The NHS is an organization, which provides for more than just healthcare. It ranks as the single largest organization in the UK with a million employees and spendings of over 11 billion pounds in goods and services as sourced from (NHS PASA, 2002). This huge amount is judiciously spent as per the government policies; in providing adequate healthcare keeping in mind the environmental issues and regeneration while reducing health inequalities, thereby supporting the UK sustainable development agenda. (Coote A.2002)
The Southmead Integrated Community Hospital bears in mind the same principles while procuring the necessary goods and services for timely and smooth completion of the hospital.
Sustainable procurement as given in the (Friends of the Earth 2003) is the use of advanced technology and well-equipped economical state to derive the best possible healthcare through efficient procurement concerning economic growth and upliftment of the society and environment. It is about looking beyond short term growth and costs and focusing on long term growth and Return over Investments (ROI), including social and environmental implications. It offers opportunities to suppliers, manufacturers and contractors to provide goods and services, which are environment friendly and socially uplifting, keeping in, mind the optimum costs for such goods and services. This would in return provide long term cost savings, healthier markets and contribute to wider government agendas. EC (2004)
Sustainable procurement can be termed as good procurement practices as pointed out by (HM Government 2005) keeping in mind the following necessary steps.
- Best Value for Money: Factors, which are taken into consideration, are availability, pricing, cost of goods and services, environmental issues and long-term gains through reduced costs.
- Environmental Aspects: Some of the environmental aspects kept in mind while procurement is improvement in the effects on the environment by the use of goods and services through its full life cycle. This involves raw material, distribution and packaging and end user application thus completing the process from the cradle to the grave. IGD (2003)
- Social Aspects: Aspects for social implications include local communities, poverty eradication, international equity in the distribution of resources, fair and legal labour conditions and other aspects of basic human rights specified by ( Rayner, G. 2002)
The Risks Involved in Procurement ( Problem Statement)
An essential part of a successful procurement is the analysis and careful steps of eradication of such risks. This involves identification, allocation and management of risks in procurement.
Effective management of risks must address the problems and limitation of both the buyer and the vendor thus bringing the equation to equilibrium.
In order to manage risks the procurement process must systematically identify, analyze and assess risks and come to a solution early on in the procurement process. Responsibilities must be assigned to the person in the best situation to manage process and eradicate risks at the minimum haste and cost. This could involve new practices, procedures and systems or simply by negotiating contractual agreements. It is also of importance to figure out the cost of a suitable risk management technique and if it is commensurate with the importance of procurement activity along with the nature and magnitude of the risks involved.
Types of Risks involved (Issues the NHS Procurement Manager would face)
While involved in procurement the project manager of Southmead Integrated Community Hospital will have to undergo certain legal and business risks. Some of the issues which the Procurement Manager of the NHS would most likely face are.
- Direct Contractual Liability: Liability of the vendor to the issuer or the reverse, causes a threat of breach of contract.( Bruntland G.1987)
- Third Party Liability: Potential risks of liabilities between the issuer and the vendor with any other party being the third party.
- Limitations of Legal Recovery: The compensation due from a breach of contract between the issuer and the vendor or the third party are liable to government laws and may not fall in the prerogative of the compensation received.
- Risks of Vendor Covenants: There is always a risk of the vendor losing the capital required to complete the steps of the contract until the end.
- Product design and Construction: It is also a question whether the said project could be completed within the given period by the concerned authorities to meet the optimum expense.
- Operation and Maintenance: The benchmarks set for a given project like this stand a risk of underperformance.
- Financial and Market: This risk involves inflation rates, market prices, interest rates and foreign currency fluctuations.
- Political: The project may be subject to change in government policies by means of a new bill or change in the ministry or change of ruling party.
Managing Risks( The Procurement plan for the NHS Hospital development)
Once the potential risks have been identified and analyzed the adequate eradication or risk management methods may be introduced. The method applied for a particular risk will depend on the kind of vendor and the issuers’ policies and contracts with him.
- Establishing Mechanisms to Monitor Performance: For long-term procurement like the Southmead Integrated Community Hospital, the issuer needs to establish at the outset a clear system of monitoring the project contract performance for an ongoing term. The mechanism may be simple as scheduling frequent meetings with the vendors and the project specific personnel to discuss the progress and problem solving sessions in the meetings.
- Establish Performance Benchmark: Wherever possible the project must enforce benchmarks and regular checks must be made to verify if such benchmarks are being met. Often procurement contracts enforce the vendor to provide for continuous improvement of increased service levels and reduced costs.
The procurement of the Southmead Integrated Community Hospital would involve the following: DH (2004)
- Computer Hardware ( Laptops, Desktops and Printers) Computer softwares, telecom.
- Office Equipment, Office supplies and furniture.
- Facility maintenance services (heaters/coolers, Plumbing, Electrical) and spareparts.
Low Preference Clinical Procurements:
- Wound care( Gauge, Bandage, tapes)
- Examination Gloves( Latex, Vinyl, Nitrile)
- Textiles (Disposable shoe covers, scrubs, sheets, blankets, towels)
- Sharps( Needle, syringes, IV start kits)
High Preference Clinical Procurements:
- Surgical Packs (Standard, custom procedure packs)
- Cardiovascular Implants( AICD, pacemaker, stents)
- Orthopedic Implants( Hip, knee, spine, trauma)
All these could be scheduled to be delivered as soon as the building structure is completed and the beds and lifts installed. These procurement could be completed within a months period of time.
On the basis of the case highlighted in the UKHCA Case Study, the problem statement remains that the client would make haste and not take the necessary time and precaution to conduct a thorough analysis of the tenders it receives through interview with the tender applicants. The council specifies that it would choose the right candidates from an initial interview with them and if they come up with a likeable first impression, their tender would be approved as mentioned by Anthony Collins Solicitors LLP( 2009).
This by far is a very abrupt decision and successful candidates might not have the potentials to execute the job assigned by the council in the development of the hospital.
Therefore, it is suggested that a lengthier approach be taken to judge the preferred candidate.
Some of the strategies the Hospital development Council can adapt are:
- The financial and work capabilities of the tender applicant be analyses with real life past examples of the work done by the particular tender applicant.
- The efficiency of the workforce the tender applicant has in his team be judged with previous examples of the work done by such applicant.
- Previous work done for hospitals could be analysed by the council, apart from the interview could be adopted by the council to judge the right candidate for the tender application.
Every hospital needs to decide how far and how much they are going to go in the evolutionary path to provide the level of excellence in their service. By reaching the clinical preference phase, the hospital can save up to 20% of the costs involved by using the risk management techniques discussed. (NHS undated pp: 53).