Q & A: John Neilson, Managing Director, NHS SBS
SSON: John, a bit of background to begin with: can you tell our readers a little about NHS Shared Business Services, in terms of why the organisation was set up and how it’s structured?
John Neilson: The business was set up initially by the Department of Health (DH) to create efficiencies in its back office that could then be invested in front-line healthcare. That was in 2003. By 2005 the DH realised that the organisation would be more efficient and could grow more quickly if they worked with a commercial partner. They went through a full procurement process. Steria worked with the DH on the joint venture model that we have today. It was a unique proposition which the DH considered would work best for the NHS marketplace. It is a unique joint venture – a genuine 50/50 partnership with Board representation from both Steria and the DH... Both organisations were required to make investment in the joint venture and will consequently share in the benefits.
Partnership working, wanting to do things collaboratively, was a key element of what we created. If you draw a comparison with other outsourcing contracts where it is more supplier-contractor based, there is the potential once the contractor has taken on the work for responsibility to pass to them. Our model is different in that the DH is represented on our Board and so they contribute to all the strategic discussions and decision-making.
SSON: So, just to clarify: in terms of the gains generated, 50% goes back to Steria as profit and 50% goes back as extra funding the NHS can spend wherever it wants?
JN: Yes: for the DH, they’re yet to decide how they’re going to utilise those funds but it is probable that they will share it out among our NHS Trust clients.
SSON: What are your own responsibilities within your current role?
JN: I’m Managing Director of NHS Shared Business Services (NHS SBS) and report directly to the Board. I am accountable for the strategic growth of the business and the delivery of the ongoing business objectives around profit, revenue, client satisfaction etc. I have been in this position since January 1 2009.
My background prior to that was with Steria. I have a general management background which includes HR Director at Steria.
SSON: OK. The organisation has enjoyed some significant success recently in terms of adding new clients. Can you tell us about what’s been going on – who’s come on board?
JN: This year we’ve taken on 14 new finance clients and 16 new Payroll clients. I think the main driver for this success is the improvement in quality of service delivery. Our customer satisfaction survey showed the number of Directors of Finance that would recommend our services has increased to 85%, while 87% of the same population say that we "add value to their business". We have also been ranked by Hackett as world-class amongst shared service organisations – we’re among the top 18 shared services organisations in the world – and it’s that combination of world-class systems and processes with high levels of customer satisfaction that has led to significant levels of growth this year.
The National Outsourcing Association (NOA) has also given us two awards this year. In a marketplace that’s very much word-of-mouth, where people network across the sector in a very open and transparent way, this sort of recognition is very important. If you can build up momentum from this then really you start to drive growth.
People have seen our improving customer satisfaction results, they’ve seen we’re delivering 20%-30% savings for Trusts and Trusts want to be part of that. We’ve also had a lot of support from the Treasury and from the DH, both of which have highlighted NHS SBS as a centre of excellence in the way we support the government’s agenda of reducing costs in the back office to protect frontline services.
SSON: What have been the challenges you’ve faced when taking on these new clients and how successfully do you think you’ve overcome them?
JN: I think that one of the biggest lessons we’ve learnt is the importance of an excellent initial migration. We have invested heavily over the last couple of years to ensure that migration is right. We put a lot of effort into working with clients so that they understand how the migration will work to deliver the best results. Our experience is that outsourcing with a well planned migration is the basis for a successful partnership with the NHS Trust client. The feedback we’ve had from the clients we’ve taken on this year is that our migrations have been the best yet.
SSON: On that topic: when a trust decides it wants to join the project, do you have a vetting process when you decide whether or not they’re going to be compatible with your procedures and systems, or do you just say "fine: you want to do it, come on in!"?
JN: Having established interest we have a base-lining process where we analyse all the different elements and costs that the Trusts manage within their finance and accounting, Payroll or Family Health Services businesses. We use the base-line to give us a deeper understanding of their activities and therefore the processes we would be taking on. Often this process gives clients a better understanding of what they do and how they do it. It allows us to prove the case related to saving them between 20% and 30% of their existing costs. We work with the Trust to develop the business case which will go through their internal governance process to get sign off.
Usually the Trust’s board decides whether or not to proceed. Each Trust has an independent decision-making process – supported not only by their executive management team but also by their non-executive directors and advisors.
