In our latest interview we spoke with Robin Modak, chairman and founder, Genmed, to find out more about vendor natural managed services in healthcare.
Could you tell me a bit about yourself and your organisation?
I am the founder and chairman of Genmed, a specialist provider of vendor neutral managed services to the NHS. We provide all the resources needed by clinical and non-clinical departments in Trusts to deliver patient care. This covers many disciplines such as surgery, endoscopy, renal, pathology, IT, imaging, medical records scanning and even buildings. We manage hundreds of supplier contracts, all the materials, equipment, maintenance, tens of thousands of orders, product lines, along with invoice administration.
We are not a leasing company or finance house. Our role and our reach is much wider and more consultative. We work with Trusts in partnership to ascertain what clinical facilities or technology they need to support their strategy, their workload issues, we find and select the suppliers clinicians want, negotiate and drive costs down, put together the finance, manage all the contracts, pay subcontractors and take all the risk upfront ourselves.
I launched the company in 2005 after my previous employer in 2002 didn’t see the opportunity that managed services presents the NHS and in 2003 and 2004 two joint ventures with corporates didn’t fly. We now provide a unique service and much needed capital to Trusts via our managed service contracts, with hospitals authorised to reclaim the VAT back on them so they get a 20% budget benefit.
What is the most significant achievement for your organisation in the past few years and what will be over the next 12 months?
Our approach is very much in line with recommendations by Lord Carter of Coles in terms of how to improve the operational productivity and efficiency of hospitals. Our managed services contracts have grown in popularity as Trusts seek to reduce costs, rationalise pricing, improve efficiency, speed up purchasing, minimise administration, free up resources and ultimately try and achieve what appears mutually exclusive at first glance – doing more with less. We have been a driving force in helping our NHS customers to do this by generating valuable data and underpinning their departments to achieve their service output.
We now work with 42 Trusts around the country where we have around 250 managed service agreements some of which are substantial and total £180 million over their contractual period. We are working with Trusts throughout the country including Countess of Chester Hospital, London Northwest University Healthcare , Norfolk & Norwich University Hospitals, Nottingham University Hospitals, South West London Elective Orthopaedic Centre and Wirral University Teaching Hospital among others. Managed services shift costs from CAPEX to OPEX and avoid finance directors’ avoid having to find additional capital they just don’t have available.
For the second year running, we were identified as one of London Stock Exchange Group’s 1000 Companies to Inspire Britain. Published annually, the report celebrates the UK’s fastest-growing and most dynamic SMEs, with companies representing over 40 sectors and spanning every region of the country.
Moving forward, we are focusing on developing the business in Europe.
What problems and challenges are there to overcome?
Money is always an issue in the NHS. But just throwing more cash at the healthcare system is not enough given the NHS has an insatiable appetite for spending given a growing and ageing population.
It’s not that the health service isn’t cost aware. NHS Trusts have been working on Cost Improvement Programmes for years to meet the Department of Health’s goal of making annual savings of 5% year on year. It’s a crude example, but if a Trust spends £100,000 on consumables year one, they’d be expected to procure the same for £95,000 the next. It’s not a sustainable strategy because you can’t continually beat up suppliers on price.
We need to be taking a much wider more value driven approach to procurement if the NHS as a whole is to truly benefit. This will then help achieve the long sought after virtuous circle whereby spending improves operational imperatives, increases efficiency, improves patient care and saves money in the long run as well as short term savings. This is our focus.
What do you think is the biggest technology challenge?
We need to use technology in a smart way to add value. Take a simple example. If you’re a managed service provider like us taking over responsibility for managing thousands of medical devices as part of a hospital surgery contract, you’d clearly want to know the precise number, their physical location, age, condition and when they were last serviced. In a cost/efficiency conscious climate, you’d expect Trusts to have these records at their fingertips. However, this isn’t always the case and information is often not available or ad hoc.
The result is that Trusts often knee jerk and buy new equipment because they have an immediate patient need and don’t know where devices are or how many they really have. The cost implication is staggering if you multiply this by all the departments in over 200 acute Trusts in the country. This is real and happens.
