CASE STUDY: Process Improvement
An NHS Hospital Trust needed to make significant savings in order to balance its books.
One opportunity was to reduce the cost of the £60m-worth of medical supplies it purchased each year. Traditionally these had been ordered by consultants, managers and nursing staff across the hospital, as well as by a central procurement department, but with little central control and no corporate knowledge of the total commitment until the accounts department paid the bills, so:
- No opportunity to leverage the total value of expenditure
- No standardisation on selected best value suppliers
- Too little visibility of ordering to manage budgets smoothly and avoid overspend
An e-procurement system had been introduced, but uptake was very slow and patchy. All attempts to introduce standardised products had foundered on the complete lack of trust between procurement and the clinical managers and consultants.
AN INPACT assessment confirmed that lack of trust across the hospital was almost non-existent and certainly would block all initiatives, even though there was general agreement that something had to be done to reduce costs.
The management culture was a mix of Pragmatic/Anarchic and Structuralist: a strong ‘command and control’ culture prevailed, but within this managers were able to set up their own systems and manage processes in their own way, as long as they achieve clinical standards and performance targets. There were laid-down procedures, but they were only followed if managers saw benefits for themselves and their patients.
Process capability was a mix of level 1 (ad hoc) and level 2 (defined).
The analysis indicated that conventional strategies for developing standardised processes would not work here. Instead the strong silo culture had to be accommodated. Standardisation of medical supplies is regarded by NHS as a key part of its drive to improve patient safety, so the recommended strategy was to refocus the standardisation initiative away from cost reduction, onto clinical performance improvement.
The solution was to set up a standardisation panel, championed by the CEO, led by the Head of Finance and the Safety Improvement Manager, populated entirely by clinical managers and consultants, with procurement doing the work in the background to identify best value products for trial and putting contracts in place.
In parallel, it was recommended that the e-procurement system be enhanced to provide real-time information to clinical managers so they could use it to manage their budgets. This would help them to gain the confidence to move all ordering over to the electronic system, which would in turn provide better commitment information to management.
UK public sector ICT spending currently stands at £16.8bn and is set to grow to £20.2bn by 2011/12. Research suggests that less than a third of this will succeed in producing the desired performance improvements and cost savings.
If you are facing this situation, you might be interested to find out how INPACT can help you focus on the cultural and process capability foundations needed to enable successful implementation of change projects in your organisation.
Take a look at our INPACT Project Readiness Assessment demonstrator and then contact us.