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Award-winning procurement

Source: Public Sector Executive May/June 12

Jeff Nielsen, head of the Procurement Cooperative at NHS North Central London, discusses a more entrepreneurial way of working.

An NHS procurement cooperative that has saved millions of pounds for its members and won an award for its innovation could provide lessons for other parts of the public sector.

The NHS North Central London Procurement Cooperative, launched in late 2011, began life as a shared services team between NHS Camden’s Commissioning and Provider services, the Islington Commissioning and Provider services and the Camden and Islington foundation trusts.

Moving from a shared service to a full cooperative embedded the values of teamwork and collaboration, by connecting all the members that the group procured for, including five primary care trusts within the region. The service has achieved significant cost savings and was named as the best ICTenabled innovation and enterprise at the UK Public Sector Digital Awards.

Head of the cooperative Jeff Nielsen spoke to PSE about improving procurement, and how this could be used as a model for other organisations both within and outside of the NHS.

He said: “It brought together a greater unity. It asks everyone to cooperate because they’re all a part of the savings scheme.”

A liaison advisory panel was formed from each of the organisations involved to secure regular input on what procurement services they were looking for.

“We have to save money – our Government has told us that. So let’s cooperate,” Nielsen said.

Catalogues were set up to identify best value for the trusts, resulting in £2.7m savings in the first year. Commenting on this success, Nielsen said: “We’ve done a lot of the right things and are continuing to do so. Now that the cluster has been formed, because of the difference in the spend, we’ll push another 18-20% of savings this year. With the greater budgets that will be a lot more money.”

Entrepreneurial spirit

Nielsen suggested that a bit of creativity is the way to achieve savings and drive efficiency, and that furthermore, this is something that may be currently lacking in the public sector and health service.

He said: “I think that a lot of people haven’t done it because they do not have the business acumen in the public sector to do it. My background is primarily private sector and I’m very entrepreneurial, whereas many public sector organisations are not.”

Nielsen selected staff with experience in the private sector and a creative spark to allow the cooperative to operate well as a business. This forms the perfect model to improve procurement in other areas of the health service and public sector, he argued.

“It works, and if you’ve got a lot of clients or are a shared service, it’s even more effective. We do this all with eight people where it normally takes 30 and we’ve combined the best of breed systems to be able to do it. It’s making the best use of the technology instead of letting the technology run you.

“I think that’s a problem in both sectors of business, when the technology instead of the people starts running the business. If the systems run you then they’re not good systems. We have really good systems but we run for the benefit of who we procure for, our client.”

Nielsen proposed that currently in the NHS, the right technology is not being used “fully or effectively” and that “procurement is forgotten most of the time”.

Taking responsibility

He continued: “Procurement drives the savings and limits the organisations’ liabilities moving forwards with EU complications, maintains the SFIs and is the first place where the auditors stop when they come in to look at the books.”

If trusts could concentrate on this more in the future, there could be a “marriage between finance and procurement”, he said. “Procurement spends the money and finance is responsible for the money; if the two would work together it would be brilliant.”

Introducing e-procurement forced this accountability, as a budget holder has to approve a requisition, whereas previously it could just be sent through. This helps to enable people to be responsible for their budgets within their designated areas and allows the organisation to control the spend.

As the commissioning organisation expands, the procurement cooperative will expand further as well; Nielsen’s plan is to deliver the service to the GP community, which is currently being trialled. He concluded: “At some point I’m hoping to spin it out into a social enterprise or business.” 

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