The NHS must address procurement inconsistencies to make £1 billion in savings

Dean Dickinson, managing director of Advanced Business Solutions (Public Sector & Enterprise Division) explains how inconsistencies within NHS procurement processes can easily be addressed with technology

Dean Dickinson

Dean Dickinson of Advanced Business Solutions on how discrepancies in NHS procurement can be addressed with technology

A staggering £1 billion could be saved by the NHS in England by 2019-20 simply through improved procurement of everyday goods, according to a recent government review.

The review was carried out by Lord Carter and found huge discrepancies between what trusts are paying for the same goods – with prices varying by more than 35%, compared to 1% to 2% in other health systems.

These figures are backed up by the NHS Procurement Atlas of Variation, published in 2014, which found significant inconsistencies in prices paid by NHS trusts for common items, such as one trust paying £3.95 for 100 needles compared to £31.68 paid by another.

Technology has been highlighted as a key way to achieve a standardised, consistent approach, with Lord Carter recommending the creation of a single electronic catalogue for purchasing goods.

There is a wide choice of innovative technology to help trusts implement this strategy and save costs

This electronic catalogue will ensure that professionally-sourced products are procured, helping to ensure best value and standardisation and enabling procurement efficiencies – a key aim of the NHS eProcurement Strategy. Once this catalogue is implemented, spend analytic software can also be leveraged to compare prices being paid across the NHS and to support contract renegotiations.

The strategy will also address the variations in surgical costs identified in the review, which found that hip replacement operations were sometimes costing more than double what they should – adding up to an additional £17m cost to the NHS every year.

With an eProcurement system in place these costs can be recorded directly in high-cost clinical areas such as theatres using GS1 coding. Technology, such as integrated patient-level resource management (PRM) systems, can be a key facilitator in enabling clinical operational managers to effectively monitor costs and compare variation by clinician, as well as manage inventory.

Royal Devon and Exeter NHS Foundation Trust has saved £421,000 by implementing a PRM solution to reduce unnecessary stock holding and cut waste. By providing instant costing and usage information on product lines, the system has enabled greater control over product requisitioning and is used by theatre staff to analyse the cost of all items used for surgery.

Many trusts are already addressing the challenges raised by Lord Carter, but there is still a number which have yet to do so

By implementing the NHS eProcurement Strategy, trusts will also reap further benefits from low cost electronic transactions, where paper invoices which need to be manually keyed, are replaced by much-more-efficient electronic transactions.

There is a wide choice of innovative technology to help trusts implement this strategy and save costs. For example, we are seeing an increase in demand for spend analysis solutions, for example, which provide a cohesive view of all procurement costs and improve financial transparency to assist with driving greater value from suppliers.

Many trusts are already addressing the challenges raised by Lord Carter, but there is still a number which have yet to do so. Trusts need to understand that this is a great opportunity to standardise best practice across the NHS and make significant savings in procurement and back office costs. The savings made in these areas will enable funds to be reallocated to where they are most needed, the protection of direct patient care.

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