Wouldn’t it be better if hospitals worked a different way? For example, if RFID tagging, asset tracking and dashboard software were introduced, quality information would be available about each device. You’d then be able to
- Introduce lean processes with key distribution points around the hospital for the booking in/out of equipment;
- Ensure that the right quantity and type of medical device was always available for patients;
- Avoid buying as many devices;
- Rationalise or reduce the number of suppliers used;
- Lower maintenance costs through effective tracking and auditing;
- Boost CQC compliance ratings given equipment is always cleaned, better maintained and with certified;
- Enhance patient safety through the introduction of the latest technology which is efficiently managed.
Of course, senior management support is required to push through such change given RFID and associated software requires reallocating budget. In other words, it’s an invest to save approach but in the long run the situation on the ground is vastly improved with Trusts able to radically change device management which moves things on from just purchasing and break-fix to completely re-engineering a process for the better.
This is just one approach. We also focus on generating quality data for analytics from our managed services. Linking these together provides a bedrock of valuable information for operational benefit but also the data needed to transform the NHS.
What advice would you give to other organisations or professionals?
Trusts should consider working closely with their managed service providers – and allow them the opportunity to be more creative and proactive – to deliver programmes which help increase income, improve healthcare, enhance outcomes while creating a more efficient way of doing things. Directorate managers need to be more involved earlier on in this process not just procurement who are more driven by cost improvement programmes (CIP’s).
Vendor neutral managed service providers can help support Trusts’ strategic goals by creating cash in the system from the same budget. This is through VAT recovery, fixed price negotiations and the flexibility to choose the products they want. This then allows them to pay for things that will have a beneficial effect to the overall health system. Trusts can reduce maintenance costs by refreshing ageing equipment which in some cases is over a decade old or even older. Newer and higher specification devices – covered by warranty – then enable them to generate more income by taking on additional contracts for patient care from CCGs or offering services to other hospitals which they would hitherto not been able to do. It also repatriates services as patient cases don’t have to be referred to other NHS organisations with the obvious cost implications. It all adds up to a very positive snowball effect.
Take the Eastern Pathology Alliance Network (EPA) as an example. They have used an managed service contract to buy the latest next generation sequencing technology from Vela Diagnostics to offer Hepatitis C virus testing services to the wider NHS, thereby generating additional income. Historically it could have taken some-one in the UK almost a year to get properly diagnosed if they had Hepatitis C virus symptoms. Now it can be done by the EPA within a week.
Currently things are too siloed with NHS procurement teams focused on their ‘patch’ – delivering transactional CIP savings – without necessarily an appreciation or focus on the wider benefits to the organisation. Trusts and their managed service partners really ought to examine the strategic imperatives and how this filters down operationally across all departments.
What is next in your space?
We are working on a new business venture to create a purchasing arm which will be a standalone and differently branded company in the Genmed group. Given we are now working with around 250 suppliers on behalf of our 42 hospital customers, the idea is to aggregate spend and negotiate framework prices based on volume discounts from key suppliers. Clearly all Genmed customers then benefit. The business will have a UK and European focus – but wider if a business opportunity is commercially sensible to go after – and will be launched in the New Year.
In addition, we’ve incorporated a company in Dublin called Genmed Managed Services and are developing key partnerships with large medical equipment OEMs to enter the European healthcare market.
The other area we are looking at is how to collate data from all the buying we are doing to provide real-time and quality analytics about NHS purchasing. The idea is then to build a consultancy business around this to assist Trusts to further improve efficiency savings.
What are you working on at the moment?
We are just finalising our year end having just had a record year for the company. The goal for Genmed is ambitious. Our strategy is to take the business to £500 million in sales in three years and £1 billon in five. We are providing managed services in all clinical and non-clinical areas. Our focus is now wider as we have the know-how, the resources and the partners to continue to focus on public hospitals but now target the private sector healthcare in the UK and whole of Europe, too.
One a personal note, I have just invested in a business breading alpacas and processing their fibre into products. We currently have 23 of which 17 are pregnant so next year we will have 40 animals. We will then have the critical mass for launching the alpaca business effectively.
