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NHS Procurement Review · PASA · Collaboration with the Public Sector · e-Commerce · Collaboration with the Private Sector · PASA Staff Development · PASA & NHS Trusts · Final Words · Contact Philip Cunliffe discusses the role, aims and objectives of the newly formed NHS Purchasing and Supply Agency with Duncan Eaton, the Agency's Chief Executive. On 1 April 2000 a new Executive Agency of the Department of Health was launched. The NHS Purchasing and Supply Agency was formed out of the now-disbanded NHS Supplies following the Cabinet Office's Review of NHS Procurement published in June 1999. The report recommended that the new Agency should act as a strategic adviser to the NHS on all supply issues. A separate logistics organisation was formed at the same time - the NHS Logistics Authority - to provide the main management of the supply channel for consumable products into the NHS. Prior to the report, NHS Supplies provided NHS trusts with detailed information on their supply spend and performance of supply service, provided around 1,200 supply staff at a local level to trusts, influenced around half of the NHS's annual £7bn spend on goods and services and held contracts with around 1,500 suppliers. In addition, NHS Supplies bought goods and through warehousing and distribution services, sold these goods to trusts and health authorities. NHS Procurement Review [top] The review was commissioned in recognition of various inefficient areas within the NHS procurement function:
A major aim is to secure procurement savings of at least 3% per annum and make a significant contribution to achieving overall NHS targets by generating £1bn a year for patient care. Purchasing and Supply Agency (PASA) [top] I met Duncan Eaton at his headquarters in Reading. A Chief Executive of the new Agency, Mr Eaton not only has a wealth of experience, having held a number of key procurement roles in the NHS, but also has enormous enthusiasm and optimism about how the Agency will perform. "I am convinced," he says, "that, with the agency working in partnership with the Logistics Authority and NHS trusts, the recommendations of the NHS Procurement Review will be successfully implemented." Although the Agency will be operating from the previous NHS Supplies' offices at Reading (head office), Chester and Normanton in the North-East and a smaller office in Sheffield, Mr Eaton believes it is a fundamentally different organisation from NHS Supplies. "As an executive Agency of the Department of Health, it has been charged with the development of purchasing and supply policy throughout the NHS. However, PASA will not just act as an advisory and co-ordinating body but also as the leader in the ongoing modernisation of purchasing and supply in the health service." Unlike trusts and health authorities, there is no board within PASA. Duncan Eaton has this responsibility although there is a ministerial Advisory Board (chaired by Ron Kerr, Director of Operations, NHS Executive) which will ensure the Agency delivers its targets. With the aid of a highly experienced and motivated set of directors, Mr Eaton is currently putting together the strategies for the Agency in areas such as electronic commerce, communications and the spread of best practice. "The structure of the organisation must be right. The structure will be evolutionary and, over time, we may change things internally." Collaboration with the Public Sector [top] Although PASA only has responsibility for NHS procurement within England it has established excellent links with health departments in Scotland, Wales and Northern Ireland. Regular meetings are taking place and a good flow of ideas has come from these. The Republic of Ireland has also been present at these meetings. Subjects such as electronic commerce and training have been discussed as well as opportunities for multinational contracting. Collaboration with other related organisations is also underway. Duncan Eaton has had extensive meetings with Kate Priestley, Chief Executive of NHS Estates, and they will be working closely together in order to co-ordinate common areas of procurement activity. Mr Eaton has also established a working relationship with David Jeffreys, the Chief Executive of the Medical Devices Agency, another DoH executive agency. In addition, PASA is in close contact with the National Institute for Clinical Excellence (NICE), where NICE's work has procurement implications Mr Eaton clearly sees the benefit of these collaborations: "Benchmarking information with these and other related organisations is extremely important." Duncan Eaton also mentioned benchmarking information in this regard: "PASA is positioned very differently from these organisations and can therefore add value". Naturally, a very close working relationship needs to be formed with the Office of Government Commerce (OGC). Shortly after the formal launch of OGC, Duncan Eaton and Peter Gershon met to discuss various matters of common interest. Mr Eaton