Transition management in the firing line

In 2006, the UK Department of Health changed the way oxygen was provided to home-based patients. With delays, shortages and a reported death the implementation made national headlines.

Four companies, Air Products, the British Oxygen Company (BOC), Allied Oxycare/Medigas and Linde, were awarded five year contracts to provide the new Home Oxygen Service (HOS) in England and Wales.

The new approach — the biggest change in 50 years – aimed to give patients bet­ter access to the latest equipment. GPs would send an order directly to the serv­ice provider where previously local pharmacies provided oxygen supplies to patients upon receipt of a prescription.

Service providers were required to provide oxygen cylinders or concentrators (electrically operated machines that extract oxygen from the air) to around 75,000 homes in 11 regions.

With seven months until service commence­ment, the huge task of gathering patient details, prescriptions and consent forms for patients from 300 local National Health Service (NHS) organisations was undertaken.

Widespread stakeholder communications was carried out. New order forms were sent to GPs and hospi­tals. Service providers geared up.

With the transition came immediate difficulties.

The simultaneous change in service providers and supply chain processes had compounded the likelihood and impact of major problems. GPs and patients struggled to implement new proce­dures, but when issues emerged, the ‘big-bang’ implementation of new supply chain processes had left little system capacity to absorb them.

There were significant product shortages and delivery delays to patients, and the implementa­tion problems made national headlines when a death was reported (which was not the fault of the new service as the patient was already gravely ill, but it was controversial nonetheless).

Service providers were inundated with orders. Patients reported waiting for very long periods, sometimes days, for their oxygen supplies.

Call centres were overwhelmed and patients had great difficulty finding out when their order would arrive. When they didn’t get answers, they called again, or asked their GP to call or re-order for them.

Some patients did not leave their homes in case their delivery arrived while they were away, increasing their frustration. Complaints were received in significant numbers. For the govern­ment and oxygen service providers it was embar­rassing with considerable time and money required to eventually redress the situation.

At about the same time, the Department of Health awarded another large supply chain con­tract — the outsourcing of the logistics and con­sumables procurement functions of the NHS. It was the largest supply-chain outsourcing ever in the UK.

In contrast to the HOS, this project, involving the provision of critical hospital supplies, transi­tioned successfully from day one.

Structured to deliver savings to the NHS esti­mated at over £1 billion over 10 years out of a total £22 billion spend, the new provider, DHL, is required to procure and supply health con­sumables products to over 600 hospitals across England. With both procurement and logistics roles outsourced, this contract represents a first for Health in the UK.

Given the high risk to hospitals and patients of product mix-ups, delays or shortages, managing this change successfully was essential. Although DHL wanted to implement new processes and technology to generate a return as soon as possi­ble, both parties ultimately agreed on a policy of ‘minimum change’ during transition.

Unlike the HOS project, the transition was broken into Pre-Transition, Transition and Transformation stages.

Each was managed dif­ferently and importantly, any major changes were deferred to the Transformation stage. The Pre-Transition phase was defined as the three-month period leading up to the date of commencement of service.

During this phase, the Department of Health and DHL reviewed and gained knowledge of the businesses in detail and planned for the commencement of service.

The Transition phase was defined as a four to 12 month period starting from commencement of service during which the service provider would be required to reach stable service levels and would not make any significant changes to the existing businesses.

A significant amount of work was carried out during Pre-Transition. DHL appointed a dedicat­ed Transition Director with responsibility for the overall transition. In addition, a joint steering group was estab­lished to provide a focal point for managing activity.

Weekly meetings enabled issues and risks to be identified and managed. A weekly dashboard report was prepared, showing risks, issues and actions for all participants.

DHL ensured all its operational workstreams had vis­ibility of, and could contribute to, the transition planning and joint steering group activity.

Change was kept to a minimum. While livery and branding were updated to reflect the new management arrangements, customer processes such as ordering, and operational processes such as procurement, warehousing and distribu­tion remained untouched wherever possible.

DHL and the Department of Health imple­mented an extensive communications strategy with stakeholders such as hospitals, staff, unions and suppliers regarding the timetable for change and any impact upon them.

This helped limit the potential for errant customer behav­iour (such as stockpiling). When the commencement date was reached, the service operated smoothly and was deemed a success.

Written by Capital Insight senior consultant Scott Lawlor, who held management roles for both UK projects (HOS post-transition).