page 1
page 2
page 3
page 4
page 5
page 6
page 7
page 8
page 9
page 10
page 11
page 12
page 13
page 14
page 15
page 16
page 17
page 18
page 19
page 20
page 21
page 22
page 23
page 24
page 25
page 26
page 27
page 28
page 29
page 30
page 31
page 32
page 33
page 34
page 35
page 36
page 37
page 38
page 39
page 40
page 41
page 42
page 43
page 44
page 45
page 46
page 47
page 48
page 49
page 50
page 51
page 52
page 53
page 54
page 55
page 56
page 57
page 58
page 59
page 60
page 61
page 62
page 63
page 64
page 65
page 66
page 67
page 68
page 69
page 70
page 71
page 72
page 73
page 74
page 75
page 76
page 77
page 78
page 79
page 80
page 81
page 82
page 83
page 84
page 85
page 86
page 87
page 88
page 89
page 90
page 91
page 92
page 93
page 94
page 95
page 96
page 97
page 98
page 99
page 100
page 101
page 102
page 103
page 104
page 105
page 106
page 107
page 108
page 109
page 110
page 111
page 112
page 113
page 114
page 115
page 116
page 117
page 118
page 119
page 120
page 121
page 122
page 123
page 124
page 125
page 126
page 127
page 128
page 129
page 130
page 131
page 132
page 133
page 134
page 135
page 136
page 137
page 138
page 139
page 140
page 141
page 142
page 143
page 144
page 145
page 146
page 147
page 148
page 149
page 150
page 151
page 152
page 153
page 154
page 155
page 156
page 157
page 158
page 159
page 160
page 161
page 162
page 163
page 164
page 165
page 166
page 167
page 168
page 169
page 170
page 171
page 172
page 173
page 174
page 175
page 176
page 177
page 178
page 179
page 180
page 181
page 182
page 183
page 184
page 185
page 186

74INNOVATION UKINNOVATION of its experience in handling relationships that could play an essential role. In recent years, some industry sectors have complained that the NHS does not respond well to innovative ideas and very rarely seeks to " pull" ideas from the supply side. Over the last five years we have been working to address this in some sectors such as medical devices through the Healthcare Industries Task Force ( HITF) and its succes-sor the Ministerial Medical Technology Strategy Group ( MMTSG), and in pharmaceuticals through the Minis-terial Industry Strategy Group ( MISG). These initiatives have led to the creation of important support levers and functions such as the National Innovation Centre ( NIC), the National Technology Adoption Centre ( NTAC) and the Centre for Evidence- based Purchasing ( CEP), but we know these initiatives cannot embed a culture of com-mercial innovation in the NHS alone and the way the NHS faces up to industry is an essential ingredient to improving the relationship. Industry has complained that the NHS commercial land-scape is both confusing and time- consuming and there-fore sub- optimal. We know that if we can face industry in a more co- ordinated and intelligent manner then we can achieve significant improvements. Over the past decade in particular, the third and private sectors have played a vital role in the support and delivery of healthcare to the NHS. New services, buildings and staff have offered the public and patients better access to, and quality from, NHS- funded healthcare. This is why we have recently launched a new commercial operating model ( Necessity not Nicety) to encourage the NHS to organise itself to face up to industry in a more co- ordi-nated and intelligent manner, working with the grain of the NHS, not against it. Commercial and procurement skills are already at a premium at all levels and they are particularly acute in the area of innovation. At the heart of this new model is the creation of regional Commercial Support Units ( CSUs) whose task will be to act as the primary interface for industry. CSUs will pro-vide commercial support to commissioners to " stimulate the market" where this works in the interests of patients, manage contracts effectively and work in harmony with NHS Supply Chain to secure better value for money for goods and services procured. It will give existing and potential healthcare suppliers a single, simple point of contact with the NHS and it will allow scarce commercial skills to be shared in the most efficient way. Government expects Innovation and the procurement function have never been comfortable bedfellows in the majority of the pub-lic sector, despite the growing importance government is attaching to it. As an endless stream of government reports and policies have filtered down, procurement functions have struggled to deliver on the recommenda-tions. The latest drive is the 2008 White Paper Innovation Nation, which promises to make Britain the best country in the world to run an innovative business or public serv-ice. The paper acknowledges that whilst there have been good examples of innovative procurement, the culture has not yet taken root and procuring innovative solutions is still a low priority. The finger is inevitably pointed to the age- old reasons of risk aversion, difficulties in defining what constitutes innovation in procurement, and insuf-ficient capability in the function. Innovation Nation builds on HM Treasury's Transforming Government Procurement by recommending that govern-ment departments should include an innovation procure-ment plan as part of their commercial strategy, setting out how they will embed innovation in their procurement practices and seek to use innovative procurement mecha-nisms, based on the DIUS/ OGC guidance included in Finding and Procuring Innovative Solutions ( FPIS). The majority of government departments have now published their Innovation Procurement Plans, but will Innovation Nation make a difference? To find the answer to this, it is necessary to look at what drives public procurement now. Drivers in public procurement As government attention has intensified on public pro-curement then departments have become increasingly sophisticated in their approach - not least to deliver the expectations set by Peter Gershon in 2004. Armies of consultants have marched into public services offering sourcing methodologies to help deliver the expected effi-ciencies from procurement. However, the problem with five, six or even seven- step methodologies is that they all tend to be focused on what the public sector has spent its money on in the past, rather than what it will spend its money on in the future. Put crudely, public