Radical new strategy to improve NHS procurement

Government unveils plans to save millions by improving purchasing and increasing procurement efficiency

The new strategy sets out an ambitious plan for improving NHS procurement activities

A radical new blueprint for how the NHS buys and funds everything from rubber gloves and stitches to hip implants, building work and temporary staff has been unveiled this week by Health Minister, Dr Dan Poulter.

When our NHS is the single biggest organisation in the UK, hospitals must wake up to the potential to make big savings and radically change the way they buy supplies, goods, services and how they manage their estates

The new strategy - Better Procurement, Better Value, Better Care: a Procurement Development Programme for the NHS - is set to completely alter how the health service spends money by cutting waste so that cash can be ploughed back into frontline services.

It details ambitious plans to save £1.5billion by becoming smarter and more efficient in the way the NHS buys supplies and does business.

Announcing the document, Dr Poulter said: “The Government is putting an extra £12.7billion into our NHS, but that money needs to be spent much more wisely by local hospitals. When our NHS is the single biggest organisation in the UK, hospitals must wake up to the potential to make big savings and radically change the way they buy supplies, goods, services and how they manage their estates.

“We must end the scandalous situation where one hospital spends hundreds of thousands more than another hospital just down the road on something as simple as rubber gloves or syringes, simply because they haven’t got the right systems in place to ensure value for money for local patients. This kind of poor resource management cannot go on, and this radical new strategy will help our NHS get a grip on wasteful spending to drive real change and improved procurement practices so that more of our NHS resources can be spent on frontline patient care.

We must end the scandalous situation where one hospital spends hundreds of thousands more than another hospital just down the road simply because they haven’t got the right systems in place to ensure value for money

“The money saved though our plans to cut wasteful NHS spending can be spent instead on the things that really matter, such as more operations or revolutionary new treatments.”

The publication takes an open and frank look at existing procurement inefficiencies, with the findings showing there is little consistency in the way the service spends money and that few senior people working in hospitals know how to procure effectively.

It sets a number of specific actions to tackle the issue. They include:

  • The recruitment of a new NHS procurement champion with private sector expertise who will have the authority to drive better procurement practices across the whole of the NHS
  • Dr Dan Poulter to lead a special top-level team, drawn from Government, the NHS and business to work with the new procurement champion to provide ongoing scrutiny and guidance to the NHS in driving improvements in NHS procurement and productivity gains
  • Mandating hospitals to publish for the first time what they pay for goods and services and setting up a brand new ‘price index’ especially for hospitals, through which they will be able to see how much they are spending on different products compared to other hospitals. This will drive improvements because, for the first time ever, hospitals will have to publish what they pay for supplies and services, and be held accountable to patients and the public for what they spend. Hospitals and their boards will be able to see where they are lagging behind and could do better
  • Cutting the temporary staff bill by 25% by the end of 2016 (temporary staffing currently costs the NHS £2.4billion every year), by helping the NHS learn from the best hospitals and use more efficient staffing arrangements
  • A plan for the Department of Health to make the most of the market by working with top NHS suppliers directly to strike new, bulk deals for cutting-edge medical equipment like radiotherapy machines and MRI scanners
  • Growing the UK economy by making the NHS more agile and better at working with small and medium-sized businesses, including implementing Lord Young’s recommendations on pre-qualification questionnaires, including simplifying them across the NHS, or even abolishing them for low value procurements
  • Exposing poor value for money and bad contracts by making more data about the deals the local NHS is signing publicly available
  • Improving support to help senior NHS staff better understand procurement

The new strategy is part of a wider government drive to save taxpayers’ money by being more efficient.

This kind of poor resource management cannot go on, and this radical new strategy will help our NHS get a grip on wasteful spending to drive real change and improved procurement practices so that more of our NHS resources can be spent on frontline patient care

The strategy has been widely welcomed by the supplier community. Speaking to BBH this week, Nick Gerrard, chief executive of NHS Supply Chain, said: “We are committed to supporting the Department of Health and NHS organisations with the implementation of this strategy to deliver greater efficiency savings from procurement and supply activities.

“Through our experience of working with NHS trusts, we do believe that further efficiency savings can be achieved through working together to aggregate NHS spend, and provide commitment to suppliers to get the best value out of every pound spent on procuring products.”

David Melbourne, interim chairman of the NHS Supply Chain customer board and chief financial officer of Birmingham Children’s Hospital NHS Foundation Trust, added: “I welcome the publication of the strategy and hope that the NHS will support its objectives given the difficult financial challenges that all organisations are facing.

“The challenges around getting best value from NHS procurement are widely understood and it’s now time to deliver the efficiencies that can be achieved."

Click here for the full document.

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