PROCUREMENT
Steve Shirley, head of business development for commercial payment solutions at MasterCard, discusses NHS procurement. W
ith non-pay expenditure in excess of around £17bn per annum*, procure-
ment, and its companion, commissioning, might be described as big business in the UK healthcare sector. Setting this expendi- ture in the context of rising healthcare costs, as a result of both inflation and in- creasing demand, in a recession represents a significant challenge for the whole of the NHS.
In addition, with the NHS under severe pres- sure to reduce costs by £20bn, whilst provid- ing even better services to patients in terms of quality, value, frequency, waiting time, security, transparency and personalisation, the spotlight is on procurement. The £1.2bn procurement savings target reflects this.
NHS Procurement has been developing contently over the last 20 years with for- ward thinking programmes such as the Procurement Hubs, shared services and World Class Commissioning, but recent re- ports suggest that there is still much to be achieved.
Improvement opportunity areas recently identified include reducing the cost of procurement as well as the cost of goods and services; meeting the commitment to prompt payment; streamlining the pur- chase-to-pay process; engaging with small and medium-sized enterprises (SMEs); dealing with an expenditure profile char- acterised by multiple, low-value orders; developing procurement e-enablement to encourage improved data and information quality.
The Government Procurement Card
MasterCard is in a position to enable im- provement in all of these areas. We have been providing modern procurement and other financial management solutions to healthcare agencies around the world for many years. A key instrument of driving ef- ficiencies has been the development of the third generation Government Procurement Card (GPC) in the UK. Research shows that the GPC has not been adopted in the NHS to the same extent as in local and central government but the MasterCard GPC Pro- gramme can help Trusts to streamline the procurement process, providing a cost- effective means of buying low-value goods and services. It also delivers enhanced
84 | national health executive Nov/Dec 11
standards of service delivery by making it simpler for employees to buy essential day- to-day items, guarantees on-time payment to suppliers and, by eliminating paper, contributes to sustainable development.
In short, GPC is convenient, cost-effective, and a valuable contributor to efficiency tar- gets. MasterCard GPC solutions are availa- ble to public sector organisations in the UK through our partner financial institutions, including the RBS Group. It is intended to be a tool to be employed throughout an organisation spending public money, con- tributing to a lean purchasing cycle with smoother and faster processing with more effective visibility and control.
GPC achieves this by replacing paper- based purchase ordering systems with in- novations such as MasterCard Multi Card, which can issue payment cards to multiple authorised managers and collate all pur-
chasing information electronically to track spending.
GPC also ensures greater purchase con- trol, as cardholders’ expenditure can be managed on an individual basis, allowing administrators to place limits on purchase amounts, types of suppliers and numbers of transactions. This enables the proper management of expenditure by cardhold- ers on an individual employee basis and at an individual transaction level, while maintaining the ability to authorise chang- es in cardholders’ limits easily.
GPC also provides transactional data and expenditure analyses to ease control over spending by capturing the data produced from the receiving and reconciliation of goods and paying suppliers in a system such as MasterCard SmartData. Captur- ing essential data and management infor- mation will make future buying decisions more informed.
eTrading hubs
In addition to MasterCard’s GPC, creating opportunities for private sector suppli- ers through e-trading hubs, cards help to eliminate disjointed and competitive pro- curement. Building on the NHS landscape of procurement hubs and shared services, engaging suppliers in a virtual marketplace the NHS can join together to maximise its collective buying power, levelling the playing field and even encouraging SMEs to participate in bidding for health sector contracts.
Changing the way the NHS buys prod- ucts and services can save a tremendous amount of money and provide a range of benefits across various policy areas. Mas- terCard believes that the key to achieving successful reform of the way procurement works is to embrace technological advanc- es that make the pro- cess easier and that are based on the principles of control, transparen- cy and auditability.
*
www.dhs.gov.uk – August 2011
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www.mastercard.co.uk/publicsector Steve Shirley
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