Supplies Management for Health Services

Stanley Hyman

• Publisher: Routledge
• Year: 2022
• Print ISBN: 9781032248127
• eBook ISBN: 9781000569513
• Edition: 1
• Topic: Business
• Subtopic: Organisational Development
• Index: Business

First published in 1979, Supplies Management for Health Services looks at the characteristics and problems of hospital suppliers and examines the way in which the hospital and the National Health Service deal with supplies problems and relations with suppliers. Beginning with a description of the National Health Service and its supplies' organisations and the role of the Department of Health and Social Security in this field, the book then reports on the detailed studies made over two years of the supplies' problems of ten London area health authorities and ten London manufacturers of medical equipment.

The NHS situation is then contrasted with the supplies' situation in three non-health organisations and with the health supplies situation in France and West Germany. The final part of the book analyses the information obtained, proposes a means of assessing supplies systems, and evaluates the NHS situation. This is followed by the realistic proposals for reform, advocating a system similar to that used in British defence services, based on a central procurement agency, close cooperation with private manufacturers, and manufacture by government where necessary. This book will surely interest students of economics and global health.

Part One
THE NATIONAL HEALTH SERVICE

DOI: 10.4324/9781003280231-1

1 THE STUDY OF HEALTH SERVICE SUPPLIES

DOI: 10.4324/9781003280231-2

This book reports on a research project that investigated the problems associated with supplying the British National Health Service with the goods and services it requires. The general problem of procurement is magnified in the National Health Service.

There is no single central buying organisation but a large number of independent regions and areas (and hospitals within areas) covering a range of purchases now valued at about £600 million pounds. While that represents only about 8 per cent of the total annual NHS expenditure, it is a vast amount of money and the ways in which that money is spent must be a matter of concern; it can affect the welfare of patients and is part of public expenditure.

Good procurement necessitates consideration of the needs and problems of suppliers, and thus concern about the effectiveness of the complete procurement process. There is a single system, involving both the NHS and its suppliers. The system perspective increases the objectivity of this study as we have not been biased towards the narrow interests of either buyer or supplier.

The project has been based on a detailed study of ten area health authorities in three Thames regions of the National Health Service and of ten manufacturers of electro-medical equipment. Although they represent only a small part of total purchasing—perhaps 3 per cent—these products are distinctive to the NHS, whereas the majority of purchases represent such items as food, clothing, and building maintenance expenses that are used by many organisations, industries and social services.

A study confined to health services supplies would lack opportunities for comparison and appraisal and the project has therefore compared the NHS supply situation with that in one large private firm, one local government authority, one nationalised industry, and with the hospital supply situation in France and West Germany. This has been an ambitious programme, particularly as the bulk of the work has been done by a part-time research assistant and a part-time secretary over two years, and it has been impossible to be comprehensive. Most of the twenty-three collaborating organisations were visited once every three months, first to discuss the general supplies situation then to investigate particular problems identified at earlier interviews by observation and discussion. The French and German studies have been based largely on literature surveys, correspondence, previous market research studies, and a series of visits to French and German organisations.

Origins

The project originated in a study concerned with the general problem of efficiency in organisations. That began at Kingston Polytechnic in 1967 and involved a series of visits to two each of five different kinds of organisation by a team of specialists in finance, personnel, marketing, general management, and operations management. Although each visit was brief and the assessment crude, it was possible to rate the organisations in terms of assessed efficiency and thus to identify the best and the worst. Those two organisations were studied in the light of a hypothesis that efficiency was a function of the external relationships of an organisation, and not primarily of its internal organisation. Some initial evidence was obtained that indicated the correctness of the hypothesis.¹

One type of organisation investigated was the hospital, and the team found it extremely difficult to come to an initial assessment on the efficiency of the hospital. A number of attempts have been made by researchers to formulate a procedure for making an objective assessment of hospital effectiveness. One obvious method is to consider costs but that is unhelpful when the purpose of the hospital is to preserve or improve health. One can conceive of a hospital with no current costsperhaps an empty hospital—but one failing to fulfil its proper function. If patient care becomes the criterion of efficiency, most studies have been concerned with the length of time patients have had to stay in hospital for particular illnesses or operations. Those studies are certainly important but inadequate until one knows the subsequent fate of the patient. If he is sent home too soon and drops dead the next day, the hospital is not efficient, but it might claim that its statistics demonstrate its efficiency in getting patients home more quickly than anybody else.