SSON: How often do you find a Trust deciding that it doesn’t want to go with you?
JN: If a Trust decides not to join NHS SBS today it doesn’t mean that they will never want to join us. They may have other priorities at this point in time but they might come back to us in say 18 months time to have the conversation again. We have very few situations where the Trust will say "actually we’ve looked at this and don’t think it will work for us". Occasionally Trusts feel they are already very efficient. They may feel that they can run things better by themselves, or they have other issues that may outweigh the financial benefits that NHS SBS would bring. In the majority of cases NHS Trusts will either come in with us immediately or will defer until a more appropriate time in the future.
SSON: What are your targets – if you can share them with us – in terms of on boarding new clients for 2010?
JN: In general terms we are looking to increase the number of new contracts signed in 2010 quite significantly, and we anticipate that level of success continuing over the next two or three years. I think we have quite a compelling story, and with the financial pressure currently upon the NHS I think that we’re well placed to achieve this growth.
We anticipate increased growth in all our business areas, but probably more significant growth in both Payroll and Family Health Services – they will grow faster because they’re starting from a much smaller base. We have 120 Finance & Accounting clients today, but the Payroll and Family Health Services offerings are newer for us so we would expect them to grow at a faster rate.
SSON: Can you explain Family Health Services?
JN: Family Health Services are services that are normally provided by Primary Care Trusts and would include patient registration, call and recall services for screening, managing GP payments and contracts, optician payments, and medical records.
SSON: Just a quick look at the near future: with an election round the corner, do you see this being a challenge for you? Do you see services being affected if there’s a change of government at the next election? Or will it be business as usual?
JN: I think it’s very much the latter. Whichever party is in government after May, they will have the same cost challenges. The NHS is clearly one of the largest areas of public expenditure and will therefore be under a significant amount of pressure. All parties are committed to maintaining frontline care and we have an offering that supports this. We anticipate that after an election there’ll be increased focus and pressure on reducing back office costs. Therefore regardless of the colour of the government NHS SBS will continue to support efficiency savings for the NHS...
SSON: Moving on: you recently partnered with Software Europe to improve your Payroll offering. Can you tell us about this deal – what were the drivers and how has it improved your service capability?
JN: It enables us to provide e-expenses for our clients which gives them a range of benefits: not only is it a more efficient, paperless operation for their staff, but it allows greater levels of control in terms of processing expenses and greater levels of accuracy. It gives them a better understanding of what expenses are being incurred and why. It also identifies areas where they can manage more efficiently in terms of better purchasing arrangements. Software Europe’s solution fits in very effectively with our broader Payroll offer; it enables us to allow that aspect of the service to be realised by our clients, and the deal we’ve negotiated with Software Europe allows our clients to get all of those benefits at a price that they couldn’t get anywhere else in the marketplace. We expect the partnership with Software Europe will be good for them, good for us and excellent for our clients.
SSON: Taking a broad perspective, do you think that the NHS SBS operating model could be replicated for other areas of UK public sector service provision – or even public sector operations in other countries – or is it so specific to the NHS in all its amorphous gory that its uniqueness precludes that kind of replication?
JN: I think in theory you should be able to take our operating model out into other parts of government in the UK and probably overseas. I think other government departments should look seriously at what we do. The key to our success at NHS SBS is our partnership with the DH. Both entities need to go into this type of arrangement fully engaged as partners – it’s not a supplier-contractor relationship. Therefore they both must make long-term commitments and be committed to the project. If the people involved from both sides take a high level of interest in making it work it will be successful. If you have those components I can’t see why it wouldn’t work in any other part of government.
SSON: And finally, John, what are your ambitions for the organisation over the next three to five years?
JN: We’re looking to double the size of the business over the next three to five years and achieve significant savings for the NHS.
SSON: In terms of the number of clients served, or the number of transactions?
JN: Both – and also in terms of the revenue that we generate. I think probably more important than that, we’re looking to establish ourselves as a world-class leader providing high-quality back-office services. And we want to build on the foundation that we’ve established and which gives us our reputation in the marketplace today. Probably today we are statistically Number One in the market, but I would want us to get to the point where emotionally and as a brand we are recognised as the leader of back-office services in the NHS – delivering real value back to the NHS.