LPP benchmarking and analysis service unlocks full potential of NHS procurement
The need for transparency in and benchmarking of NHS spend has become something of a mantra as we deal with rising demand and falling income - but there’s little point in benchmarking without analysing the detail to identify how to get best value from procurement.
NHS London Procurement Partnership members are now able to set the standard for benchmarking in the health sector – as LPP members can access a full service, from data cleansing, benchmarking and analysis, to developing work packages enabling their organisations to take advantage of the savings and value opportunities identified. This is all part of the service provided within the membership fee.
Why benchmarking and analysis matters
LPP’s benchmarking and analysis service supports members to unlock the potential of procurement to make a major contribution to achieving QIPP savings targets. Our new service addresses the gap in meaningful procurement information by pooling analytical resource, and aims to enable members to drive value for the NHS and patients through price alignment and process efficiency.
Achieving this requires a fundamental improvement in the quality and transparency of data provided by members – and the LPP service is set up to make that easy and confidential. Only LPP will be able to definitively identify the origin of data.
How the service works
• You receive data templates, which you then complete and upload.
• A first run analysis is carried out to assess the quality of your data.
• If there are gaps in the information you have provided, LPP will advise your organisation on completing the data templates.
• Once LPP has worked with you to produce a satisfactory data set, LPP identifies some early opportunities to drive savings.
• At each data run, the LPP analytics team assesses opportunities on your behalf, but also assesses the quality of your data, continuing to advise you as necessary on ways to improve your data, and data consistency. In this way, members will be driving up the standards of data provision and so maximising the potential of the benchmarking service for all members.
• Having identified opportunities to improve savings and processes, LPP works with members to identify their priorities, and determine what strategy to adopt to achieve them. That might be negotiating on price, building variance into a contract, or collaborating with others to influence a deal.
• A work package to support that strategy is then produced. Some members have the capacity and capability to carry out analysis internally. Where that isn’t the case, project support is available from the LPP team at an extra cost.
This service meets the criteria identified by our members for an analysis service. It:
• overcomes inconsistencies in data reporting and analysis – the percentage of products classified using standard criteria by the 16 members taking part in the pilot rose from five to 84 per cent;
• provides the analytical tools and expertise for a professional analytical service – a centralised team to do the data crunching and provide help with improving data quality and present real, qualified opportunities;
• makes data provision confidential – only LPP and the original provider will know the origin of the data featured;
• goes beyond the “known” data – introducing external data sources and other information to give you competitive advantage;
• offers an intuitive interface with minimal training, but the flexibility and functionality to drill right down to item level and view data in a variety of formats.
Savings and anomalies identified, processes improved - even with poor data
Working with uncleansed data will still identify potential savings for members. Uncleansed refers to the many different ways organisations may record and classify their purchasing – a range of different codes may be being used which actually represent just a single product. This enables suppliers to charge a variety of prices. Here’s what happened, however, when we used the LPP service to analyse a member’s use of the LPP Orthopaedics and Spinal Framework: savings of £139,000 were identified analysing original data. Cleansing that data (standardising product coding to clarify the products being purchased, and analysing the external factors affecting an organisation’s purchasing habits) resulted in an ultimate saving of £531,000. Looking at the chart below, the analysis also resulted in the removal of one supplier from the framework – having been provided with the benchmarking evidence, that particular supplier refused to honour the original contract pricing.
Data analysis also throws up anomalies – organisations usually assume that if they’re buying the largest quantity of an item, they’ll be getting the best possible price. Analysis of users of an LPP framework for the purchase of ceramic knee implants revealed that the largest purchaser of implants (by volume) was being charged in the lowest volume price band - correcting the banding cut the member’s costs by 50 per cent, equivalent to almost £30,000 a year. Volumes of particular items purchased won’t necessarily determine best price - there are many factors at play, which are built in to our data crunching and analysis service.
Data is key
London's NHS provider organisations account for about £12bn of London’s total £14bn NHS operating turnover. The LPP service captured the data for 60 per cent of that turnover during the pilot period, and will have captured 90 per cent by December 2013, making this one of the most comprehensive benchmarking services available.
This service is worth around £40,000 on the open market – but is provided to LPP members within their annual fee. As LPP Chair and Chelsea and Westminster NHS Trust Finance Director Lorraine Bewes said on launching the service, “LPP will do all the heavy lifting, enabling you to concentrate on your core business This service is for you, to help you drive value that will benefit patients. We all need to collaborate and provide our data in a timely manner to benefit, but the result is best practice procurement, which will drive savings opportunities no matter what type, size and location of your organisation.”
What’s included in LPP members’ benchmarking and analysis service:
• Business analytics tool
• Benchmarking tool
• Analytics service
• Data enrichment
Also available at an additional cost:
• Local catalogue management
• Transactional Document Exchange
Savings and anomalies identified,processes improved - even with poor data
Working with uncleansed data will still identify potential savings for members. Uncleansed refers to the many different ways organisations may record and classify their purchasing – a range of different codes may be being used which actually represent just a single product. This enables suppliers to charge a variety of prices. Here’s what happened, however, when we used the LPP service to analyse a member’s use of the LPP Orthopaedics and Spinal Framework: savings of £139,000 were identified analysing original data. Cleansing that data resulted in an ultimate saving of £531,000.
Data analysis also throws up anomalies. Analysis of users of an LPP framework for the
purchase of ceramic knee implants revealed that the largest purchaser of implants (by
volume) was being charged in the lowest volume price band - correcting the banding cut
the member’s costs by 50 per cent, equivalent to almost £30,000 a year. Volumes of particular items purchased won’t necessarily determine best price - there are many factors at play, which are built in to our data crunching and analysis service.
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