Hospital purchasing slammed by auditors as 'poor value for money'

2 February 2011

2 February 2011 | Angeline Albert

Hospitals in England are paying more for basic supplies than they should because a lack of central purchasing control is hampering efficient buying, according to the National Audit Office (NAO)

In a report published today, the NAO said fragmented purchasing of basic supplies, including medical equipment and stationery, represents “poor value for money”. The spend amounts to £4.6 billion a year.

The NAO estimated at least £500 million could be saved annually if trusts bought in a more collaborative way. The government’s plans to decentralise the NHS puts efficient buying at risk, it added, because it secures no commitment from hospitals to purchase a single item or class of supplies.

Trusts are not getting value for money because they purchase many different types of the same product. This included 21 varieties of A4 paper, 652 types of medical gloves and 1,751 different cannulas (plastic tubes inserted into the body) across all hospitals. This also varied significantly between hospitals. While one trust bought 13 different kinds of gloves, another purchased 177 types.

Although trusts can use regional procurement hubs and a national supplies and distribution organisation, the report said, “there is no requirement for them to do so”, and they are free to buy directly from suppliers. Some hospitals were incurring unnecessary administrative costs by making multiple, small purchase orders.

Amyas Morse, NAO comptroller and auditor general, said in a statement: “Today’s report points out that with no central control over foundation trusts, the [health] department cannot mandate more efficient procurement practices.

“Given the scale of the potential savings which the NHS is currently failing to capture, we believe it is important to find effective ways to hold trusts directly to account to parliament for their procurement practices.”

The majority of hospital trusts - 129 out of 165 - are foundation trusts which are outside the Department of Health’s (DH) direct control. Under the Health and Social Care Bill, the government hopes to turn all hospital trusts into foundation trusts.

Margaret Hodge MP, chair of the Committee of Public Accounts (PAC) said it was “unacceptable” for hospitals to pay more than they need. “Problems to date have been caused by insufficient coordination between hospitals trusts. This report makes clear that individual trusts acting alone will only be able to make limited improvements in the future.”

By 2015, the NHS must find £15 billion to £20 billion of annual efficiency savings. “NHS Trusts need to get more business-like and ensure they are making the most of their combined spending power to deliver the best value for taxpayers and patients,” said Elizabeth Wells, head of public services reform at the CBI.

A DH statement said: "The more efficient the NHS becomes, the more we can invest back into patient care. That is why it's so important for hospitals to deal with wasteful procurement. While it is up to local hospitals to decide how they purchase products, government has a role in providing support and robust information. We are therefore considering launching a review to help hospitals get better value for money from procurement, drawing on the expertise of government advisers."

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