Suppliers slammed as NHS charges vary by a 'staggering' 300%

Manufacturers 'taking advantage' of poor procurement as report reveals £500m is wasted every year

The amount hospitals in the UK pay for basic supplies such as blankets and syringes varies by as much 300% depending on the trust, a worrying new report claims.

And the discovery has led to criticism being levelled at suppliers for allegedly ‘taking advantage’ of the NHS.

The study by Ernst and Young revealed that around £500m a year is being wasted because of poor procurement processes.

At the root of this problem lies the lack of transparency in the market, leaving trusts unable to make cost-efficient decisions about purchasing supplies

This comes after similar criticism from the National Audit Office (NAO) and the Public Accounts Committee (PAC), which both ruled that opportunities for efficiencies were being missed because of the way NHS trusts work in silo to procure equipment.

Such a lack of collaboration means that where a particular trust has paid a premium for products in the past, it will continue to be charged higher prices, even if hospitals elsewhere have negotiated lower fees, or have collaborated with neighbouring organisations to bulk buy.

The latest report looked at the purchasing practices of 10 unnamed NHS trusts, and examples of the problem include one hospital paying £120 for a box of electric blankets while another paid only £47. Another trust was charged £23 for a box of forceps, which cost another organisation £13; and the amount paid for knee implants varied from £787 to £1,109. The identity of the individual suppliers concerned is not known.

Commenting on the findings, Ernst and Young spokesman, Joe Stringer, said: “Our analysis raises serious concerns about price variation and spending in the procurement of NHS supplies.

Our analysis raises serious concerns about price variation and spending in the procurement of NHS supplies

“At the root of this problem lies the lack of transparency in the market, leaving trusts unable to make cost-efficient decisions about purchasing supplies.

“The consequences of inaction in the back office will only be felt more acutely in frontline care.”

This discovery has led to widespread criticism of suppliers. Julian Trent, managing director of the price comparison site, Peto, said: “They are taking advantage of a lack of information. What seems to be happening is rather than a fair price being charged; as much as you can get is being charged.”

The findings come as the NHS has to shave more than £20billion from its budget over the next five years. Improvements to tariffs and procurement processes, the report authors claim, could go a long way to meeting this target.

Describing the current discrepancies as ‘staggering’, Stringer said: “With the NHS facing sustained pressure to contain rising costs and demand within a flat budget, transparency must be introduced across the board.”

Responding to the findings, Health Minister, Lord Howe, said the Government was making it very clear that wasteful procurement in public services was ‘unacceptable’.

He added: “We are working on introducing a new barcoding system that will increase transparency, save money and make care safer.

"The new system will take time, but ultimately it will result in the kind of price comparison website that already exists in other sectors, like supermarkets, and will revolutionise the tracking, safety and use of clinical products bought by the NHS.”

But will NHS trusts be able to secure better prices as their new foundation trust status makes them more independent of each other and of central control?

At the root of this problem lies the lack of transparency in the market, leaving trusts unable to make cost-efficient decisions about purchasing supplies

Chris Hopson, chief executive of the Foundation Trust Network, commented: "NHS trusts know that they need to improve how they buy supplies to get best value and they are making good progress through a variety of different routes including commercial purchasing consortia and regional NHS procurement hubs.

"Price comparison websites and better public information on how trusts are performing in this area will undoubtedly help drive further improvement."

Responding to the criticism of suppliers, a spokesman for the Association of British Healthcare Industries (ABHI) told BBH "The report rightly highlights the level of inefficiency that currently exists in NHS procurement. At present the amount of waste and duplication in the system does not benefit industry or the NHS.

“In our submission to the Department of Health's review of procurement we called for a system of procurement that is focused on delivering the best outcomes for patients by giving them access to the most innovative technologies. Key to this is access to data and information, including information on the contribution that technologies make to patients as well as market transparency.

"The ABHI will continue to work with the Government to deliver a system that helps deliver the best outcome for patients.”

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