As the team had no specialist knowledge of the hospital, it decided to study one particular aspect of hospital activity where its collective industrial experience might enable it to make a justified judgement—the purchasing of hospital supplies from industry. An initial enquiry demonstrated the complexity of the subject and led to a pilot study in the Kingston Hospital Group in 1969-70 which was financed by grants from the Nuffield Provincial Hospitals Tmst and the then South West Metropolitan Regional Hospital Board (out of private funds). That study involved some investigation of suppliers’ problems. It was a useful pilot study but the scale of its operations and the difficulties of undertaking the project indicated the need for further work. The reorganisation of the National Health Service in 1974 may have changed the situation radically but no related studies have appeared. An application was made for a grant to the Social Science Research Council and the project started in April 1976.

Related Studies

There is now a wide range of studies of hospitals, health services, and the British National Health Service in particular. They are well documented and a number of books exist reviewing relevant knowledge, some of which are listed in the bibliography. Most of the studies are specialised, concentrating on specific problems or procedures of the NHS, with a view to improving performance. Another range of studies are ‘broad brush’ reviews of knowledge and problems, such as Brian Abel-smith's Value for Money in Health Services. Robert Maxwell’s study of Health Care: The Growing Dilemma in nine major countries is pains-taking and most informative, analysing expenditure in those countries and demonstrating enormous economic problems associated with satisfying different and future health requirements.

One range of studies by Professor R. Revans has been concerned with several dimensions of hospital life. His books on Morale in Hospitals and Communications in Hospitals are pioneering in many senses and undoubtedly will influence the future management of hospitals.

So far as procurement is concerned, the literature appears to be divided into (a) highly technical studies about particular products, and (b) anecdotal articles that expound at some length and with considerable repetition the remembered problems of NHS supplies officers. Very few of the existing studies are rigorous and analytical and a great deal of valuable knowledge is being lost through the failure to adopt systematic procedures for learning about the experience of many successful supplies officers.

None of the existing studies (apart from my report on the Kingston project) appears to be concerned with the twin problems of the NHS and the supplier. Stringent separation has led to the absence of enquiries into the total procurement process that to be successful must incorporate the needs of both of the principal parties. Such studies have not been made because most investigators tried to meet the immediate problems of one party. As a result, many of the really important and difficult problems have been left on one side.

Studies of Supplies

The field of study of what is variously known as purchasing or supplies management, or procurement management, is somewhat meagre, particularly in Britain. The Institute of Purchasing and Public Supplies has for many years led the way in the training of managers concerned with purchasing, and it publishes useful journals. It has not undertaken research to any extent, and its library is small. The situation in the USA is different, with many journals and books reporting on problems and on research projects, and many professional institutes and university courses are devoted to the subject. In Britain, serious academic study has been slight, with useful initiative being taken by the Administrative Staff College in the form of the work of Dr David Farmer.

In industry, both public and private, buying is still a poor relation of production and marketing, and many opportunities for sensible economies and quality improvement continue to be missed. The salaries of purchasing managers appear to be comparatively low, and the procedures of many firms in respect of buying, contracts and payments does not seem to be satisfactory. There are some outstanding exceptions but these tend to be associated with large organisations. British Airways has some of the most advanced procedures now in use and they could be matched with similar success stories elsewhere. But good purchasing seems to be very dependent on the abilities of individuals, without the general theory and status associated with such areas as accounting and engineering that form such an important part of organisation effectiveness.

