What can the NHS learn from Marks and Spencer?

The appointment of Stuart Rose to advise on leadership in the NHS reminded me of a visit I made to Marks and Spencer 25 years ago during my first spell at The King’s Fund. This took place shortly after the Thatcher government published its plans to create an internal market in the NHS, introducing the separation between commissioners and providers. I wanted to understand whether the NHS could learn any lessons from how M&S related to the suppliers of the goods sold in its stores.

I gained three major insights from my visit. First, M&S ran a centralised buying function rather than devolving this to individual stores. Its buyers were experts in the markets in which they operated, often having direct experience of making the goods and products they were responsible for purchasing. This meant that they negotiated from a position of strength and were able themselves to bring ideas and suggestions to suppliers to help them deliver what M&S and its customers wanted.

Second, M&S operated on the basis that its relationships with suppliers were usually long term. As a result, buyers invested in developing and building relationships to achieve mutual advantage. These relationships were of course underpinned by legal contracts, but the emphasis seemed to be more on working together to overcome difficulties and disappointments rather than using contractual levers to achieve results. Failure to sell sufficient numbers of suits or dresses in one season, for example, could be addressed in the next.

Third, and linked to the last point, contracts between M&S and its suppliers at that time were short documents that focused on issues seen as key by both parties. These documents were supplemented where appropriate by master copies of the products concerned (ties, shoes, underwear etc) that could be invoked in the event of disputes over quality. Frequent contact between buyers and suppliers, involving buyers spending time in factories and farms, helped to avoid these disputes becoming routine. Relational contracting rather than legalistic contracting was the preferred approach.

These insights remain as relevant to the NHS today as they were at the time. On the assumption that the separation between commissioners and providers will continue, they are a challenge to system architects to think hard about:

  • the balance to be struck between concentrating scarce commissioning expertise and devolving responsibility to commissioning organisations at a local level
  • the expertise required by commissioners and the value for the NHS of hiring experts, including more clinicians, able to speak the same language as providers and to add real value to the contracting process
  • the way in which commissioners work with providers and are able to develop ‘win win’ relationships in which both parties can benefit without these relationships ever becoming too cosy
  • the nature of communication between commissioners and providers, including the extent to which they rely on voluminous contract documents as opposed to strong personal relationships.

These are all issues that Simon Stevens, the incoming chief executive of NHS England, will have thought long and hard about, drawing on his experience in a large health insurer in the United States. Stuart Rose may not have been asked to advise the NHS on how to make the commissioner/provider separation work more effectively but he would provide a valuable service were he to share his experience in this area.

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Comments

#41710 Ann Leitch

Having worked in merchandising in M&S early in my career, before moving to commissioning in the NHS and subsequently private hospital director roles, I 100% agree with your analysis. Ann Leitch

#41711 Carol Morgan
Secretary

Good afternoon

I find it very difficult to see how Stuart Rose will help the NHS . My concern is that Marks and Spencer have reduced the quality and design of it's women's clothing range over a long period of time. They have focused on cheapness rather than quality. It is quality that is required in health care .Marks and Spencer is a profit making company that is it's function but it is not and never should be the aim of the NHS.
I fail to understand why we have a man who has worked in a private American healthcare company in charge of the NHS. I can not imagine any one less suited to the job.American health care companies are just that.Health insurance providers whose sole aim is to make money.
What is missing in the NHS is the pride that people took in working for the NHS prior to the intervention of Margaret Thatcher .
My view is that central buying and control if done properly will benefit the NHS rather than trying to inject"competition" into a non profit making organisation.
I have recently had first hand experience of our local hospital and it was excellent. The service 111 is not so good.It was clear that the person I spoke to on the phone was not clinically trained and at 4 am and in a lot of pain I needed to be able to speak to clinically trained staff.
Thirty years ago my daughter was three months old and clearly ill. I was able to phone my GP at 9pm and then take her to his surgery about one mile away. He saw her and was able to give appropriate medication then and there.No need for a hospital visit. The changes that have been made and the present government are tying to make had been detrimental to the health service for patients. I would like to hear a comment if possible

#41713 Harry Longman
Chief Executive
Patient Access Ltd

The difference is that M&S centralised buying function is sourcing clothes for people who are broadly similar in body shapes and so on all round the country, whereas for the NHS we clearly need 211 buying organisations because the kinds of diseases, accidents and so on which people have in 211 different places are all really very different. The flaw in your argument is obvious.

