NHS Shared Business Services: Share the Health - Ruth Ormsby and Jim Vincent
After three years the National Health Service’s move to shared services has generated significant savings and it is moving towards profitability. Ruth Ormsby of the Department of Health and Jim Vincent (pictured) of NHS Shared Business Services tell FDE that, despite being in the politically sensitive public sector, the transition has so far been smooth and successful.
In 2005, the National Health Service took a bold step by creating NHS Shared Business Services (NHS SBS), which aimed to reap the cost and efficiency gains promised by outsourcing in a way that preserved sufficient control in a politically charged environment. Since then many trusts and ambulance trusts have moved some or all of their finance, accounting and payroll processes to the new entity, often cutting up to one-third of their costs.
Since teaming up with service provider Xansa, which was then bought in 2007 by Steria, to create NHS SBS, there has been no looking back, despite the scale and complexity of the NHS. To a large extent the structure of the deal as a joint venture is behind the success, proving that the issue is not whether shared services are a good or bad idea, but how you structure and implement them.
‘The NHS is becoming more commercial, and it is a huge organisation, so there is a big opportunity here,’ notes Ruth Ormsby, director of shared services at the Department of Health.
Initially, the NHS pursued its own agenda for shared services, opening centres in Bristol and Leeds, with sufficient capacity for all NHS trusts. But the project ran into problems.
‘Politically, the mandate changed. PCTs had to come in as customers and it was a loss-making business. Ernst & Young came in and advised us that a joint venture was the way forward. At first we were doing it ourselves and it was not working, but we saw that there were people out there who were experts,’ says Ormsby.
In an open procurement programme the NHS sought a partner with commercial expertise, ultimately choosing Xansa, which brought to the table a strong track record in big business process outsourcing deals, including the provision of finance and accounting services to BT and BBC.
Steria, which absorbed Xansa’s operations last year, is a €2 billion business with over 19,000 employees worldwide. Over 40 years it has developed an integrated delivery model comprising onshore, nearshore and offshore elements.
‘We had the knowledge and the knowhow on customer service and efficiency,’ says Jim Vincent, managing director of NHS SBS.
‘The stakes are higher in the public sector, the degree of scrutiny is more acute – as it should be - and the sheer number of customers makes it a true exercise in shared services. But we allow trusts to focus on providing their core services,’ he adds.
NHS SBS is the first joint venture between the Department of Health and the private sector. Through its shared service centres in Leeds, Bristol, Southampton, Portsmouth and, crucially, Pune in India, it processes purchasing transactions and handles day-to-day financial and payroll management.
One quarter of all 450 NHS trusts have signed up for some or all of the services. Those trusts that have joined up are already receiving savings in the region of 30%, and the National Audit Office believes the NHS is on track to make savings of £224m over next ten years – equivalent to the annual salaries of 3,000 general practitioners or 12,000 nurses. Furthermore, when NHS SBS makes a profit it will most likely be shared between customers using the services.
Systems and structure
The turnaround in performance since the adoption of a joint venture approach has been remarkable. Partnership creates a different set of dynamics compared to the average outsourcing deal. ‘It works very well and is very different to other outsourcing environments. It is a closer and more open relationship,’ notes Vincent. Customer service teams handle any issues that arise for trusts, the user feedback forum is popular, and there is a real dialogue between service provider and customer. ‘Trusts love it,’ remarks Ormsby.
‘The NHS has been through lots of reorganisation and change, but the joint venture gives us the flexibility to cope with change. The joint venture has worked so well. The NHS is the major stakeholder, but the structure allows some flexibility and control is not an issue. It is a true, 50/50 partnership. Both sides must work hard at the relationship, and there needs to be a lot of effort by senior management, but both sides have the same goal – to grow and bring in more customers,’ she adds.
Vincent agrees: ‘Both parties must work together constructively towards shared goals, and there must be a higher degree of participation than usual. Trusts understand the governance structure, which gives them a sense of comfort in the transparency of the partnership.’
The experience of trusts that made that transition early has been sufficiently positive to attract many more, which see tangible benefits.
‘Over the last three years performance has improved dramatically, and the reputation of NHS SBS is built on good feedback,’ confirms Ormsby.
Once a trust decides to consider shared services, the transition is made easy, in part because of the systems infrastructure. Trusts use different platforms and technology providers, but they can all connect to the Oracle 11i platform, which is also highly scalable.
Oracle’s service-oriented architecture and web-enabled applications for sharing information, pooling resources, and providing cost-effective business services, make standardisation and consolidation relatively simple.
‘The Oracle platform for finance and accounting is geared specifically to the needs of the NHS and is designed to stimulate growth. It is working, because more trusts are now willing to be public advocates for us,’ observes Vincent.
Inevitably, transition to shared services raises some thorny issues, particularly around the transfer of staff. Moving jobs to India has, after all, been a sensitive issue in many industries. So far, however, there have been very few challenges in this regard for NHS SBS, partly because an appropriate change management process is firmly in place.
‘Some trusts are big local employers and shared service means redundancies, so we have to make the business case. Redundancies are up to the individual trusts, and they do occur, but it is possible to redeploy people,’ says Ormsby.
‘When we struck the JV, the use of India was recognised from day one as a key benefit of the business model. New clients recognise the cost savings and efficiency, though some trusts are sensitive in early stages,’ notes Vincent.
Building on success
When the joint venture was struck shared services were alien to the NHS, but the reasons behind the move are now much better understood by NHS trusts, as are the benefits. Consequently, they are more sophisticated in what they seek from shared services.
‘The business case used to be about savings, but now it is very much about the use of information to help manage trusts as businesses. The use of data for strategic purposes means that more trusts come to shared services for of the reporting capability,’ says Ormsby.
Handling finance, payroll and eprocurement, NHS SBS holds a vast amount of valuable data, which can be used to improve not only financial management, but also the delivery of care. People at the front line of care can concentrate on their core activities, while the trusts retain autonomy over budget allocation and spending.
Daily income and expenditure reports accessed online can be analysed for budgeting, planning and forecasting with Oracle’s web-based analytical processing tools. The reporting system also has the flexibility to respond to changes in NHS directives that define new parameters for what must be reported.
‘Improved reporting capability, with greater speed and granularity, allows clinicians clinicians who oversee budgets to focus more on delivering care to patients. In some cases it has allowed trusts to achieve major change,’ says Vincent.
NHS SBS also offers compliance with SAS 70 – the US audit standard for shared services - so individual trusts audits are not necessary and audit costs are lower. Furthermore, financial management information is integrated back into trusts’ own financial systems.
‘What we have created is a leaner business, using the best of public and private skills to provide world-class finance and accounting services for the NHS,’ stresses Ormsby.
For other public/private partnerships the lesson is clear: true partnership pays dividends.