This is not a specialist study of procurement management —a suitable umbrella term to cover the whole process—and no expertise is claimed in this field. We have looked at the work of purchasers and suppliers and attempted to assess it objectively without being able fully to appreciate all the burdens of the individuals on both sides because we have not worked as the professional has done. However, through an association now extending over ten years, I believe that I have obtained an appreciation of the difficulties and successes of procurement. The loyalty and energy that most people concerned with NHS supplies devote to their work is outstanding, especially when much of it must be repetitive and dull. The project should be seen as a study of procurement management and as a study of the relationship between the private and public sectors in what is called ‘the mixed economy’. These issues are important to political and financial management in general and need analysis and discussion. The final part of this book aims to contribute to that debate.

Organisation Theory

The implications of this study for the theory of organisation are considerable, especially in respect of inter-organisation relationships. This is a relatively new facet of organisation studies, and the recent book edited by William M. Evan² does indicate a degree of progress in a vital but generally neglected field. When the organisation is studied from the outside instead of internally, many new considerations emerge. Internally, an organisation appears to be a collection of individuals, resources, and conventions that bind it together into an entity isolated from the rest of the world. Viewed from the outside, the organisation appears to have one or a few very distinctive characteristics, and many more common to a wide range of organisations. The common needs of organisations may be better met by each organisation having closer links with general common service suppliers, and then concentrating on its tmly distinctive needs and abilities.

Notes

1. 1. S. Hyman, ‘How to Be efficient’, Management Today, June 1968.
2. 2. William M. Evan, Inter-organisation Relations, Penguin, London, 1976.

2 ASSESSING SUPPLIES SYSTEMS

DOI: 10.4324/9781003280231-3

The proper focus of attention in the consideration of health is the welfare of the individual and the availability of doctors and nurses. But the work of medical staff is dependent on the provision of a vast range of products and services that make it possible for expertise to be properly applied and used. Thus the emotion and drama of medicine has to be translated into many more mundane activities, such as the process of deciding what goods and services should be bought and then obtaining them in appropriate quantities and qualities and at optimum prices. Hospitals have to be designed, built, equipped and kept running on a twenty-four hour basis every day of the year. In addition to hospitals, there are numerous clinics and other medical centres, nearly all of which are in Britain operated by the NHS out of public funds. In other countries, there are varying mixtures of public and private provision of health services, and one estimate indicates that probably 60 per cent of the world’s population are now served by public medical services. Most informed opinion suggests that this proportion will increase over the next few years and that possibly by the end of the century the proportion of totally private medical treatment will be infinitesimal on the scale of world population. Whether medical services are private or public, they will still require the goods and services ancillary to medical practice.

The significance of health service supplies increases with the awareness of rising demand for health care throughout the world. One authoritative study shows that a country which had spent 3½ per cent of its national product on health in 1950 was spending 6 per cent of a much larger gross national product by 1969. In that year the United Kingdom spent about 4½ per cent of GNP and the United States about 6½ per cent. That 2 per cent difference costs the United States 19,000 million dollars. In the United States the annual health expenditure per person was about 400 dollars in 1972 but that would pay for only about two days of acute hospital care, including physician’s fees. In Britain and in most other countries, approximately 70 per cent of health service expenditure goes on salaries and wages. The remainder goes on hospital building and the supplies of medicines, medical equipment and dressings of all kinds.

Bearing in mind the very low standards of health care in developing countries, it is obvious that the future demand for doctors and other trained medical personnel is going to be enormous and far beyond the resources now available, or likely to be available, to produce fully trained doctors to the standard now considered normal in advanced countries.¹

The Nature of Supplies Management

The work of supplies managers in most organisations is largely concerned with routine purchasing of standard requirements. From one perspective, it appears to be a dull bureaucratic paperchase that requires little initiative or ability. At the other end of the scale, the chief buyer for a large organisation may be spending millions of pounds a year and concentrating his efforts on discovering new and better products from more reliable suppliers and at better prices, a search that may take his interests all over the world. For most organisations, procurement lies somewhere between these two e...

Table of contents

• Cover
• Half Title
• Title
• Copyright
• Original Title
• Original Copyright
• Contents
• Foreword
• PART ONE: THE NATIONAL HEALTH SERVICE
• PART TWO: THE SUPPLIERS
• PART THREE: OTHER SUPPLIES SYSTEMS
• PART FOUR: DANGERS AND OPPORTUNITIES
• Bibliography
• Index