Improving procurement within the NHS

The policy paper Better Procurement, Better Value, Better Care – A procurement development programme for the NHS sets out some key initiatives. These include actions to improve data, information and transparency; the creation of a new national 'enabling function' to support leadership and build better capability throughout the system; a series of interventions to achieve immediate efficiencies and productivity gains; actions to improve data, information and transparency; and an initiative to fundamentally re-think clinical engagement in the procurement of highvalue medical devices and the relationship with the device industry; and the creation of a new national 'enabling function' to improve and support leadership and build better capability of procurement in the NHS. Commenting on the need for greater procurement efficiencies, Sir David Nicholson, chief executive, NHS England, said: “The NHS purchasing power is massive but there is a wealth of evidence that it is failing to harness this fully. Across the NHS there are far too many examples of different solutions to the same problem, far too many instances when organisations do not act collectively and fail to secure the best possible deal. This is simply not good business sense and needs to change if the NHS is to improve quality of care and maximise value for money. “The National Audit Office has already identified the potential for £500 m savings in the NHS alone. I believe the real potential may be even greater. Our collective ambition should be for a modern, effective and efficient procurement function in the NHS that is among the best in the world.” Dr Dan Poulter, MP, believes that the NHS procurement capability needs to be radically improved. He said: “The NHS spends over £20 bn every year on goods and services which typically accounts for around 30% of the operating costs of each hospital. Effective management of this resource is vital. It is our intention to stabilise non-pay spending for the next three years. We want to help Trusts so they spend no more than they currently do by the end of 2015-16. In real terms this means Trusts need to find over £1.5 bn of procurement efficiencies over the next three years. This is a significant challenge, and one in which we recognise Trusts need guidance and support.” In 2011-12 NHS Trusts spent £20.6 billion on goods and services. This is summarised in Figure 1. It is believed that there are opportunities to reduce expenditure in all of these categories, but each requires a different approach and these are highlighted within the document.

Procurement partners

Procurement partners play an important role in helping Trusts manage their non-pay expenditure. It is estimated that they influence around 30% of the £20 bn. In addition to this, NHS Supply Chain influences around £600 m of capital expenditure. The DH believes that the relationship between these organisations and Trusts has been distant, unfocused and lacking commitment. It says that Trusts have used these organisations as a source of 'framework agreements', cherrypicking those that suit their needs and forcing all procurement partners to issue tenders to broaden their 'offerings' in the hope Trusts will use them, leading to replication and unnecessary costs for suppliers. Both NHS Supply Chain and GPS now have NHS Customer Boards which is beginning to improve communications with the NHS and has gone some way to improving their offer to the NHS. However, more needs to be done to deliver commitment and at a greater pace, says the DH. Duplication of effort is a waste of procurement resource and the NHS needs to use these organisations more intelligently. The procurement development programme will support the modernisation of procurement across the health system and help Trusts deliver efficiencies. To oversee the programme a NHS Procurement Development Oversight Board will be created, chaired by the Parliamentary Under-Secretary of State for Health. A private-sector procurement champion will also be appointed to drive the modernisation of procurement across the NHS and to drive greater procurement accountability.