BravoConnect 2014: Spend Analytics & Benchmarking
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This document discusses spend analytics and benchmarking in healthcare procurement. It introduces David Coley of Heart of England NHS Foundation Trust, and Pavel Ollitervo-Murphy and Scott Pryde of BravoSolution. Heart of England NHS was facing budget deficits and struggling to meet targets. Spend analytics can provide a 10% savings target across categories totaling over £2 billion. Benchmarking allows comparison of practices to improve efficiency. Collaboration between organizations can expand the impact of initiatives. The discussion focuses on challenges of variability, benchmarking practices, and how procurement intelligence is changing with new technologies.
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BravoConnect 2014: Spend Analytics & Benchmarking
- 2. Spend Analytics & Benchmarking David Coley | Heart of England NHS Foundation Trust Pavel Ollitervo-Murphy & Scott Pryde | BravoSolution
- 3. David Coley - Introduction Procurement Director at Heart of England NHS Foundation Trust for 13 years. Expert in implementation of eProcurement and analysis solutions as well as strategic change management in NHS trusts. Track record in driving strategic approach to NHS procurement, reducing a transactional focus and upskilling the function to manage supplier relationships.
- 4. Pavel Ollitervo-Murphy - Introduction Principal Consultant with 9 years experience in Procurement. Previously at GSK as a Sourcing Manager managing Marketing Services. Before this Pavel worked at GSK eSourcing Department as Sourcing Manager providing expertise and consulting to various parts of the business to optimise their sourcing.
- 5. Scott Pryde - Introduction Procurement & supply chain success in multiple industries from electronics to healthcare Several of the UK’s largest and most innovative spend analytics initiatives. Healthcare supply chain, medtech market and technology innovation expertise
- 7. Case Study Spend Analytics & Benchmarking David Coley | Heart of England Foundation Trust
- 8. HEALTHCARE TRENDS Ageing population & lifestyle Restructuring Primary care commissioning Tariff based reimbursement £20Bn savings & QIPP Capacity constraints & restructuring Innovation The Challenges to the NHS HOSPITAL SECTOR Demand and capacity Responsiveness Reimbursement Budgets Service efficiency & productivity Patient safety & outcomes Innovation
- 9. £6m deficit 13/14 – first deficit posted since becoming a Foundation Trust £24m CIP target for 14/15 with only £13m of plans 4th Year of a £5.5m non-pay savings challenge A&E 4 hour wait being scrutinised by Monitor 18 weeks and Cancer targets under considerable pressure Planning for Winter Reducing length of stay and delayed discharges Centre-led action network (CLAN) model across estates and pharmacy Procure and deploy GS1 compliant trust wide point of use stock system Collaboration with multiple aggregation partners Procurement Challenges at Heart of England
- 10. Progress Expected on Policy Based Actions Standards • Leadership • Process • Partnerships • People Scorecard • Doing it well • Doing it efficiently • Doing it right Systems • GS1 • eProcurement • Analytics • Benchmarking Stakeholders • Special interest groups e.g. Orthopaedic Surgeons
- 12. Enhanced Spend Analysis Benchmarking & Focus Groups Share Market Intelligence , Context, Experience Multilevel Collaboration , Integration & Professional Networking Solution Traditional Analysis NOW IMPACT Enabling Technologies ?
- 13. Challenge
- 14. 10% Savings, All Categories Category Spend (£) Initiative Savings Target(£) TOTAL 21,543,991,902 9.84% 2,119,057,063 CLINICAL Medical & Surgical Equipment 4,234,448,282 10.00% 423,444,828 Pharmaceuticals Blood Products & Medical Gases (Secondary Care Only) 3,520,038,443 8.00% 281,603,075 Staff & Patient Consulting Services & Expenses (Clinical) 3,067,569,723 10.00% 306,756,972 Chemicals & Reagents 506,116,402 8.00% 40,489,312 Laboratory Equipment & Services 488,970,451 8.00% 39,117,636 Purchased Healthcare 480,274,463 8.00% 38,421,957 Diagnostic Imaging & Radiotherapy Equipment & Services 370,183,111 8.00% 29,614,649 Digital Health (Secondary Care Only) 205,364,836 15.00% 30,804,725 Patients Appliances 201,386,791 8.00% 16,110,943 Bedding Linen & Textiles 57,883,628 15.00% 8,682,544 Dressings 54,353,176 9.00% 4,891,786 Dental & Optical Equipment 52,531,924 10.00% 5,253,192 NON-CLINICAL Staff & Patient Consulting Services & Expenses (Non Clinical) 2,055,942,064 12.00% 246,713,048 Building & Engineering Products & Services 2,036,673,424 12.00% 244,400,811 Hotel Services Equipment Materials & Services 1,514,742,817 10.00% 151,474,282 Provisions 809,509,382 8.00% 64,760,751 Fuel Light Power Water 686,305,556 10.00% 68,630,556 Office Equipment Telecomms Computers & Stationery 673,386,704 10.00% 67,338,670 Transportation 289,985,231 8.00% 23,198,818 Furniture Fittings 158,710,128 10.00% 15,871,013 Staff Clothing 45,895,952 15.00% 6,884,393 Patients Clothing & Footwear 15,956,562 15.00% 2,393,484 Hardware Crockery 8,466,629 15.00% 1,269,994 Gardening & Farming 7,395,384 10.00% 739,538 Recreational Equipment & Souvenirs 1,900,841 10.00% 190,084
- 15. The most profitable industries are most often the most inefficient supply chains They are also the most technically complex And have the greatest procurement :stakeholder relationship challenges Supply Chain Inefficiency
- 17. Safety, Outcomes and Quality
- 18. Unified & Aligned Relationships
- 22. Core Wider spend capture Avoidance of leakage Improved Stakeholder Alignment Stronger Cost Control Auditable Savings Delivery
- 23. Challenge 1 10% NHS Savings Essential – Where to start ?
