NHS Collaborative Procurement Partnership Total Orthopaedic Solutions

1. NHS Collaborative Procurement Partnership Total Orthopaedic Solutions Khalid Shihadah, Orthopaedic Procurement Specialist

2. The project • Why? • Scope of product areas, structure and benefits • Benefits to suppliers • Feedback from the supplier meetings • Framework solution for the NHS trusts • Timelines • Implementation

3. The project • Total Orthopaedic Solutions is a project which aims to give compliant cover across all aspects of Orthopaedic spend • Offers a strategic model which gives individual NHS Trusts options within and across specialities

4. Current state of Orthopaedics • Crisis looming: rising demand and a reducing budget - need to find efficiencies • Implant costs account for c30% of tariff income, so need to pay closer attention to the costs of the supply chain and choice of implants used • Evidence suggests there is significant waste in the system, and that implant choices are not necessarily driven by the best patient outcomes • All the barriers to world-class supply chains exist in Orthopaedics

5. DH QIPP Orthopaedic group identified requirements • Rationalisation within NHS trusts • Products including implants and instrumentation • Suppliers per trust • Consigned stock levels • Not to limit consultant choice • Good clinical engagement and facilitation • DH QIPP board includes senior orthopaedic clinicians from around the country • Efficiency improvements • Clinically • Supply Chain • Savings - £1.5bn - £2bn directly from procurement

6. Orthopaedics can account for 20% of non-pay spend at individual Trusts. • Spend on Hip and Knee Arthroplasty alone • £825m for the Procedures (Hip 47%, Knee 53%) • £233m for the Implants (Hip 52%, Knee 48%) • Variations in implant cost against Tariff across landscape • Hips 9% – 50% • Knees 17% - 34% *Source: FTN Benchmarking Study June 2010

7. Issues in orthopaedic procurement • Fragmented procurement landscape • Transparency • Cost to serve • Commercial models and supplier behaviour

8. Total Orthopaedic Solutions framework will offer the opportunity for an informed, rationalised approach to Orthopaedic purchasing in order to secure short term savings through effective, surgeon centred procurement, in which NHS Trusts can then reap the rewards of efficiency savings following rationalisation • Rationalisation can come in various forms

9. Strength in members • Four NHS Collaborative Procurement Organisations • 85 Acute Trusts • 60% of the NHS in England • Can achieve effective business solutions through sound Clinical engagement

10. NHS Collaborative Procurement Partnership Surgeon Centred Strategic Purchasing • Surgeons are ultimately answerable to patients • Patient outcome is dependant on a multitude of factors • Understanding that neither the cheapest nor the longest surviving implants are the answer • Surgeon philosophy and local practice determines the options, the Framework identifies the opportunity to be cost effective

11. NHS Collaborative Procurement Partnership Surgeon Centred Strategic Purchasing • Results speak volumes • Surgeon centred rationalisation has led to reduction in spend on products by c20% in lower limb arthroplasty and c30% in Trauma • Decision for award made by Surgeon group at individual Trusts following focussed and relevant financial analysis and sound clinical evaluation • Informed and compliant purchasing has led to more efficient departments supporting clinicians and vast reduction in loan services

12. Scope of product areas Total Orthopaedic Solutions Lots: • Hip Arthroplasty – Primary, Revision, FNOF • Knee Arthroplasty – Primary, Revision • Extremities Arthroplasty – Shoulder, Elbow, Ankle • Trauma Implants & Consumables – All Emergency Trauma and Elective relevant products and CMF • Spine – All Spinal Ortho products • Arthroscopy / Sorts Med – Consumable, Implantable & Capital • Bone Preparation – Cement, Mixing Systems, Pulse Lavage • Power Tools and Consumables – Large, medium and small bone • Regenerative Technology – Biologic and Synthetic bone and soft tissue substitutes • Orthopaedic Generic Instruments – Generic capital

14. Weighting and evaluation • Each Lot is individually weighted and will be evaluated / scored independently • Submissions from Suppliers can be for multiple Lots or a single sub-lot within a designated Lot.

15. Lot specific solutions • Each Lot must perform as a solution in isolation • Bands need to work for varying size NHS Trusts • Bands will vary per Lot • Volume • Total Spend at List Price • Commitment drivers • Sole Supply drivers

16. *Discounts would be variable per band across a range of products. Three trust example

17. Strategic purchasing • Relevant banded discounts • Commitment and Sole Supply options • Total Spend Thresholds • Consignment – Gold Standard • Managed Services • Third Party Vendors • Added Value Proposals

18. Rationalisation not limitation Rationalisation can work in various ways: • Within a Lot • Across a Supplier’s portfolio • Rationalisation to one majority supplier with commitment • Rationalisation to various niche suppliers, with added benefit of “Sole Supply of what they can provide” and the Trust is happy to commit to, over a period of time.

