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Knowledge Hub

What’s happening with value-based procurement?

Oli Hudson, content director at Wilmington Healthcare, looks at the phrase of the moment in procurement circles – what does it actually mean for medtech?

One complaint about the NHS, that many medtech suppliers I have worked with over the years maintain, is the service’s obsession with short term cost over long-term value.

It is an issue that at least some parts of the NHS seem to share, hence the current vogue for ideas of value-based procurement (VBP).

Value-Based Healthcare has been doing the rounds as a concept for at least ten years, originating with the Right Care programme of Sir Muir Grey in the early 2010s, when it made a connection between the resources used and outcomes achieved, focussing on unwarranted variation and waste reduction.

VBP now has a definition accepted by academics and NHS Supply Chain that stresses two things: apurchasing process that “generates opportunities to release capacity”, and that it should “deliver tangible, measurable benefits that make a positive impact on patient care, and increase efficiency”.

An NHS England board paper in 2017 explored how CCGs could benefit from a value-based rather than cost-based approach. Then, in 2019, it took a sidestep into the world of procurement – with NHS Supply Chain appointing a VBP lead – Brian Mangan – and commissioning a report into how the approach could benefit systems.

The report’s release was suppressed for most of the course of the pandemic. When it finally came, it found three critical success factors:

  • clinical support and engagement – critical to the adoption of VBP
  • a need for common understanding of value between buyers and suppliers
  • assurance from suppliers to substantiate claims aid VBP adoption for NHS trusts

If properly understood by both the NHS and suppliers, then, could VBP offer promise to both sides for the future?

A new momentum for VBP – via systems

The NHS from April 2022 will be divided into 42 integrated care systems. These are integrated bodies of purchasers – involving local authorities, former clinical commissioners, and hospital trusts as providers – and are given a new duty, via the reform of the 2015 procurement of healthcare services regime, to arrange services in the best interests of patients, taxpayers, and the population. Population health approaches should be the norm, and of course this affords an opportunity to look at value for the whole patient population across the system.

The current legislation means three things of note here. Firstly, it requires hospitals to work together as place-based partnerships to secure contracts. This means they can look at the spread of resources with a wider lens, and not be forced to compete for and conserve resources at their own cost centres. Place based partnerships are also likely to tender collectively and engage more generally in joint procurement.

Secondly, these services will be paid for by a block budget, rather than activity-based payments as before the pandemic, giving providers some leeway over day-to-day cost pressures. In the future, contracts are likely to be paid for by a block/blended approach, meaning trusts have a secure baseline of funding but also incentives to achieve value and/or outcomes.

Thirdly, the legislative proposals shift their emphasis from cost to value. Taken in the round, the time is riper for VBP than at any stage in the past decade.

Clinical support and engagement

NHS Supply Chain’s report concluded that clinical support and engagement were essential for VBP – and this is yet another synergy with the new Health and Care Bill, for the legislation also stresses that leading the charge for transformation in a given ‘place’ – a locale of 300,000 to 500,000 people – should be clinicians. Across the NHS, all pathways are in the process of being transformed and this should not be done without intensive engagement by the clinical community. New pathways lead to a need for new technology, and this is when imaginative new procurement can take place.

Cardiology procurement makes VBP real?

Let’s look at an example from Cardiology procurement. An immersive piece in HSJ of 21 October covered a recent collaboration by the South London Cardiac Operational Delivery Network (ODN) and NHS Supply Chain.

The project brought together cardiologists from the five centres in a “clinical council” to improve procurement of percutaneous heart stents, and featured evidence about the various stents on offer obtained by surgeons in real time.

This had real world impact – the process led to the number of suppliers being cut from 12 to two, and to projected savings of 30% of the total spend on the devices across the five trusts – Guy’s and St Thomas’ Foundation Trust, King’s College Hospital FT, St George’s University Hospital FT, Lewisham and Greenwich Trust, and Croydon University Hospitals Trust.

The spend on stents was projected to go from £4.5 million per year to around £3.2 million per year. This is the kind of clinician-led, value-based procurement NHS England will be wanting to see. Many other examples of this kind of project are available in NHS Supply Chain’s own VBP project report and findings. Thirteen pilots are being taken forward as a result of the review, in the areas of capital equipment, cardiology, endoscopy and endourology, ward based consumables, and wound care.


If, as seems likely, VBP does gain a foothold in local purchasers’ mentality, medtech will need to heed the advice of the NHSSC review and ensure it aligns itself with those three critical success factors.

Firstly, when trying to influence local procurement, particularly the use of a new device in a novel clinical pathway, clinical engagement must be sought. It should be aligned with industry on objectives and should use the widest possible array of stakeholders across the place-based partnership, provider collaborative or system.

Secondly, suppliers must ensure their aims – likely to be the achievement of outcomes for patients – align with those of the target system, place, and pathway.

Third is the point about evidence – that all claims proposing a value for systems, involving those patients and the costs (or savings) involved in them should be readily available and based on fully costed business cases – and of course should be understood and valued by the clinicians medtech has engaged with to further the innovation.

If these three areas are focused on, then VBP could well prove a useful concept for medtech over the next few years.