Saving the NHSINVERTO saves Trust over £4m in 24 months

H E A LT H C A R E C A S E S T U D Y

Targeting non-pay expenditure

Tough performance targets, increasing demand on patient services and shrinking budgets are putting NHS Trusts under unprecedented � nancial pressure. The struggle to balance the books without compromising standards of care is now forcing many Trusts to take decisive cost-cutting action.

In 2013, Mid Essex Hospital Services NHS Trust appointed INVERTO to help plan and implement Project Spotlight, an ambitious initiative to drive a £3m reduction in non-pay expenditure.

The Trust was attracted by INVERTO’s success based fee structure and the ability to transfer performance improving procurement expertise and methodologies from the private sector to an NHS environment.

Mid Essex Hospital Services NHS Trust

- Employs 5,000 staff providing a range of acute and community based services to 380,000

people- Provides regional plastics, head and neck, and upper gastrointestinal surgical services to 3.4m people - Provides world renowned supra-regional burns services to 9.8 million people

www.meht.nhs.uk

Structured approach

INVERTO started with a detailed analysis of the Trust’s non-pay expenditure and reviewed the current approach to procurement in every spend category. Results were benchmarked to identify savings potential and prioritise the sourcing projects that could contribute most.

By taking a category-by-category approach, including areas that had previously seen little or no procurement involvement, INVERTO was able to target savings and develop individual product procurement strategies to deliver better products at better prices.

How we saved over £4m in 24 months

“Without the internal capacity to address cost savings, our decision to collaborate with INVERTO has delivered a step change in the way we approach the procurement process, at no � nancial risk to the business.”Nick Gerrard, Chief Financial Of� cer, Mid Essex Hospital Services NHS Trust

Scope

• £55m targeted from a possible £70m of non-pay expenditure

• A structured 24 month programme

• More than 114 individual sourcing projects across 25 categories

Orthopaedics26% saving

H E A LT H C A R E C A S E S T U D Y

Innovative sourcing

A variety of innovative sourcing and procurement strategies were used from national frameworks and mini competitions within regional frameworks,

to large scale OJEU tenders.

With examination gloves, for example, a combination of OJEU tender and medical product evaluation within the Trust was used to create a short list of suppliers who

then competed on price in an e-Auction. This resulted in a 27%

cost saving.

Stakeholder collaboration

Stakeholder engagement was key to the project’s success. The knowledge, opinions and direct involvement of clinicians operating as part of INVERTO’s cross functional teams in each of the individual procurement categories made a vital contribution.

Clinical products were trialled and sampled to ensure they met or exceeded required standards

and all procurement decisions were fact-based and transparent,

allowing clinicians to make best value choices with a full understanding of the commercial implications.

“The worry that � nancial pressures would result in sub-standard products or inventory changes was totally unfounded. Everything was presented in a format that was relevant to me as a clinician, allowing us to make informed decisions.”Bill Martin, Consultant Orthopaedic Surgeon at Mid Essex Hospital Services NHS Trust

Rapid Savings

Engagement in action: Orthopaedics

• £3m orthopaedic product procurement spend • Cross-functional commercial and clinical

team involved • Reported to Clinical Director and

Trust Executive • Inter-professional approach

encouraged supplier competition • Team’s combined knowledge enabled

accurate modelling of cost scenarios • Supplier offers compared and assessed

at a procedure construct level • Results presented to clinical team for review• Board paper recommendations led to award

of contracts • Additional bene� ts accrued through

optimisation of consignment stocks • 26% overall cost saving

More than £4m of savings were delivered

in two years through two project phases:

Phase 1: A 15 month cost reduction programme delivering savings of £3.3m.

Phase 2: A 9 month programme generating savings of over £400k through additional sourcing projects, a Product Change Programme, and a lean supply chain programme which contributed a £478k reduction in stock.

