savings for users. LPP analysed a member’s use of the LPP Orthopaedics and Spinal Framework. Initially savings of £139,000 were identified, but this grew to £531,000 once the data was cleansed. ‘Uncleansed’ refers to the many different ways organisations may record and classify their purchasing – a range of different codes may be being used which actually represent just a single product. This enables suppliers to charge a variety of prices.

“Data analysis also throws up anomalies. Analysis of users of an LPP framework for the purchase of ceramic knee implants revealed that the largest purchaser of implants, by volume, was being charged in the lowest volume price band. While volumes won’t necessarily determine the price paid, in this case correcting the banding cut the user’s costs by 50%, equivalent to almost £30,000 a year.”

Chelsea & Westminster director of finance, and LPP an, Lorraine Bewes said: “This new service, for the NHS and by the NHS, addresses the gap in meaningful procurement information by pooling analytical resource, and aims to enable members to drive value for the NHS and patients through price alignment and process efficiency.

“LPP will do all the heavy lifting, enabling procurement teams to concentrate on their core business. To get the best out of it, organisations need to collaborate and provide their data in a timely manner, but the result is best practice procurement, which will drive savings opportunities no matter what type, size and location of an organisation.”

To get the best out of it, organisations need to collaborate and provide their data in a timely manner, but the result is best practice procurement, which will drive savings opportunities no matter what type, size and location of an organisation

Bewes highlighted some big savings achieved during the pilot stage of the service, when just five trusts were actively using the tool: “Even with a relatively low level of use, we identified some big savings, highlighting price alignment opportunities of £10m, of which £475,000 was delivered in one year for a single trust and £115,000 in another. The tool has also been used to review supply channel switching opportunities. A large distributor approached LPP suggesting that changing the supply chain and following a similar methodology they had used successfully elsewhere in the UK would save London £14m. When their data was benchmarked, however, it was identified that changing would have meant a £1.5m cost pressure.”

The service is confidential and only LPP will be able to definitively identify the source of data, to help overcome the reluctance of NHS organisations to provide data.

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