Commercial Best Practice 1. Locally lead the NHS

Commercial Best Practice

1. Locally lead the NHS

2. Work with community partners

3. Engage with public and patients

4. Collaborate with clinicians

5. Manage knowledge and assess needs

6. Prioritise investment

7. Stimulate the market

8. Promote improvement and innovation

9. Secure procurement skills

10. Manage the local health system

11. Make sound financial investments

Where Procurement Skills have Impact ?

World Class Commissioning Competencies

PROCUREMENT SKILLS

1. Locally lead the NHS

2. Work with community partners

3. Engage with public and patients

4. Collaborate with Clinicians

5. Manage knowledge and assess needs

6. Prioritise investment

7. Stimulate the market

8. Promote improvement and innovation

10. Manage the local health system

11. Make sound financial investments

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4

56

7 8

9

1011

Strategic SourcingSupplier Relationship ManagementSupply Chain Theory

Market Engagement and AnalysisBusiness analysis and commercial planningStakeholder/Customer Relationship Mang

Project ManagementSpec Dev, Tendering, Legal and RegulatoryCommercial, Finance, Budgetary, AccountingContracting and NegotiationMarket ManagementContract and Performance Management Contractor and Supplier Management

8

9

10

1

1. Analyse Undertake Opportunity Assessment Service/Needs Review Data Collection and Analysis Benchmarking Market Analysis

2. Plan Establish Stakeholder Groups Demand management Develop Procurement Strategy Develop Project Plan and Risk Register Use best practise models to develop Expressions of Interest, Pre-Qualification Questionnaires,

Specifications, Invitation to Tenders, Evaluation Criteria, Draft Contracts, SLAs and KPIs

3. Do Manage the Tender Process Provide Legal Advice and Contract Drafting and Production Negotiate Contractual Terms & Conditions, Price and Performance Contract Award and Implementation

4. Review Develop Supplier Relationship Management Ongoing Supplier management against Contract Terms, SLAs and KPIs Benefits Tracking Periodic Stakeholder Reviews

Procurement Stages

Commissioning Cycle and Competency 9 - Procurement

Strategy Cycle

Operational Cycle

Priority Setting Service Design

Strategic Commissioning

Supplier/Contract Strategy

Budget/Affordability Model

ServiceSpecification

Market Management

OperationalReporting

ContractManagement

Supplier Development

Needs Assessment

Demand Portfolio

Contracting Process

Adapted from Newchurch for the Leadership Academy

Source: IPC framework for joint commissioning and purchasing of public care services - CSIP

Procurement forms an integral part of the process...

Commissioning and Procurement examples:

1. Analyse Current & future needs

Suppliers strengths and weaknesses

2. Plan What is being provided and what is

needed Developing service specifications

and decide on contract type and terms

3. Do Decommissioning redundant

services Tendering requirements and letting

contracts

4. Review Identifying any change in

population Monitoring and reviewing contracts

Integrated Commissioning

Review

Plan

Do

Analyse

PROCUREMENT

PROCESS AND

SKILLS

COMMISSIONING PROCESS

Gap Analysis

Joint commissioning

Strategy

Service Design

Change Management

Budget & Market Management

Strategy Monitoring Performance

Management and Review

Purpose and Guidance Market Analysis Resource

Analysis

Risk Analysis

Supply and Demand Analysis

Procurement forms an integral part of the process

1

23

4

3

4

4

5

6

7

7

6

8

8

8

9

101011

11

2

2

2

87

Project Management

Operations

Commercial/Procurement

Medical/Clinical

IM&T

Legal and Regulatory

Finance

Communications

PURCHASED HEALTH CARE

COMMISIONING SKILLS SET

Market Engagement and Analysis Business analysis and commercial planning Project Management Strategic Sourcing Supplier Relationship Management Supply Chain Theory Stakeholder and Customer Liaison and Relationship Management Specification Development, Tendering, Legal and Regulatory Commercial, Finance, Budgetary and Accounting Contracting and Negotiation Market Management Contract and Performance Management Contractor and Supplier Management

World-class Commissioning identifies Procurement as one of the key organisational competencies that PCTs need to secure to deliver health and care services, these skills comprise:

Procurement Skills

Key Statements of Procurement Maturity

Procurement impact / value

Board visibility and interaction

Demand management, innovation and engagement

Management information

Policy and process compliance

Sourcing / market management

Purchasing processes

Supplier relationship management

Collaboration

Green / sustainable

The PCT recognises that the benefits of procurement are greater than cost reduction, and procurement supports the strategic agenda of the PCT