- 25. Benchmarking
- 26. Benchmarking Deeper category & supply chain knowledge Improved Clinical Product Governance Alternative proven stakeholder practice Clinical equivalence Enhanced credibility, closer relationships, increased leverage Higher savings & efficiency impact
- 27. Challenge 2 Orthopaedic Hip Prosthesis Benchmarking
- 28. • Share Evidence, Expertise & Experience across the system • Expand reach with same skills & resources • Collaborate Locally & Nationally • Make best use of national initiatives • Reduce supply chain tender & contract management burden • Increase aggregation leverage where appropriate Collaboration
- 29. #3 Information and knowledge sharing alongside analytics Collaboration - Example
- 30. Group Discussion
- 31. • How do you use spend analytics & business intelligence in your organisation? • What knowledge, information and data challenges does your organisation face? • How will procurement intelligence change in the future ? Group Discussions • What are the challenges that you face in reducing sources of inefficiency: variety, variability, volatility ? • How do you benchmark across you organisation ? • What other information is required alongside raw data and statistics in order to make better judgements ? • What technologies have had the biggest impact on procurement performance in your organisation & why ? • How are new technologies e.g. social media and online market places changing how you manage your supply chain ?
- 32. Measure performance, get connected, get motivated !
- 33. Q&A
- 34. Thank You!
Editor's Notes
- Ask audience how many of them are wearing a device to measure and track their daily performance?
- SHAs/PCTs now replaced by NHS England and 211 CCGs 142 trusts (Acute, Community, MHS and Ambulance) have achieved FT status , but another 99 are seeking status by 2014 NHSTDA calculate 47 of these do not have a stand-alone solution DH transitioned to a Department of state And on top of this we have Francis…….. Financially, NHS still expected to find £20bn savings by 2014-15 on £100bn budget – of which procurement expected to deliver £1.2bn….
- The Foundation Trust structure and the internal market contradicts procurement logic. Previous reorgs have stripped skilled staff out of Trusts No wholesale reinvestment in technology and people (20bn + savings target) NHS Procurement has to work virtually and widely sharing data and category strategies
- The future : A virtual procurement landscape – both procurement intelligence and facilitated collaboration Unlocks minds through broad participation Provides complex and massive sets of data in manageable chunks Helps like minded organisations integrate quickly and deeply .
- Example 1 – NHS 10% savings are essential – Where to start ? Provides a high level summary of the NHS spend by category. The data shows an increasing spend in almost every category, with varying degrees of fragmentation and a supplier and transaction level, as well as varying levels of compliance to formal purchase order processes by category. The challenge ; The NHS needs to save 10% to remain sustainable given the current economic and budget restriction combined with rising demand from an ageing baby boomer generation. They are recruiting for a new procurement tsar to deliver the latest strategy published in early 2014 which sets out to save 10% on the £35Bn non-pay spend. If you were them, and based only upon this data, where would you start and why ?
- Example 2 – Orthopaedic Hip Benchmarking Provides a detailed summary of the Orthopaedic Primary Hip Market; The data shows and increasing price level for Primary Hips, with varying prices between trusts. There is also variability in degrees of fragmentation at a supplier and brand level as well as varying technology and evidence based decision making profiles. The challenge; Arthritis is on the increase, and primary hip replacements are one of the highest volume procedures in the NHS. Hospitals, regardless of cost are reimbursed at the same flat rate of around £5,000 per hip replacement. But material costs are increasing and becoming unsustainable. Identify what has been driving the price increases and variability. Suggest strategies which would overcome these challenges bearing in mind that Surgeons have string levels autonomy to specify the product that they believe will serve patients best, and also that they tend to have close direct Orthopaedic supplier relationships.
- Example 3 – Using Technology for Collaboration Open to suggestions here – we could make it a more discussion oriented example e.g. ... Here are some of the ways that the NHS is starting to share different types of procurement intelligence alongside data as well as collaborate with each other. The activities are in their infancy and exciting developments are expected which have their grounding in enabling technology. How is procurement intelligence used in you organisations and how do you see enabling technologies improving information and knowledge sharing across your supply chain ?What efficiencies might accrue from these developments?
- CORE 1. - Are you monitoring company wide purchasing (global reach) - Is spend analysis used to ensure purchasing alignment to strategy - Cost variances – Are these identified and monitored? - Are you using spend analysis to govern compliance against policies and agreements - Are you using spend analysis for Demand Planning 2. - Biggest challenges, past challenges and how these were overcome - Current challenges 3. - Anticipated future challenges - How are you preparing your org for these? BENCHMARKING – What processes do you have to assess the current situation? - Do you have a plan in place to tackle sources of inefficiency? 2. - How do you use internal benchmarking to create category insight? - Are you using spend analysis to build deeper category & supply chain knowledge? - How can analysis support Supplier/Brand choice. Is the data used in governance of purchasing? 3. – What other information do you currently have available and is it utilised? - What data would you ideally like to add to aid your decision making? COLLABORATION What technologies do you use to share initiatives through the organisation? Why are they so effective? What are your predictions for new technologies, do you have plans to integrate these in your processes? Is there any interesting online articles on Alibaba etc? How can spend analytics support your development of pipeline and forecasts? Do you utilise spend analytics to reduce the volume of supply chain tenders and aid contract management? Are you using analytics to help aggregate leverage opportunities? Do you use analytics to eliminate duplication of effort across different locations operating with same categories?