19. Rationalisation benefits • Rationalisation allows for short term, in year target savings to be made. • Beyond award: • Vastly reduced loan service • Increased Efficiency - Clinical, Clinical Support and Supply • Increased throughput • Financial gains through best practice and other incentives available to NHS Trusts

20. The supplier Main incentives for Suppliers: • Ease of route to market • Reduction in Tendering – One Tender Across NHS • Market Share / Volume Sales • Commitment • Profitability

21. The supplier • Project scope removes requirement for repetitive and lengthy tendering • Total Orthopaedic Solutions consists of 10 Lots; 9 of which are tendered regularly throughout the NHS • 1 effective OJEU tender every 4 years across 4 Collaborative Organisations = 36 fewer Tenders • 1 effective OJEU tender every 4 years across 85 NHS Trusts = 765 fewer Tenders • 1 effective OJEU Tender, with effective solutions available to all the NHS

22. The supplier. What are we offering? • Relevant pricing bands per Lot • Ability to add additional incentives for increased discounts • Written, agreed and viable commitment for additional benefits • Ability to offer incentives for good return on investment • Two trusts, same volume, differing levels of profitability • Total Orthopaedic Solutions Framework as a Sales Tool • Opportunities to build mutually beneficial partnership

24. Supplier feedback • Overwhelmingly positive • Reduction in OJEU processes • Allows for business to be conducted and awarded without a middleman; Trust – Supplier relationship • Pricing options are firm and fair and therefore allows for a top level clinical sell • Surgeon centred strategic purchasing assessing product specific benefits, added value needs as well as cost • Concerns • Complexity of multiple Lots • Implementation post Framework award • Trust commitment and spend / usage monitoring

25. Issues in orthopaedic procurement • Fragmented procurement landscape • One OJEU process with subsequent standardised processes which are thorough and efficient • Framework solution allowing for strategic selling and purchasing • One document covering all Orthopaedics • Transparency • National pricing structure across Orthopaedics with realistic drivers and additional discounts • Added value and opportunity to build partnerships • Recognition that transparency works both ways

26. Cost to serve • Rationalised and intelligent consignment stock • Sound specification and implementation which allows for the elimination of loan kits • GHX cataloguing / Standardised Catalogue format including GS-1 • Increased service levels whilst reducing implant price • Recognition that service requirements / theatre support differ from site to site • Commercial models and supplier behaviour • Suppliers have a solution for each Trust; no requirement for direct non-compliant offers • Excellent supplier relationships - finding the right orthopaedic partner • Change in culture and rationalisation providing long term efficiency benefits - clinically, within theatres, within sterile services and through supply chain • Patient pathway improvements • Increased throughput / profitability - For Suppliers and the NHS • Technological advances; up to date and future proofed • Orthopaedics as a total business solution

27. Timescales • Open process tender will begin c.4th September 2014 • Process will close c.6th November 2014 • Framework Award 1st Jan 2015 • 3+1 years • Total Orthopaedic Solutions framework will supersede all other existing framework agreements across each collaborative organisation

28. Implementation • Collaborative procurement organisations will facilitate implementation at their respective member NHS Trusts • Standardised format across each Collaborative • Framework solution will be subject to good clinical engagement at individual Trusts

29. Surgeon Centred Approach • Implementation begins with an understanding of local requirements and should be a staged process bespoke to Trust needs • Initial identification of potential benefit through the Framework for an “as-is” migration (Benchmarking) • Additional financial benefits identified through commercial drivers within the offer schedule • Any further work around rationalisation must then be Surgeon Centred and have good clinical engagement

30. NHS Collaborative Procurement Partnership Importance of clinical engagement Local demographics and treatment principles Implant survivorship not at expense of function Products can offer both at a beneficial cost

31. NHS Collaborative Procurement Partnership Importance of clinical engagement

32. NHS Collaborative Procurement Partnership Importance of clinical engagement

33. NHS Collaborative Procurement Partnership Orthopaedic trauma implants and consumables • Clinically engaged supplier rationalisation through a multitude of options within all sectors of trauma and relevant elective surgery through the framework • Total spend rationalisation within core and specialist sub-lots Hip fracture management Generic plates and screws Specialist plates and screws Cannulated screws Foot and ankle Hand and wrist Intramedullary nailing system External fixation systems Elbow fracture management Shoulder fracture management Cranio-maxillofacial Miscellaneous

34. Strength in members • Four NHS Collaborative Procurement Organisations • 85 Acute Trusts • 60% of the NHS in England • Ability to influence the market for the benefit of the NHS

35. NHS Collaborative Procurement Partnership

36. Questions