Procurement elements of commissioning are represented and addressed at board level

The PCT systematically challenges demand, introduces innovation and optimises resources whilst engaging with clinicians and other stakeholders

The PCT has full visibility of its external spend, provider performance and commissioning function performance

The PCT shows high levels of compliance to policy, processes and contracts established or selected by the PCT

The PCT has commissioned the right contracts, with the right providers, through the right route, in full knowledge of the options and how they will meet their needs

The PCT is acquiring all products and services through an efficient purchasing process

The PCT is developing effective relationships with key providers

The PCT is taking advantage of collaborative opportunities and is aware of the potential benefits and value brought by collaboration

The PCT is maximising social and economic benefits and minimising damage to the environment through the services it commissions

Aligning the Procurement Diagnostic with WCC

WCC Competency

Maturity Statement

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Demand management, innovation, stakeholder engagement

X X X X X X X X X

Visibility of spend and performance X X X X X XCompliance X X XCorrect contracts and providers X X X X X XEfficient procurement processes XEffective relationships with supplier X X X X X X XCollaboration X X X X X X X XMaximising social and economic benefits

X X X

Recognition of wider benefitsBoard involvement

The Blueprint is based on a framework which covers all the key activities of a PCT as a commissioning organisation

13

A.T. Kearney

House of Commissioning*

1. Strategy, Organisation

& Governance

1. Strategy, Organisation

& Governance

5. Segment strategy &

Implementation

5. Segment strategy &

Implementation

4. Health Market Analysis

4. Health Market Analysis

6. Segment & Provider Management

6. Segment & Provider Management

9. Performance Management

9. Performance Management Knowledge / Information

ManagementKnowledge / Information

Management

12. Support Functions(HR, Finance, Legal, IT, Estates)

12. Support Functions(HR, Finance, Legal, IT, Estates)

3. Clinical Leadership3. Clinical Leadership

2. Public Health

Management

2. Public Health

Management

Strategic Commissioning

11. Talent Management & People Development11. Talent Management & People Development

10. Knowledge & Technology Management

10. Knowledge & Technology Management

Processes

People(1)

Information & Data

• Provides a dedicated market management role over three “dimensions” (segment, provider and system)to ensure strategies are delivered,

• Provides a dedicated market management role over three “dimensions” (segment, provider and system)to ensure strategies are delivered,

8. Programme & Change Management

8. Programme & Change Management

7. Stakeholder Engagement & PPE

7. Stakeholder Engagement & PPE

Notes: (1) Includes skills, knowledge and behaviours * Adapted from A.T.Kearney’s House of Purchasing and SupplySM

Sources: AT Kearney

• Centre-led strategy for commissioning that is linked to the PCT’s overall Strategy and Operating Plan

• Multi-year plans for leveraging provider market opportunities

• Greater focus on strategic vs transactional activity

• Centre-led strategy for commissioning that is linked to the PCT’s overall Strategy and Operating Plan

• Multi-year plans for leveraging provider market opportunities

• Greater focus on strategic vs transactional activity

• Deployment of advanced techniques to model current and future needs – identifying trends and shaping provider markets

• Deployment of advanced techniques to model current and future needs – identifying trends and shaping provider markets

• Priorities are identified based on a clear set of goals and an understanding on the market opportunity

• Categories are assessed for collaborative sourcing opportunities

• Priorities are identified based on a clear set of goals and an understanding on the market opportunity

• Categories are assessed for collaborative sourcing opportunities

• Strategies are developed based on a deep understanding of the current and prospective provider market – eg, non- traditional providers

• Should cost analysis is used to support provider discussions

• Strategies are developed based on a deep understanding of the current and prospective provider market – eg, non- traditional providers

• Should cost analysis is used to support provider discussions

• Pro-active and systematic measuring of commissioning outcomes

• Measures linked to the overall goals of the organisation

• Pro-active and systematic measuring of commissioning outcomes

• Measures linked to the overall goals of the organisation

• Broad understanding of specific role in supporting overall commissioning goals – eg, recruitment strategies requiring greater engagement with universities; legal considerations relating to market strategies

• Broad understanding of specific role in supporting overall commissioning goals – eg, recruitment strategies requiring greater engagement with universities; legal considerations relating to market strategies

• Data across the full spectrum of providers/services available in a form to support commissioning activity

• Category strategies , contracts , etc, are stored electronically and readily available to key stakeholders

