The NHS as a good corporate citizen procurement

Choosing Health Briefings

As part of Choosing Health? the national consultation on a new public health white paper the government appointed task groups to lead on eight key themes: Better health for children and young people; Consumers and markets; Focusing on delivery; Leisure; Maximising the NHS contribution the NHS as a whole; Maximising the NHS contribution in primary care; Working for health/opportunities in employment; and Working with and for communities. The HDA supported the task groups, which met during AprilMay 2004, with these briefing papers.

Total NHS spend on wages and salaries and goods and services varies between 5.1 billion (Yorkshire and Humber) and 7 billion (East Midlands and London) The contribution to GDP varies between 6.7% (North West) and 10% (West Midlands). This briefing is based on a regional mapping of NHS activity as a good corporate citizen, commissioned by the HDA from the Kings Fund (Jochelson et al., 2004).

Whats the potential for action on procurement?

Good corporate citizenship in procurement is about increasing the volume of goods and services purchased from local businesses, and buying green and recycled goods. Regional studies on the economic role of the NHS support the idea that NHS trusts should procure more goods from local businesses to help strengthen local economies. The following examples include regional projects funded by regional development agencies, the NHS Purchasing and Supply Agency (PASA) and the NHS, and local initiatives set up by NHS trusts.

Background
The NHS has a powerful economic, social and environmental impact. The all-government plan for action, Tackling health inequalities (DH, 2003), highlighted how the NHSs employment and procurement policies, its capital build, and its training and skills programmes can support local economies and contribute to regeneration. Figures from the English regions illustrate the scale of the NHSs economic impact:

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Action in the regions

North West
The North West NHS Suppliers Bureau, which is being piloted in Cheshire and Merseyside Strategic Health Authority, aims to help small and medium-sized enterprises win NHS contracts. The Bureau provides training on health, safety and environmental issues, NHS tendering procedures, rules of the Official Journal of the European Communities (OJEC), and etrading. It will also create a supplier database for the NHS and other public sector organisations. The North West NHS Passport scheme helps local companies meet health and safety standards for the NHS supply chain.

North East
One North East procurement group has organised meet-the-buyer events with the local chambers of commerce, small business federations and Business Link (www.businesslink.gov.uk). Local businesses have individual interviews with NHS buyers, as well as seminars and exhibitions on health and business topics.

East Midlands
A working group on increasing NHS procurement from the local textile industry is producing guidance for businesses on selling to the NHS, and a directory of suppliers. It is also meeting minority businesses with an interest in tendering for NHS contracts. The Public Health Group is advertising tenders to local producers for supplying fruit to the National School Fruit Scheme. It is also encouraging a group of distributors in Lincolnshire to make a cooperative bid for the distribution of school fruit in the county.

purchases locally produced milk, eggs and meat, and encourages its other suppliers to purchase locally. Barnsley Primary Care Trust has recruited a coordinator to extend local procurement by developing good practice in specifying services and placing contracts. Queens Medical Centre, Nottingham has developed a procurement policy out of its environmental policy. It is working towards the environmental management accreditation ISO 14001 and encouraging its suppliers to achieve that accreditation. Norfolk and Norwich University Hospital Trust, working with East Anglia Food Links, has tested out a range of regionally produced organic meal offerings in its staff and visitors canteen. The London Foodlinks Hospital Food Procurement Project, which is funded by the Kings Fund and the Department for Environment, Food and Rural Affairs (Defra), aims to achieve 10% of hospital food in London sourced from organic and/or local suppliers. Initially the project is focusing on food served in the canteens at Ealing and St Georges hospitals, and canteen and ward catering at the Royal Brompton and Lambeth hospitals. The catering manager of Eastbourne Hospital, part of the East Sussex Hospitals NHS Trust, is setting up a confederation to create links with local producers and, with the help of the East Sussex Food and Health Partnership, creating a directory of local meat suppliers. The Royal Cornwall Hospital Trust is seeking EU funding for a centralised factory to provide cookfreeze hospital food for the region using local products and labour.

Issues
Regional studies of the NHSs economic impact recommend that the NHS should: Work with regional development agencies to open up procurement channels to local businesses Draw up permissible criteria for including social, local and regeneration criteria in procurement contracts Include progress on local procurement in the performance management of trusts. However, there are problems and challenges common to all the regions: Procurement managers often lack board-level support many trusts focus on clinical performance, and finance directors are concerned with lowest cost rather than a broader view of best value Procurement strategies are not strategic enough

West Midlands
The Centre for Healthcare Innovation and Development, part of an innovation hub for all trusts in the region, identifies and tests ideas for innovative healthcare products and then seeks local companies to commercialise them.

Examples of local action

The Fruit Shed, a fruit and vegetable distributor on Merseyside with five employees, won several lucrative contracts after taking part in the North West NHS Passport scheme, as well as a health and safety award from the Wirral Investment Network. West Cumberland Hospital in Whitehaven (part of the North Cumbria Acute Hospitals NHS Trust)

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 they should focus on goods or services that will make the greatest impact on the NHS and the region There is a belief that a focus on price is a requirement of best value information clarifying EU legislation on allowing environmental or social issues to be included in contract specifications, and examples of model contracts, would help to remove misconceptions Suppliers often do not respond to NHS procurement

opportunities as they find it difficult to understand NHS needs regional development agencies and the Purchasing and Supply Agency can facilitate communication and participation through regional business networks and development programmes, and work with trusts and local chambers of commerce to organise meet-the-buyer events.

Sources
DH (2003) Tackling health inequalities: a programme for action. London: Department of Health. www.dh.gov.uk/assetRoot/04/01/93/62/04019362.pdf Jochelson, K., Delap, C. and Norwood, S. (2004) Regional mapping of claiming the health dividend activities in the NHS. London: Kings Fund.

About the Health Development Agency

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ISBN 1-84279-293-8 Health Development Agency 2004

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