MANAGED EQUIPMENT SERVICES
All about MES
As trusts rein in spending, many are looking at alternative ways of acquiring large scale medical equipment. The problem is that many do not understand the options available to them. More and more trusts are enquiring about managed equipment service as a solution but are unaware of the complexities of this service option
T
he MES model came about during the inception of Private
Finance Initiatives which were largely popularised in 1990s and 2000s. It was seen as a way to incorporate the model to encompass large medical equipment usually with a close association with the fabric of new buildings into the same financing structure.
Apart from the obvious attraction of private finance, the key drivers around this method of funding were the removal of risk during the building phase into the private domain. More recently the scope of the MES market has expanded further and is now increasingly being considered for existing hospitals replacing services provided by existing equipment.
NHS Supply Chain undertook a comprehensive research project about what an MES contract entails and offers trusts to understand what is currently on offer.
Over the course of six months, NHS Supply Chain consulted with trusts that already have or are considering MES as well as key suppliers in the UK market.
The result of the research was Nov/Dec 10
a comprehensive paper and a number of assisting documents and templates which NHS Supply Chain has been utilising to communicate to trusts that are considering the MES route to promote better understanding within the NHS.
What is an MES?
MES is the service outsourcing of equipment management and maintenance, including planning and scheduling of replacement assets, procurement and sourcing of equipment, maintenance and performance reporting, disposal and selling of equipment, finance solutions and services and peripheral services (intrinsic with equipment).
MES is a full outsource of all aspects of owning, managing, replacing equipment and the services related to this. Typically contracts can last between seven to twenty five years although they can be longer dependent on a trust’s requirements and preference.
While this can enable the trust to plan financially for the future, for the in scope elements with one unitary payment; it can limit development in the long-term by being tied into such a strict contract structure.
That is not to say that it is unsuitable for all trusts. An MES may be the best solution for some where the conditions are right. But in order to get the full benefits out of such a contract it requires a substantial amount of work from the trust
MES benefits
• One point of contact for all queries.
• Reporting services and equipment management.
• Provision of finance.
• Ability to reclaim VAT (subject to HMRC approval). Limitations
• Long term contract – can trusts accurately plan and commit to a 15-20 year timeframe?
• It is not easy to assess value for money due to price opaqueness.
• MES can take up to 3 years to set up for large scale projects and can be costly in terms of fees and resource time.
• Can be inflexible dependent on how the contract was established.
• VAT reclamation not guaranteed initially or for the life of contract.
The research indicated that the key drivers behind an MES contract generally fall into three categories: equipment; finance and administrative support for a trust.
FOR MORE INFORMATION
To discuss MES and your capital equipment requirements with NHS Supply Chain’s specialist team, contact:
Ed Grainger Senior project manager, NHS Supply Chain T: +44 (0) 7850 931 942 E:
edward.grainger@
supplychain.nhs.uk
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• Guaranteed equipment replacement programme.
• Strategic planning and procurement of equipment.
• Staff training on equipment.
• Transfer of ‘capital risk’ to private sector.
Under equipment, an MES can help trusts with their capital planning; guarantee replacement of equipment and their improved uptime – with penalties for not achieving operational targets. It also offers services such as reporting on machines functionality and training for staff.
One of the key drivers for most trusts at present is finance. MES provides a fixed payment structure so that trusts can plan budgets effectively and ‘ring- fence’ their spend. It can also offer VAT reclamation subject to HMRC approval.
The administrative aspects include having one point of contact for all queries, which cuts down on the amount of time searching for numbers and calling numerous suppliers, and support with audit management.
An MES, if implemented properly, can help ensure that the service delivers value and a wide range of benefits for all stakeholders.
The trusts need to fully understand what their requirements are from the MES before entering into such a complex and lengthy procurement exercise.
It is therefore important that they establish their own drivers and procure a contract which matches their expectations which drives a variety of benefits over and above VAT reclamation.
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