With over half of local authorities in England and more across the UK commissioning community equipment and wheelchair services out to private providers, the prospects for operators in this sector have never been better. As the NHS outsources more services there is scope for smaller businesses to step in and benefit from the £150m spend which is currently shared between the top five providers. AMP hears from Andrew Stevenson, an expert in community equipment, who reveals what you need to know about the market and how to get your products and services accepted by local authorities.
1. Contract lengths are increasing
Historically, when the commissioning market started out, the length of contracts were typically between two and four years, explains NRS Healthcare’s sales director, Andrew Stevenson, who describes the community equipment arena in its early stages as a bit like a merry-go-round.
“After three years company A will depart the scene, then company B will come in, after another three years, company C will come in. There was a little bit of a market generation going on.” The trend has now shifted to contract points, which are predominately around five to seven years and in some cases up to 10 years. Stevenson advises: “When you have a contract provider with a 10-year contract then you really know where your market is and who you should be talking to. Contracts are beginning to extend out, which is commercially beneficial for everybody but it also gives you an opportunity if you’re bringing a new product to market to actually get that through the process and into the community equipment market.”
2. There are more framework agreements
Historically a community equipment contract or wheelchair service contract was very much about logistics. But framework agreements are beginning to dismiss the idea that contracts should only concern equipment and could have other services attached to them, for example, wheelchair or telecare services, which in some instances could have assessment attached to the contract, says Stevenson.
“I can’t stress it enough — it is increasingly about partnership. But it’s not about exclusive partnership”
“If you’re providing a product it’s straightforward and simple. If you’re providing services that are specific and specialised then those conversations are relevant to these organisations because they are not specialist companies. They are aggregators and they are looking increasingly for partnerships with specialist companies who can provide that product or service or a combination of the two. So don’t get disenchanted.” Stevenson notes that NRS Healthcare is doing lots of things in 2017 that it wasn’t doing last year and hadn’t even considered three years back. In a short space of time then things can change quite dramatically. He adds: “Don’t get disheartened. There is a huge market out there for all products and services and for specialisation if you look at it from a partnership perspective.”
3. It’s all about partnerships
“Partnerships and specialisation is where we need to be,” drills Stevenson. “I’ll reinforce this particularly strongly and I can’t stress it enough — it is increasingly about partnership. But it’s not about exclusive partnership. You cannot have an exclusive partnership with NRS.”
4. Equipment reviews are a great opportunity
All authorities, whether they are an in-house or commissioned service, operate on an equipment review basis. For Stevenson, equipment review is a continually ongoing opportunity for providers to bring new products and services to local authorities.
But he warns that with new products or adaptations to current products there is a significant issue of legacy stock with many contracts. If an authority has issued 2,000 units of a product into the community and a provider comes along with a new product that is better and cheaper, there are still 2,000 pieces of that equipment in the community that are going to get recycled, reconditioned and potentially put back into use.
Stevenson advises: “Equipment review days (ERDs) are what you should start with. And you should start that in-house, with the community equipment teams, the OTs, the service managers and similarly with the commissioned-out companies.”
5. OTs are not the be all and end all
Many equipment providers place strong emphasis on OT demonstrations because there is a notion in the market that once a product is approved by OTs in the area then it will naturally be snapped up by in-house and commissioned services. But Stevenson warns that OTs do not make the final decision and that it is a partnership or a group of people that decide on equipment. It is important then to make sure you have the whole partnership of decision makers on board, not just the OTs.
“Don’t get disheartened. There is a huge market there for all products and services and for specialisation if you look at it from a partnership perspective”
6. It’s not all about offering cheaper equipment
It isn’t always just about cost. In many community equipment contracts that are commissioned out, cost can be slightly irrelevant because most of the commissioned companies work on a cost basis with their customer. So if they’re currently buying a £100 product, to come in with a £90 product probably isn’t going to be a great wow, because what they are looking for is lifetime — how many times can I get that product recycled, reissued and reused. A lot of these operations are now driven by that credit that drives the commercial side. So lifetime cost is key.
7. Standard equipment lists are under pressure
Standard equipment lists are significantly under pressure, according to Stevenson. He describes a “demographic tsunami” combined with the financial crisis making a lot of authorities, both in the commissioned sector and the in-house sector, look closely at their equipment lists. The question they have to ask is ‘what can we take off?’ “Standard equipment lists are beginning to shrink down and you need to consider that when you’re bringing a new product,” says Stevenson.
He adds that specials and non-standard equipment lists is a difficult subject for local authorities to manage. “It’s a budgetary challenge for all parties concerned. But specials and non-standard equipment lists do exist across in-house and commissioned services. Again, just because you’ve gone through that great OT assessment, equipment review, you have got some challenges.”
8. Pick up where others fail
Close technical equivalents (CTE), which are similar products to the ones already prescribed, are an opportunity. If the current equipment provider is out of stock but the service needs to continue issuing mobility aids there will always need to be CTEs.
Stevenson explains: “From a football perspective, are you sitting on the bench waiting for your competitor to fall over on delivery or a quality issue to allow you to get in there while you’ve been sitting there waiting for the time to prove your product does what it says on the tin?”
Out of stocks can also be a strong opportunity for prospective providers. The vast majority of products arrive in the country from around the world. That means the supply chain is probably two to three months long, says Stevenson. Supply chains are generally long and vulnerable, therefore. “Be aware of that one. There’s an opportunity if you’re a local supplier in the UK or Europe — your supply chains are shorter and stocking issues are better.”