Examination Gloves27% saving

Cannulas & Catheters 21% saving

H E A LT H C A R E C A S E S T U D Y

Accurate measurement

The programme accurately measured actual savings achieved through a robust process:

• Detailed baseline established for each project at product, price and volume level

• Figures for each project validated by � nance department

• Savings calculated against new, lower prices when uploaded to Trust’s system

• Savings were difference between old and new price multiplied by annual volume

• Saving � gures validated by � nance department • Savings only registered when buying at lower

price • Only hard savings impacting the accounts were

measured

Widespread bene� ts

The success of the programme is re� ected in product and service improvements as well as � nancial savings. A high level of supplier interaction prompted supplier-led product innovation that delivered both cost reductions and patient bene� ts.

Examples include:

• Switching from traditional tympanic thermometers to infrared products, reducing consumables spend by £50k

• Upgrading to higher quality hypodermic syringes while saving more than £23k

• Replacing old mattresses with new improved products at 67% less cost

• Saving £74k by implementing ‘no colour printing’

INVERTO also conducted a benchmarking exercise across 10 other Acute Trusts. Mid Essex recorded the lowest costs in 11 out of 16 products and this has generated interest in the project from other Trusts keen to reduce their own expenditure.

Long term bene� ts

“INVERTO’s approach was structured, thorough and professional. Their knowledge and experience was invaluable in rapidly establishing real focus on areas that would yield the greatest returns”Nick Gerrard, Chief Financial Of� cer, Mid Essex Hospital Services NHS Trust

Beds & Mattresses 67% saving

Waste 29% saving

H E A LT H C A R E C A S E S T U D Y

An expanding role

The project has created a fresh perspective on the role of procurement within the Trust. After the success of Phase 1, the scope of work was expanded to include areas of expenditure such as IT, which previously had responsibility for its own procurement, and where over £300k of savings were achieved.

A dedicated Product Change Programme within the

medical and surgical areas was also added, together with decision making involvement in a number of large capital purchase projects.

Adding value

As well as saving over £4m, Project Spotlight also demonstrated the long term value of procurement to the Trust, transforming it from an administrative, compliance focussed, back of� ce unit, to the driving force behind an ef� cient operation, involved in all non-pay and capital expenditure decisions.

Procurement is now essential in identifying annual cost improvement opportunities and delivering ongoing � nancial savings, as well as contributing to improved patient care and enhanced levels of service.

A cost saving framework for the future

“By engaging extensively with clinical staff across the Trust, Project Spotlight has delivered a signi� cant contribution to our cost improvement target, acted as a catalyst for the introduction of new and innovative products and put procurement on the executive agenda.” Malcolm Stamp, Chief Executive, Mid Essex Hospital Services NHS Trust

INVERTO are delighted

to be � nalists in the

HSJ Publication of the

Year Awards 2014.

Thank you to our team

of healthcare procurement

specialists who worked so

hard to make this achievement

possible.

Security 28% saving

INVERTO is the leading procurement and supply chain management consulting � rm in Europe.

Founded in 2000, we now have over 130 experts working across 10 locations. Our objective is to increase the competitiveness of our clients.

Our clients include international corporations, Public Sector organisations, market-leading mid-sized companies and some of the world’s largest private equity companies.

We are a specialist in hospital and healthcare procurement and supply chain management. With expertise across all medical and non-medical healthcare categories, we have a strong track record of savings delivery for hospitals and other healthcare organisations, through a number of assignments in Europe and across the NHS.

Our services include the identi� cation, evaluation, and implementation of procurement savings, improvement in strategy and processes, as well as specialist training and development.Our team of experts are highly quali� ed and hands-on, engaging with suppliers and working closely with clients to achieve percentage savings that are measured in double � gures. In doing so we transfer the skills and knowledge required to drive down costs without compromising product or service quality.

Our entrepreneurial approach ensures transparency, implemented improvements and measurability. We deliver results. That is our promise.

If you would like to discuss any aspect of CIPsavings delivery, please contact us on020 7043 4176 or email: london@inverto.com

INVERTO UK Ltd20 Broadwick Street, London, W1F 8HTPhone: 020 7479 4834email: london@inverto.com

www.inverto.co.uk

INVERTOWe deliver results.