NHS told to cut non-pay costs by 10% by April 2018

Paul Snell is managing editor at Supply Management
5 February 2016

NHS trusts must report their purchasing data and commit to the NHS Procurement Transformation Programme to cut non-pay costs by 10% by April 2018.

This is among the directives set out by Lord Carter, the health service’s ‘procurement champion’, in his report into productivity and efficiency published today.

from April 2016 trusts will have to publish receipts on the NHS’ top 100 items, such as surgical gloves

In the interim study, published in June 2015, Carter said the NHS could save £1bn a year through procurement, and £5bn annually by 2020-21 by reducing “unwarranted variation”. The health service spends around £9 billion on goods and services a year.

According to the Department of Health, from April 2016 trusts will have to publish receipts on the NHS’ top 100 items, such as surgical gloves, bandages and needles, monthly. This will be used to develop an NHS Purchasing Price Index.

The Procurement Transformation Programme has three strands: the development of a national catalogue of goods and services; Restructuring the supply chain delivery model following the end of the NHS Supply Chain contract, with a decision on the future model by April 2016; and the adoption of e-procurement throughout the health service.

Carter said: “My experience of the NHS and hospitals internationally is that high quality patient care and sound financial management go hand in hand. To improve the quality of care hospitals must grasp resources more effectively, especially staff, which account for more than 60 pence of every pound hospitals spend.”

In a sample of 22 hospital trusts, the report said they used 30,000 suppliers, 400,000 product codes, with 7,000 people able to place orders.

A ‘model hospital’ will also been developed to provide guidance, metrics and benchmarks on what best practice looks like.

The report was broadly welcomed by the Health Care Supply Association, but raised a warning over the implementation.

"HCSA is concerned that the pace of reform needs to be accelerated in relation to the redesignof the NHS procurement landscape and its leadership. It urges the DH to publish itsplan for the future Operating Model and timescales for its implementation as soon as possibleand to continue to engage with those working in the profession," it said in a statement.

Alan Hoskins, director of procurement and commercial services at South of England Procurement Services, added: "Raising the profile of procurement at board level to show the commercial benefits that can be achieved is important in terms of the procurement landscape, the development of procurement capability and the delivery of significant cost improvement programmes whilst delivering the very best patient care as we demonstrate the benefits of GS1 and unique identification will have a significant impact on outcomes."

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