• Data across the full spectrum of providers/services available in a form to support commissioning activity

• Category strategies , contracts , etc, are stored electronically and readily available to key stakeholders

• Commissioning is directly engaged in with patients to define requirements

• Proactive and reactive media management processes

• Commissioning is directly engaged in with patients to define requirements

• Proactive and reactive media management processes

• A systematic process for assessing future commissioning needs based on capabilities, skills, etc

• Talent identified and nurtured – use of individual development and retention plans

• A systematic process for assessing future commissioning needs based on capabilities, skills, etc

• Talent identified and nurtured – use of individual development and retention plans

• Use of a range of contract types based on need

• Provider management covers strategic as well as operational goals

• Use of a range of contract types based on need

• Provider management covers strategic as well as operational goals

• Supporting commissioning process through market-facing specification improvement initiatives

• Provides clinical leadership, governance and assurance

• Supporting commissioning process through market-facing specification improvement initiatives

• Provides clinical leadership, governance and assurance

Not Exhaustive

D

E

M

A

N

D

GATHER DATA AND ANALYSIS

Requirements Planning

Customer Demand

Policy Initiatives or Imperatives

PLANNING

Recurring Requirements

Unforeseen Requirements

Prioritisation

Aggregation

Co-operation

Collaboration

Procurement Strategies

Procurement Plans

Market Intelligence

C

O

N

T

R

A

C

T

I

N

G

Frameworks

Call Off Contracts

Service Contracts

Supply Contracts

Contract Management

Supplier Management

Performance Management

Contracts Administration

ACQUISITION

S

U

P

P

L

Y

Develop Specifications

Supplier Landscape

Procurement Strategy

Supplier Capability

CATEGORY MANAGEMENT

The schematic below illustrates Kearney’s industry standard process flow of Strategic Sourcing

World Class Commissioning Competencies and the Commissioning Process

Overview WCC in Processes

Access Needs

Review Provision

Prioritise

Define Services

Shape Supply

Communicate Change

Manage Performance

Plan5. Manage knowledge and

assess needs6. Prioritise investmentsEngage and Lead

1. Locally lead the NHS

2. Work with community partners

3. Engage with public and patients

4. Collaborate with clinicians

Procure7. Stimulate the market8. Promote improvement

and innovation9. Secure procurement

skills

Manage10. Manage providers11. Make sound financial

decisions

The Good Practice Framework

ContractStart upContractStart up

ProcurementInitiation

ProcurementInitiation

Policy ContextPolicy ContextNeeds

AssessmentNeeds

Assessment

ProcurementRoute

ProcurementRoute

Specification DevelopmentSpecification Development

ConsultationConsultation

MarketSoundingMarket

Sounding

Evaluation PlanEvaluation Plan

StandardContractsStandardContracts

TenderingTendering

Provider SelectionProvider Selection

ContractAward

ContractAward

OutcomesOutcomes

Current Service & Demand

Current Service & Demand

Contract Review

Contract Review

BenchmarkingBenchmarking

Market Assessment &

Stimulation

Market Assessment &

StimulationOptions

Development & Resourcing

Options Development & Resourcing

Pricing ModelPricing Model

Commissioning Plan and Business Case

Commissioning Plan and Business Case

Performance MeasurementPerformance Measurement

Continuous ImprovementContinuous

Improvement

Strategic Review

Strategic Review

StrategicPlanning

Acquisition

Performance Management

Stakeholder Engagement

Where can CSUs add value?

Skills and capabilities for assessment

Clear vision & leadership

Robust governance

• Benchmarking

• Cost base analysis

• Coding practice

• Process redesign• Admin & FM productivity & management

• Performance management•Quality Account management

• Service line management

• Rostering& workforce strategy• Theatre planning and scheduling• Capacity planning and scheduling• Clinical engagement

Productivity & performance improvement

• Spend analysis

•Procurement strategy, structure and skills• Sourcing and category management

Supply chain management & strategy

• Contract and supplier relationship management

• Distribution and inventory management (departmental and cross-Trust)

• Purchase-to-pay process improvement

• Benefits realisation and tracking

Market planning & strategy• Demand forecasting• Customer analysis (incl. commissioning strategy)

• Competitor analysis

• Private income strategy

• Core strategic analysis (e.g. PEST)

Change management & project management

• Project management

• Project planning & resource allocation

• Stakeholder management

• Patient involvement and experience strategy

• Marketing & communication

• Management information & reporting

• Overall & service line governance