Public Sector Procurement PoliciesOverview

The Centre for Research in Strategic Purchasing and Supply (CRiSPS), based at the University of Bath, is a world- leading centre for research, education and consultancy in supply strategy, with an international reputation for its ability to apply academic rigour to solve real world issues and influence policy. The focus of the portfolio of work has been on policy and strategy change in highly complex, inter-organisation networks and systems. Prior to this work, there was evidence of impact of a strategic approach to private sector inter-organisation networks, particularly in the automotive, electronics and aerospace industries. In these settings, a small number of very large, powerful organisations learnt how to leverage resources outside their own organisations - in their suppliers, their suppliers’ suppliers and so on, upstream, and in their customers and customers’ customers through the academic field of supply chain management. However, there was little understanding of how to leverage network resources in highly regulated, complex, public sector systems.

CRiSPS research with the NHS, HM Treasury, Department of Trade and Industry, the Police Service, local government centres of excellence, Ministry of Defence, the United Nations and the Chartered Institute of Purchasing and Supply led to this research centre becoming the leading authority on public procurement in the UK. In 2003, the establishment of the International Research Study of Public Procurement with the University of Twente, led to the generation of international research involving 17 nations.

A 15-year research partnership with the NHS has been a rare opportunity to develop deep knowledge of the NHS and apply it to deliver positive outcomes to patients, NHS organisations and taxpayers, and to extend the acquired knowledge into other areas, internationally. The depth of learning within the partnership has enabled research, education and consultancy to be spread over the procurement network of the NHS. An MBA-accredited course was developed to disseminate the learning from the shared research. As a result of the partnership, a more strategic, integrated approach was adopted to influence the £18 billion spent by the NHS on goods and services. The following examples show some of the many ways the project has demonstrating tangible and measured results.

Impact on hearing impaired patients and taxpayers

In the UK, hearing impairment is the second most common disability, after mobility, affecting 8.7 million individuals. Patients used to be prescribed highly visible, behind-the-ear, analogue hearing aids, first patented in the 1930s, even though digital hearing aids patented in the mid-1980s were being widely used outside the UK. Analogue aids amplify all sound, rather than selected sound, and produce feedback. Once set by an audiologist, the wearer has little control other than total volume. Around 25% of analogue users don’t wear their aids. The benefits of digital hearing aids to patients are that the settings can be customised to suit the user, and can be adjusted when worn according to the environmental noise being experienced. This dramatically increases the likelihood that the user will persist with the aid, rather than leaving it in a drawer.

The total NHS service cost of supplying analogue hearing aids was around £100 million - around 450,000 hearing aid units a year, at an average a cost of £222 per patient per year. The private sector provided around 167,000 digital aids to those who could afford to pay an average £1750 to an audiologist for supply and fit. The technology gap between the public and private sector was growing, as was the benefits gap between ‘haves’ and ‘have nots’, but the NHS could not afford to close this gap at existing market prices.

The average price paid by the NHS for analogue aids was £40; in the private sector an audiologist would pay the manufacturer about £600 for a digital aid. So it was impossible to see how the NHS could afford what was, on the surface, an additional £252 million to go digital.

The NHS Purchasing and Supply Agency (NHS PASA) was working in partnership with CRiSPS at the University of Bath on a new, strategic approach to rethinking supply to the NHS. They called together all the main stakeholders involved in hearing impairment services from clinical professions, patient groups, the industry, government and research, including the Royal National Institute for Deaf People (RNID), the Department of Health (DH), the Medical Research Council (MRC) and the Institute of Hearing Research (IHR). As a consequence of taking a strategic and collaborative approach to the entire network of organisations, the NHS was able to purchase and supply over 260,000 digital hearing aids a year by purchasing them for £60 per unit. As well as providing these free to patients, through standardising on Behind the Ear (BTE) digital aids, the NHS was able to change the market price and save £45.5 million a year in its total service costs. When reflecting on the partnership with the University of Bath, John Warrington, Deputy Director, Procurement Policy and Research, DH Commercial Directorate stated: “Digital hearing aids for all NHS patients could not have been achieved without the partnership showing us the art of the possible.”

Impact on policy to improve uptake of innovation in healthcare

In a review commissioned by the British Chancellor, Sir Derek Wanless identified the NHS as being a late and slow adopter of new technologies. Members of CRiSPS contributed to the Healthcare Industries Task Force (HITF) sub-group on procurement processes, organised by the Association of British Healthcare Industries and the Department of Health to examine the difficulties of introducing new technologies into the UK. As a direct result of this work, steps were taken to improve the assessment of new technologies and to develop nationally accepted evaluation methodologies to ensure a consistent approach, compared to the previous disparate and time-consuming approaches. The current Department of Health Commercial Strategy has innovation uptake as a central feature.

Suppliers benefited because the previous myriad of time-consuming access points to the NHS were consolidated into one Centre for Evidence Based Purchasing within the NHS Purchasing and Supply Agency. Working with CRiSPS, new methodologies for assessing the potential value of innovations to individual patient’s quality of life, and hospital and clinical effectiveness, were developed. For innovations with national impact, the partners looked at ways of evaluating the effect on society and the economy. Using different approaches to assess innovations, according to the nature and potential impact of each innovation, enabled smaller businesses to engage with the NHS more easily. The timescales for evaluation of medical devices was reduced.

Small to Medium-Sized enterprises learning through international research

The International Research Study of Public Procurement research has completed four phases of work and now involves 17 nations. As a direct result of learning from South Africa within this study, the Welsh Assembly changed its public procurement practice to facilitate improved access for SMEs to public procurement contracts. The Welsh Assembly Business Procurement Task Force website states: “There is a tremendous potential to be unlocked for the Welsh economy if links between smaller, local companies and the Welsh public sector are improved. It is estimated that some 49% of the Welsh public sector’s procurement expenditure is won by Wales-based businesses. The Welsh public sector spends around £5 billion per annum on external goods and services, and it is estimated that every 1% increase in spend with Welsh companies could result in an additional 2,000 jobs in Wales.”

Impact on patients receiving rehabilitation services and taxpayers

As a direct result of the work of the University of Bath and NHS partnership, 30 key players from healthcare, industry, patient representation, and policy making were brought together to form a collaborative network strategy to improve the policy and delivery of rehabilitation services in England. Through working as a coordinating body - the Prosthetics Strategic Supply Group – they proposed that Government policy to devolve rehabilitation services to local organisations was reversed to maintain a regional focus. As a result, patients requiring prosthetics received a more coordinated service that delivered more appropriate products and services more rapidly through 34 Disablement Service Centres. The coordinated approach enabled more strategic purchasing that represented better value for money to taxpayers. Integrated decision making involving patient representation enabled innovation to be more focused on real patient needs.