Trust ditches outsourced purchasing

12 May 2004
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13 May 2004 | Andrew Golder

Hospital chiefs in north-west England have brought an outsourced procurement function back in-house just five years after it was taken over by a private firm.

North Cheshire Hospitals NHS Trust hopes to save 3 per cent of its annual spend by combining two formerly separate purchasing operations in a single department.

Warrington and Halton Hospitals were separate entities but merged into a single trust in 2001. The purchasing department at Warrington had been outsourced two years previously.

After the merger it became clear that two teams doing the same job in different locations was inefficient, and procurement for the whole trust went out to tender last year.

The in-house purchasing team at Halton Hospital won the bid and took over all buying in April.

Nine staff have transferred from outsourcing specialists SureStock, who handled purchasing at the Warrington site, to the eight already employed by the trust.

Supplies manager Alison Parker said: "In terms of cost and quality, I believe an internal team would be as good as, if not better than, an outsourced operation."

SureStock won the overall Kelly's Awards for Excellence in Purchasing and Supply three years ago (see Features, 29 November 2001).

Parker added: "If you outsource to the private sector, there has to be a profit there.

"In-house, you should be able to unlock those savings and pump the benefits back into the trust rather than paying performance bonuses to an outside company."

The new joint purchasing department will take responsibility for all purchasing except drugs and is expanding its remit into travel procurement.

At present, the trust's annual procurement spend is about £40 million.

SureStock was unavailable for comment last week, but Norman Rose, director-general of the Business Services Association, which represents companies that provide outsourced services, said North Cheshire's decision was not unusual.

"Most service contracts in the public sector are going back in-house, and this has been a growing trend over the past two or three years," he said.

"The interesting thing is a number of these organisations decide to outsource again after a few years."

He said the reasons why bringing services back in-house tended not to be as effective were the lack of sanctions if targets were not met and in-house teams having less political clout than outside "experts".

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