sector procurers have been taught to gather data on what has been spent, " dice and slice" the data into categories, assess the opportunity for " savings", and then drive out the opportunities through rigorous tendering and contracting processes. Whilst there is no doubt this approach has reaped rewards, there is a fun-damental problem. It's all viewed as " money" and then " how can the money be reduced", rather than focusing on the value that the money can bring to delivering better public services. Dick Russill points out in his article " At the helm or all at sea" in CPO Agenda earlier this year, procurement is failing to shine as it should because its role is seldom associated with the goals of the business but, instead, focused on cost reduction. He calls this the " self- harming paradox" in that many senior procurement people define their importance by the vast amount of money they spend and then pin their ambitions on making it as small as possible. He says there is little credibility in a business Healthcare NHS Purchasing and suply agency ( PASA)

UKINNOVATION UK75 process seemingly bent upon cost saving itself out of existence! Dick states that procurement's business role is to con-tribute to company strategy, distil out its supply implica-tions, and then act to make strategy happen, whereas its task role is to create and sustain supply markets the business needs for it to succeed now and in the future. The slicing and dicing approach to procurement doesn't fit with this ambition. Herein lies the biggest problem for public procurers. Whilst we are under constant pressure to deliver broader strategic objectives, such as sustain-ability, the link to business objectives is harder to make, and in any case that's not what is measured. The measure is value for money which, unfortunately, is translated into " savings" ( reducing costs), and if this is what drives public procurement then it is perfectly understandable that innovation takes a back seat. Procuring innovation requires procurers to understand the value of the innova-tion to the business. " Innovation" or " strategic" procurement is very different to the more well- known transactional procurement of goods and services. Traditional procurement of goods and services is usually focused on the delivery of cash-releasing savings that can be used elsewhere on the front-line, whereas strategic procurement is focused on the delivery of business objectives and priorities. In health-care this translates to supporting the delivery of better and more efficient patient care. Transactional procure-ment still has high priority to ensure taxpayers' money is not wasted on routine goods and services used in the delivery of healthcare, but strategic and innovative pro-curement has now become an imperative in helping the NHS innovate to deliver the high- quality care for all in the deteriorating economic climate. So how can we drive inovation procurement in the NHS? The new regional duty to promote innovation coupled with the creation of regional Commercial Support Units, provides an opportunity to embed innovation procure-ment into the fabric of the NHS. Regional Innovation Procurement Plans embedded into local planning can be an important driver to mobilise the NHS commercial landscape to source innovation from outside. Regional Innovation Procurement Plans ( RIPPs) can be used to articulate local priorities and objectives and identify the opportunities for sourcing innovation from outside the NHS to meet them. They can also be used to mobilise the various players in the NHS landscape - co- ordinated by the new CSUs - to present a united face to industry and brigade innovation activity so that it becomes more focused on meeting local needs. RIPPs can also help to accelerate what we already know. There are many innovative technologies that already exist that can help NHS organisations deliver their strategic objectives but awareness and take up has tended to be slow. The National Innovation Centre has recently devel-oped a web tool to showcase and help accelerate the uptake of such technologies and RIPPs can ensure they become embedded into local planning. RIPPs can also set out the measures for success, ensuring that procurement is not solely focused on saving money. The Department will be publishing guidance for SHAs in the Autumn to help them think about Innovation Pro-curement Planning. There are already many good examples of innovation pro-curement in the NHS, for example, the HCAI Technology Programme, which is encouraging suppliers and innova-tors to develop technologies to help the NHS combat healthcare- acquired infections such as MRSA and Cdiff, and the forward commitment procurement project at Rotherham General Hospital, which is looking to use procurement to create a step- change in energy efficiency by acting as a lead market for new ultra- efficient lighting. RIPPs can be the vehicle to making these approaches the norm rather than the exception. 1 http:// www. dh. gov. uk/ prod_ consum_ dh/ groups/ dh_ digitalassets/ documents/ digitalasset/ dh_ 098541. pdf 2 http:// www. dh. gov. uk/ en/ Publicationsandstatistics/ Publications/ PublicationsPolicyAndGuidance/ DH_ 085825 3 http:// www. dh. gov. uk/ en/ Publicationsandstatistics/ Publications/ PublicationsPolicyAndGuidance/ DH_ 098876 4 Innovation Nation, Department for Innovation, Universities & Skills, March 2008 5 Transforming Government Procurement, H M Treasury, January 2007 6 Finding and Procuring Innovative Solutions, Department for Innovation, Universities & Skills/ Office of Government Commerce, June 2007 7 http:// www. dius. gov. uk/ innovation/ demanding_ innovation/ procurement_ policy/ innovation_ procurement_ plans 8 At the helm or all at sea, article by Dick Russill in CPO Agenda, Spring 2008 edition 9 http:// www. showcase. nic. nhs. uk/ 10 http:// www. clean- safe- care. nhs. uk/ index. php? pid= 28 11 http:// www. dius. gov. uk/~/ media/ publications/ C/ CS03_ RFT John Warrington is currently Director of Policy and Innovation at the Purchasing and Supply Agency ( PASA) and is shortly to take up a post as Deputy Director, Policy & Research at the new Procurement, Investment & Commercial Division of the Department of Health. Healthcare NHS Purchasing and suply agency ( PASA)