The Department of Health estimates it can save £6.7bn through measures including renegotiating contracts and reducing running costs © 123RF
The Department of Health estimates it can save £6.7bn through measures including renegotiating contracts and reducing running costs © 123RF

New commercial boss role at DoH to drive value

Will Green is news editor of Supply Management
5 December 2016

A new post of chief commercial officer has been created at the UK Department of Health (DoH) to drive value and cut costs.

The DoH said the post, with a salary of around £220,000, was part of a mission to “deliver value by reducing costs and generating receipts through improved commercial behaviours, enabling better outcomes for patients and better value for taxpayers”.

“With circa £120bn per annum of spend on the healthcare system, and a £22bn shortfall in funding, we need to be sharper and smarter to deliver better outcomes faster and more efficiently,” said the DoH in the job description.

The move comes as NHS suppliers try to increase prices following the weakening of the pound.

In a statement in response to concerns raised by NHS Supply Chain, the DoH said: “We are aware of purchasing organisations being approached by suppliers with a desire to increase prices following a decline in the strength of the pound over recent months.”

But it said other factors also contributed to supplier costs and the price of oil was low. “It is the department’s view that it is the responsibility of suppliers to manage these sorts of risks in their supply chain and to honour the prices to which they committed when bidding to join frameworks,” said the DoH.

The new chief commercial officer will face a difficult financial situation. The National Audit Office (NAO) said the financial performance of NHS bodies “worsened considerably in 2015-16 and this trend is not sustainable”.

The NAO said NHS organisations reported a combined deficit of £1.85bn in 2015-16, a three-fold increased on the £574m reported in 2014-15. Provider trusts’ overall deficit grew by 185% to £2.45bn, up on £859m in 2014-5.

In a report the NAO said the DoH estimated it could make £6.7bn of efficiencies “by capping public sector pay, renegotiating contracts, implementing income generating activities and reducing running costs”.

It said the DoH estimated a further £14.9bn could be saved by “moderating the growth in demand for healthcare services and achieving 2% productivity and efficiency improvements”.

Amyas Morse, head of the NAO, said: “With more than two-thirds of trusts in deficit in 2015-16 and an increasing number of clinical commissioning groups unable to keep their spending within budget, we repeat our view that financial problems are endemic and this is not sustainable. It is fair to say aggressive efficiency targets have helped to swell the ranks of trusts in deficit over the last few years.”

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