Could bulk-buying save NHS pounds?
- 25 July 2014
- From the section Health
Would it be better if the NHS bought in bulk?
That's the question that has arisen since I wrote about how the health service procures essentials like surgical gloves and incontinence pads.
My piece followed the government initiative to publicise the huge variation in prices paid for supplies in different parts of the NHS.
And it has raised a number of questions.
Perhaps the most important is - how could health chiefs do better?
Tens of millions could be wasted by the failure to drive a hard bargain with suppliers.
But getting a better deal for clinical waste disposal bags, surgical gloves and even A4 paper might not be as easy as it looks.
Some take the view that criticism of procurement practices is another example of "NHS bashing" - after all, they argue, the NHS was recently rated as the most efficient healthcare system amongst several leading economies by a major think tanks.
Others who have worked at various levels of the NHS say they are immensely frustrated by the waste and inefficiency they see day to day.
One leading trust chief executive told me that lecturing health staff on the need to save money resulted in eyes glazing over.
But explaining that every pound saved would be reallocated to front line services and enable better outcomes for patients was an easy message to sell.
Managements, though, clearly have to demonstrate their own competence in cutting costs by better procurement.
Central government - or the top level of NHS England - would have immense clout and buying power.
The idea of Whitehall involvement was dismissed as impractical by some.
However, it's already happening.
The Department of Health is working with NHS England to negotiate central deals for 100 items.
A list of agreed prices and suppliers will be sent to trusts in the autumn.
If deals for drugs for the NHS can be handled at national level, why not do the same for some other products?
The Home Office is currently looking at haggling out a central deal for police uniforms with a small group of suppliers.
Police authorities in England would then get the benefit of the lower prices.
The same things is being considered for fire service uniforms - its estimated that £18m could be lopped off an annual budget of £127m.
Centrally negotiated supply contracts will not always be appropriate.
Regional groups of NHS trusts might pool their procurement to get better prices.
This has been successfully applied in the capital with the NHS London Procurement Partnership (LPP).
Established in 2006, the group says it has saved more than £650m on behalf of members.
One trust is said to be saving nearly £120,000 this year alone on screws used in spinal surgery by getting a deal through LPP rather than trying to negotiate alone with a supplier.
'Own way best' mentality
Some health experts are sceptical about centralised procurement.
The former health trust chief Roy Lilley, now a commentator, says because of hidden distribution costs.
He says: "The more you buy the more expensive it is by the time you get to the end user".
He believes it would easier to tell trusts that non-medical suppliers should never account for more than a set proportion of turnover and let them get on with it.
Those who believe strongly in the merits of smarter procurement acknowledge that applying it in Whitehall is not straightforward.
Alastair McKie, of PA Consulting Group which advises some government departments, says: "It takes a lot of motivated individuals who can share their experiences across different departments to make things happen."
He says that individual organisations, for example NHS trusts, often believe their way of doing things is best and need a lot convincing to join forces with others.
The NHS supply chain sounds a dry and specialist subject.
But it matters so much because millions of pounds of taxpayers' money is at stake.
At a time of a squeeze on public funding, the imperative to make better use of that money is as urgent as ever.