Funding of NHS Supply Chain ''at odds'' with efficiency

25 October 2011

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25 October 2011 | Adam Leach

Linking the amount paid to NHSSupply Chain to the price it negotiates for big pieces of equipment offers “little incentive” and puts it at odds with making savings.

In a report published today, the Committee of Public Accounts (PAC), has called on the Department of Health (DH) to reshape its contract with NHS Supply Chain on purchasing high value items such as MRI scanners.

It wants the department to look at ways of offering NHS Supply Chain incentives to deliver savings, rather than pay it a percentage of the negotiated price. The report said: “Surprisingly, the department’s contract with Supply Chain allows it to charge trusts a percentage of the equipment purchase price, which provides little incentive to negotiate lower prices with suppliers.”

PAC chairwoman Margaret Hodge, said: “High value equipment in the NHS, like MRI and CT scanners, is worth around £1 billion, but the way this equipment is bought and used is not providing value for money to the taxpayer.”

The report evaluated value for money on the purchase of magnetic resonance imaging (MRI) and computed tomography (CT) scanners as well as linear accelerator (Linac) machines. It questioned the decision to devolve the power to purchase machines to individual NHS trusts. “We continue to question whether the system provides value for money when foundation trusts act independently with no explicit incentive to adopt best practice nor to work together to achieve economies of scale,” it said.

The report also called for the department to ensure collection and sharing of spend data on the high value items, better analysis of usage, to enable a more effective use of resources, and increasing awareness of framework agreements. On these the committee recommended that DH implement a “comply or explain” clause in purchasing contracts so trusts are forced to use the framework or justify why not.

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