#41714 George Coxon
Independent Health and Social Care advisor and care home owner
various

The answer to the question has a series of potentially powerful key lessons and tips on essentials for the NHS re resuscitate in my view.

when one thinks of M&S many might think of the following:
1- Reputation - management and enhancement
2- Pride and Loyalty of the staff - smiling and doing what they can to help
3- Profile of the brand and a 'feel good factor' when buying, frequenting the services - nothing being too much trouble as a value statement - pleasing the customer to get the 'come back again' factor
4- Image of the product and satisfaction of service users
5 -quality of the product again by outcome of what you buy and buy again
6- recommendation - I'm often suggesting friends try the food hall goodies
7- value versus excellence

I am very loyal to the NHS myself as an ex senior commissioner and existing registered nurse but I really do think there are plenty of 'importing' of ideas and ethos principles from other organisations the NHS could usefully adapt.

Returning briefly to the issue of pride - One of my roles is as a care home owner and lead for a dementia quality kite mark for residential care in Devon - this is a provider led initiative and we have circa 50 care homes involved across Devon. At a recent peer review I carried out at an excellent care home in Sidmouth (peer review is a central part of how we support homes in sharing best care and best practice) we discussed the issue of instilling pride in the work of looking after the vulnerable elderly. The home manager clearly was very committed to seeing the conversion of leading into empowering staff and developing ownership and belief in the work they do as vital can valuable - Some of what happens in the independent sector can be exported into the NHS without detraying the key elements of what makes the NHS great

#41717 Nathan
Provider

Harry, your statement that people living in 211 different places all have differnent needs is flawed.
Diabetes in London is Diabetes in Preston.
A broken leg in cornwall is a broken leg in Newcastle.
COPD is COPD.
Obesity is obesity.
Cancer is cancer.

The list could go on....and on....and on

#41718 Chris Ham
Chief Executive
The King's Fund

Nathan is right but Harry makes a valid point too. The NHS suffers from unwarranted variations in clinical practice that result in waste and outcomes that are not as good as they should be. Much of this is documented in the NHS Atlas of Variation. High performing organisations like Intermountain Healthcare have tackled variations, cut waste and delivered higher quality care often at lower cost. 211 CCGs reinventing many of the same wheels doesn't feel the best solution. Harry is right that popn needs vary and this is where some variation is needed. Isn't this what public health teams in councils are meant to do (in part)?

#41721 Joanne Smithson
Health & Social Care Policy Lead
VONNE Voluntary Organisations' Network North East

Great article, and hurrah for raising the profile of ‘relational contracting’. Too often commissioning, or at least the procurement element, is a faceless paper exercise that relies far too much on an organisation’s ability to write a set number of words in a fixed timescale, and not enough on heart, morals, ethics, trust and a desire for co-production and co-delivery. Care, compassion, innovation, and authenticity have all been cited as areas that the health & social care system should strive to develop; yet the way in which these elements of a tender or bid document are assessed are woefully under developed.

There are examples of where buyers and suppliers, commissioners and providers are working together to shape local service provision; the development of local Healthwatch is a case in point. The very best and the very worst of commissioning practices are now becoming evident. Elsewhere, community & voluntary sector activists lobbying for representation on their local Health & Wellbeing Boards (about half of England’s Health & Wellbeing Boards don’t have any direct representation from the voluntary & community sector), are still being turned away because of ‘conflicts of interest’ as the sector is viewed as a provider of service.

It’s too simplistic and uninformed a response to what’s become a highly emotive topic. Anything that can be done to ensure the commissioner/provider separation works more effectively should be championed.

#41725 John Kapp
director
SECTCo

Yes, I agree. The Brighton and Hove Wellbeing Service contract 2012-15 for £4 mpa is 156 pages of gobbledegook. The service is failing to meet its waiting time target of starting treatment within 8 weeks of GP referral, as the actual wait is 5-6 months on a grossly underestimated demand. The consequence is overprescribing of antidepressants which don't work causing patients to keep coming back in a revolving door.

#41729 Mark Sadler
Owner
yourcarehome.co.uk

Good technical buyers would be able to cost a product from it's drawing, and would go into meetings with suppliers already knowing what price they expect to pay based upon cost tables made from purchasing items with similar components in the past.
Open book negotiations with built in raw material and exchange rate mechanisms agreed to adjust costs regularly to maintain and monitor an agreed sensible profit margin for a mutually beneficial long term relationship.
Any NHS management who do not have all of that in place in their departments should be shown the door and replaced with people from the real world.
With an American at the helm, it just might happen.

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