is pleased to say that a member of OGC will have a place on the Agency's Advisory Board. Electronic Commerce [top] Electronic commerce will inevitably play an important part in the work of PASA and Mr Eaton is currently working up a strategy for the use of e-commerce. "Targets set by PASA must be consistent with the rest of government. PASA needs to consider what works best for all involved. Systems such as SupplyStream will be looked at carefully. We need to ensure that we have available to us the very latest means of transacting business while ensuring cost-effectiveness. Electronic commerce must become a standard way of doing business for trusts, PASA and the Logistics Authority." SupplyStream ,a paperless electronic requisitioning system developed by NHS Supplies and IBM, is currently used by 12 NHS trusts (with 70 others operating a limited version) and was introduced to improve control of local procurement activity. As yet, no decision has been made on the future of SupplyStream. The NHS purchasing card is also seen as another means of reducing purchasing costs, enabling PASA to concentrate its efforts on high-value, more strategically important goods and services. Collaboration with the Private Sector [top] PASA's relationships with suppliers are fundamental, according to Duncan Eaton: "Good purchasing and supply operations are dependent on good relationships with suppliers. Close partnerships need to be forged and maintained. PASA needs to have better relationships with suppliers than may have been the case in the past. Honouring contracts and working on a long-term basis with suppliers will also drive our costs down and improve quality." Input from suppliers, therefore, is crucial, in addition to the right level of competition for suppliers. In general, Mr Eaton is keen to develop a more open and trusting relationship with suppliers and is encouraging his Agency to adopt his philosophy. Mr Eaton is also keen to develop the idea of national and sub-national contracts. "The Agency will continue to negotiate contracts on behalf of the NHS but only where contracts bring benefit to the whole of the NHS 'family'. There will be full involvement of trust supplies managers in the total contracting process." PASA Staff Development [top] There has been a smooth transfer of staff into PASA. In the main, jobs have stayed the same and very few geographical moves have had to take place as the Agency is making use of the three main regional centres. But inevitably, as the structure of the Agency evolves, so this situation may change. People will change jobs as the requirements of the work of PASA change. Levels of purchasing skills must be right and to support this important element, Mr Eaton is also putting a staff development strategy into place. Since taking office, Duncan Eaton has been impressed with the level of skill within both the Agency itself and at trust level: "There are, of course, a lot of high-quality and highly qualified staff already within the Agency. However, there is always room for improvement and I intend to ensure that we make a significant investment in training and development programmes to further raise the levels of professional competence. Also, raising the skill levels of staff within trusts will be a major part of the work of the Agency." The Chartered Institute of Purchasing and Supply will be involved in this process and is already engaged in discussions with the Agency. PASA and NHS Trusts [top] Mr Eaton believes that a better relationship must be forged with NHS trusts: "I am determined to develop a dialogue with trusts. It is true to say that there has not always has been an easy relationship with some trusts in the past. The reality is that both the Agency and NHS trusts are on the same side with a common goal. There should be no hint of competition between what PASA does and what purchasers within individual trusts do. Building up better links with trusts is therefore very important." Duncan Eaton also sees great benefits in the Agency developing links with the Healthcare Supplies Association (HSA): "HSA has a major role to play in training and development. Also, HSA brings together people from other countries. The HSA conference and other activities are useful networking and debating opportunities. HSA should support PASA and procurement in the NHS." Final Words [top] Duncan Eaton is now finalising the framework document which will spell out the exact remit of the Agency and which will have to be agreed with the Department of Health, the Cabinet Office and the Treasury. Mr Eaton's final message to me was that these were exciting times for the Agency: "We have the backing of Ministers to make a real contribution. If PASA is going to be effective, NHS procurement professionals and supply organisations must all have the common aim of contributing to the healthcare of the nation." This article first appeared in GOvernment Procurement Forum folowing an interview on 12 April 2000. For
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