Transcript Slide 1

An Experience of
Managed Service Contracts
Richard Spooner
[email protected]
Scottish Association of Histotechnology, Dunfermline 2nd November 2012
What is a
Managed Service?
Board will contract with a Single
Supplier for the Management of its:
Equipment, Reagents
and Consumables
Note: Excludes Staff
HMRC allows VAT reclaim on
a Managed Service
Well established but:
Stringent conditions to be met
in terms of finances
UK only
Pro
Economy of scale ≈ 5%
Tax reclamation ≈ 17%
(Maintenance VAT exempt)
Single invoice
ie perhaps 22% of 25% = 5.5%
£ 55,000 saving for each million
currently spent
Cons
Management fee
Upfront or loaded on reagents
Service fees
Possible charge on 3rd parties
Support staff
Don’t come “free”
Flexibility
Compromise!
• Outright
Purchase-Equipment
• Probably cheapest, but restricts:
• Options for finite period
• Technology Change
• Introduces uncertainty – life span / ROI
• Ties up capital
• Leasing
• Flexible
• Aids fiscal planning
Lease from manufacturer / supplier
• No capital outlay / No asset value
• You own nothing
• No Capital Charges (UK)
Managed Service Contract
• Single Contractor
•Transfer of Risk
• VAT avoidance
Single Contractor
• Likely to be one of big 4
Diagnostics companies
• Chemistry is their core
business
Spend
•Chemistry/Blood Gas 40%
•Haematology
10%
•Transfusion
5%
•Microbiology
25%
•Pathology
10%
Laboratory Scoring
Cost v Technical
Managed Service
Biochemistry
Blood Gas / POCT
Haematology
Blood Transfusion
Microbiology
Pathology
Centrifuges
20%
35%
10%
15%
7%
7%
5%
1%
Single Contractor then Contracts
with third party suppliers for:
• Equipment, service, consumables &
support it is not able to provide
• Maybe more than 100 third parties in
large contract mainly, but not
exclusively, in general area of
“diagnostics”.
Single Supplier, Glasgow 2004
Abbott
Chemistry + Immunoassay + Virology + IT
Sysmex
Haem
Qiagen
Molecular
Menarini
HbA1c
Binding Site
Immunology
IL
Coag
IL
Blood Gas
Phadia
Allergy
Diasorin
Serology
Diamed
Transfusion
Siemens
Special IA
Millipore
Water
IDS
Immunology
Risk Transfer – At What Price ?
Price
Optimum risk
transfer ?
Risk Transfer
Transfer of Risk
Undertaking to manage service
does not refer to local
interference with working
practice.
Provides and manages
resource to guarantee financial
and technical performance (KPI)
Will accept financial penalties but
penalties don’t guarantee a
service
Board benefits from guaranteed
prices and no surprises in terms
of equipment failure
Single Invoice benefits Finance
All assets transferred to provider
(in return for a cheque).
You own nothing.
Will provide sufficient capacity to
cover growth and KPIs eg TAT
and upgrade when required.
Contract needs to cover changes
in technology
Provides nominated or onsite staff
such as engineers, financial or
technical specialists
Usually provide electronic reagent
management system and are
responsible for failures to
deliver/alternative methods
“Provide” – Board is paying for
all this expertise, penalties or
transfer of old equipment
somewhere in financial offer.
Need to work together as
“Partners” and you will need a
flexible partner
Length of Contract
• England
moves to long contracts
• CLO pushes towards 7 years
• ? 2 years to deliver
• ? 18 months to implement
• Cost of change
Managed Service
Histopathology
The Forgotten Discipline?
Big 4 operate dozens of Managed
Services in Biochemistry,
Haematology or Blood Sciences.
BioMèrieux at least 1 in Microbiology
Very few comprehensive Laboratory
Medicine contracts
Histopathology:
An Automatable Process
Contract on basis of:
• Clinical
need
• Operational fluidity
• Fiscal benefit
Do not have to take total offer
from main contractor
Pathology ready to benefit from new
technology and experience of large
diagnostic companies – Lean,
workflow logistics etc.
Not all Big 4 have in house
pathology so discipline can,to some
extent, pick and choose from 3rd
party offerings.
Are benefits to “single supplier”
concept even at discipline level
Process? Best in Class ?
Classically How We Make Choices
Now
Surely now need to procure
“Best Operational Solution”
for organisation/discipline
Laboratory Scoring
Cost v Technical
Managed Service
Biochemistry
Blood Gas / POCT
Haematology
Blood Transfusion
Microbiology
Pathology
Centrifuges
20%
35%
10%
15%
7%
7%
5%
1%
What’s in it for Pathology?
Added Value
Relationship
IT
Education
Added Value
• Recapitalisation
• New Technology / Upgrade Path
• Experience – workflow
• Develop your process
• Reagent Management
Relationship
• Partnership
• Does provider understand Board?
• Does provider understand Pathology
• Does provider work well with 3rd
party? Governance equivalence.
• Compromise
IT
• Middleware enhances traceability
• Reagent management software
• Write SOPs
Education
• Provider offers lump sum to
central/local Training Budget
• Provider offers access to CPD via
“Academy”.
• Do these cover Pathology?
• Does 3rd party offer anything above
continuous training?
Conclusion
Move towards single supplier brings
economy of scale benefits without risk
to patient
Now possible to do this on an organisation
rather than department approach in one
contract
Further savings possible through managed
service through VAT reclamation
You will Need
• A Procurement representative who will guide you
through the legal minefield
• A Finance representative to validate your existing
costs
• Support from General Management
• A Leader who has the respect of all disciplines
• An Implementer
TO KEEP IT SIMPLE
Experience of a Pathology
Managed Service Contract
Steven Harrower
Service Manager, Histopathology, NHSGGC
[email protected]
Scottish Association of Histotechnology, Dunfermline 2nd November 2012
Pathology Benefits
Added Value
• Major Investment in Equipment
• Improved Automation & Standardisation
Introduction of New Technologies
• Digital Imaging, Specimen Tracking
• Leaner Workflow
Anticipated Value
• Reduction in Transcription Errors
Bar Coded Specimen forms/pots, Cassettes & Slides
• Improved Audit/TAT Information
• Reduced Risk
Dealing with One Company?
Implementation Issues
IT/Interfaces/Incompatible Software
Greater Emphasis on Disaster Recovery
Extra Staff Resource Required
Training
Validation of Equipment & Consumables
Quality Control
Validation of Procedures
Quality Issues with some Consumables
Financial
New Ordering System
Double Billing
Helpdesk Response Time
Lessons Learned
Bidders Need to Understand Histopathology
Ensure Tender Captures Histopathology & it’s Specialties
(Histology, Mol Path, ICC, Cytology, EM, Neuro, Paeds)
Incorporate the complexities
Don’t focus solely on workload figures
Scoring Responses
Pathology is only part of Overall Score
All Disciplines Involved (& Finance Weighting)
Organise Responses
Multiple 3rd Party Bidders
Identify any GAP’s
Most Bids Focused on Core Histology
Know what’s Included in Contract (and what isn’t)
Equipment & Consumables
Anticipate the Risks