Warrington & Halton Hospitals NHS Foundation Trust forecast savings of 78,000 on maintenance contracts for imaging equipment
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1 Warrington & Halton Hospitals NHS Foundation Trust forecast savings of 78,000 on maintenance contracts for imaging equipment It was really important to us that our Radiology Maintenance contract requirements could be met through purchasing from the compliant NHS Supply Chain framework to achieve further cost improvements
2 Challenge The procurement team at Warrington & Halton NHS Foundation Trust were faced with an increasing spend on maintenance contracts for their imaging equipment which, including VAT, had risen from 600,000 to almost 900,000 due to the addition of new equipment to their portfolio over a number of years. Like for like renewals on an annual basis with the incumbent provider became the standard practice and the Supplies and Radiology team identified that a different approach could deliver savings on maintenance spend. With 71 assets spread over two sites, Warrington Hospital and Halton Hospital including Cheshire and Merseyside Treatment Centre (CMTC), the challenge for the Trust was to ensure that all key stakeholders were involved in a portfolio review project that did not compromise their ability to maintain levels of patient care. Initially they looked at a Managed Maintenance Service (MMS) but did not progress with this route as it wasn t considered a viable option. Objectives To convert annual maintenance contracts to multiyear contracts (where appropriate). Review providers to identify additional savings Achieve compliant procurement within the timescales identified Deliver savings in line with Trust targets and cost improvement programme. Solution The Trust worked with NHS Supply Chain and was able to benefit from framework discounts and a fixed indexation at reduced levels for multi-year contracts. This allowed the future spend to be budgeted and they were able to claim cost avoidance on year two for the remainder of the contract term. Results An annual saving of 78,000 (9%) has been achieved Fixed pricing for three years Contract coverage was significantly improved which provided a sizeable contribution towards the procurement team s KPIs. The appropriate solution is dependent on the level of risk you are prepared to accept. The end users needed to be comfortable that an MMS was aligned to the level of risk that they were prepared to take. In this instance, the risks were too great.
3 Implementation Process The Trust approached NHS Supply Chain to work collectively on carrying out a full portfolio evaluation to identify the savings opportunities. Receiving the [NHS Supply Chain How To] guide was really useful, we were not aware of the flexibility available and it was great to be able speak directly with suppliers to clarify requirements. In March 2013 a project team was established across the three sites comprising of end users and department managers, procurement and divisional directors, finance and EBME. A project plan with agreed timeline targets and roles and responsibilities was developed to ensure that all key stakeholders were engaged with the project and that key objectives and desired outcomes were agreed by all involved. Over a period of 6 months a full review of imaging assets was carried out to determine maintenance provisions and asset age to ensure that the correct term was selected when considering multi-year contracts. This review also prompted discussions on equipment replacement planning and provided a catalyst to carry out a deeper review of the installed base and optimisation of equipment utilization. We needed six months for the planning of this project to ensure we had time to make the decisions that would deliver the best outcome for the trust, its staff and above all patients. In October 2013, after providing initial pricing for the reviewed assets, NHS Supply Chain facilitated meetings with identified suppliers to review the quotes provided. These meetings allowed the trust to ask a number of questions which enabled them to clarify pricing and cover levels. They were also able to obtain revised pricing as a result of the clarification process. Supplier meetings and clarification of pricing took place between October and December. In January 2014 the Trust re-engaged with Dan Clegg at NHS Supply Chain to obtain final pricing based on revised cover levels to ensure that contracts were in place by 14th February 2014 to maximise any on time renewals incentives made available by suppliers. Throughout the year long project the maintenance team at NHS Supply Chain were on hand to offer support, from initial dialogue through to facilitating pre-contract inspections where the Trust decided to change provider.
4 Initially, direct communication with suppliers felt slightly uncomfortable however, being able to have direct dialogue has been a big bonus for us. Being able to fully understand the move from annual to multi-year contracts along with the ability to clarify directly with suppliers meant that we were able to get exactly what we needed whilst being sure that we were making the right decision.
5 Conclusions and learnings Trusts need to move maintenance contract procurement further up their list of priorities as costs can actually be more than the cost of the equipment Allow enough time to carry out a full portfolio review On projects of this scale, Trusts need to allow at least six months for planning, to ensure the right provider, cover level and contract term (in line with asset age) is procured Have a cross functional project team with all key stakeholders involved from day one to ensure there is joint ownership and a common goal agreed by all It is important to consider asset age and utilisation with a project of this nature to ensure that unnecessary cancellation charges are avoided due to an incorrect contract term length being selected Renew contracts on time to claim savings made for the full term and to take advantage of on time renewal incentives made available by some suppliers It is important to involve the finance team in the process to ensure that identified savings are aligned to the Trust s cost improvement methodology and can therefore be claimed. The good working relationship between the trust and NHS Supply Chain meant that we were equipped with timely information to make the right decisions. Trust Project Team: (From left to right) Sharron Giblin Assistant Contract Manager, Supplies Department, Andrea Oxford Principal Radiographer, Radiology, Chris Vranch Contracts Manager, Supplies Department Further information Chris Vranch, Contracts Manager chris.vranch@whh.nhs.uk Andy Curtis, Regional Development Manager NHS Supply Chain andrew.curtis@supplychain.nhs.uk To request a copy of NHS Supply Chain s How to Guide for Maintenance maintenance@supplychain.nhs.uk or contact Margaret Malpas on Tel:
6 About Warrington & Halton NHS Foundation Trust The Trust serves a local population of 313,463 people and provides almost 500,000 individual appointments, procedures and stays in hospital each year. Since becoming a Foundation Trust in 2008, infection rates have been reduced by over 90%, waiting times have been slashed and safety measures improved resulting in the Trust being shortlisted for the national Patient Safety and Care Awards in both 2013 and The Trust s vision is High Quality, Safe Healthcare and they have invested in new wards, departments and units - from maternity and critical care units to chemotherapy, dementia, endoscopy and ophthalmology facilities which opened to provide first class care to NHS patients. About NHS Supply Chain NHS Supply Chain is a 10 year national contract for procurement and logistics and was formed from the NHS Logistics Authority and parts of the NHS Purchasing and Supply Agency (PASA). It is operated by DHL (DHL Supply Chain Limited) and acts as agent to the NHS Business Services Authority. Using innovative procurement and supply chain processes, NHS Supply Chain helps NHS trusts deliver better value from their expenditure on clinical supplies and medical capital equipment. As a combined procurement and logistics service for NHS trusts, NHS Supply Chain transacts more than 346,000 products nationally through its catalogue, spanning areas such as wound care, gloves, implants, catering, and surgical equipment. In addition, it helps NHS trusts better plan their investment in medical capital equipment such as MRI scanners, linear accelerators, ultrasound and patient monitors. It is supporting the Department of Health to achieve its 2bn target of procurement and efficiency savings through working with its customers and suppliers to deliver 150m cash releasing savings. NHS Supply Chain is on track to deliver more than 1bn inflation beating savings over the term of its 10 year Contract.
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