NHS told to 'up its game' as DH announces procurement overhaul

£300m moneypot for bulk buying and world-class procurement strategy to drive £1.2bn savings

A £300m moneypot has been announced to help NHS trusts bulk buy large equipment as the Department of Health (DH) promises to ‘up its game’ and get smarter when it comes to procurement.

The move follows two highly-critical reports from the National Audit Office (NAO) and the Public Accounts Committee (PAC) claiming that opportunities for efficiencies were being missed because of poor purchasing processes used by NHS trusts.

Health Minister, Simon Burns, said the changes unveiled this week could save more than £1.2billion, which would be reinvested into frontline services.

Waste is unacceptable when we know there are simple solutions. That is why the NHS needs to buy smarter and get the best value for the taxpayer for every penny spent

The £300m package will encourage trusts to collaborate over the procurement of high-priced equipment such as CT and MRI scanners, ultrasound machines and cancer treatment systems. Already, £11m has been saved through advance orders placed with suppliers via NHS Supply Chain.

Burns said: “Traditionally, the NHS has struggled to make the most of its buying power as there was very little knowledge between local hospitals about their equipment needs.

“Waste is unacceptable when we know there are simple solutions. That is why the NHS needs to buy smarter and get the best value for the taxpayer for every penny spent.

“We know that at least £1.2billion could be saved over the next four years if the NHS innovatively changes the way it buys goods and services. Already, more than £11m has been saved through bulk-buy discounts on the cash fund.

“This is the first step to better, smarter procurement in the NHS and we will be working closely with hospital trusts over the next six months to help them save even more money that can be reinvested in patient care.”

This is the first step to better, smarter procurement in the NHS and we will be working closely with hospital trusts over the next six months to help them save even more money that can be reinvested in patient care

The recommended life of the majority of equipment such as CT and MRI scanners is 10 years, after which it either needs updating or replacing because of wear and tear. There are more than 200 of these large-scale items that will need replacing over the next couple of years and the DH says the NHS will be able to significantly benefit from the discounts achieved via these bulk-buy deals.

By having the cash fund available, NHS Supply Chain is able to secure better deals with suppliers and, as equipment is purchased by trusts, payment for it will go back into the fund, effectively replenishing it for future use.

This important development will allow us to group together the purchasing power of the NHS for this vital equipment, make large commitments to suppliers and bring improved planning to the management and replacement of this equipment across the NHS

Andy Brown, managing director of business solutions at NHS Supply Chain, said: “This important development will allow us to group together the purchasing power of the NHS for this vital equipment, make large commitments to suppliers and bring improved planning to the management and replacement of this equipment across the NHS.”

He added: “Procurement plays a valuable role in driving improvement in services. Our ambition is to put in place a world-class procurement system in the NHS that is responsive to modern suppliers. This will enable the NHS to adopt existing innovations and stimulate new ones that will benefit patients and taxpayers.”

In addition, hospitals are also being asked to drive forward improvements through a series of actions. These include publishing the details of all contracts over £10,000, appointing a board executive to be accountable for procurement performance, and regularly auditing procurement activities.

It is vital that we have procurement that is not only better, but is world class. It should be focused on outcomes, not just cost, and must be responsive to creative ideas from suppliers, procurement specialists, clinicians and managers.

As part of the Raising our Game initiative, an NHS-wide strategy for developing a world-class procurement system will also be published later this year and Sir Ian Carruthers,chief executive of the South of England strategic health authority will lead a consultation into exactly what is needed to help drive improvements.

Burns said: “It is vital that we have procurement that is not only better, but is world class. As a first step, Raising our Game sets out the actions that the NHS must take immediately. It should be focused on outcomes, not just cost, and must be responsive to creative ideas from suppliers, procurement specialists, clinicians and managers. Transforming procurement in the NHS could enhance quality and value and the strategy for delivering this will be published later this year.”

We have long argued that NHS procurement does not achieve its dual aims of delivering value for money to the taxpayer and getting patients access to innovative treatments

Welcoming the move, Peter Ellingworth, chief executive of the Association of British Healthcare Industries, told BBH : “We have long argued that NHS procurement does not achieve its dual aims of delivering value for money to the taxpayer and getting patients access to innovative treatments.

“Following the NAO and PAC reports last year we have worked closely with the Government and the NHS to ensure the procurement strategy is ambitious and will have a lasting impact on the way the NHS carries out procurement. Our aim throughout this process has been to help develop a strategic vision for procurement in the NHS.

The consultation process will allow the Department of Health to gather broad perspective on this topic, helping them to develop a far-reaching strategy aimed at delivering better value for patients. ABHI will provide strong input to the process, and I encourage the wider industry to offer their response to the consultation.”

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