Consolidating the number of national suppliers for couch rolls, the tissue paper used to cover examination tables, could save up to 16% on an annual spend of £7m ©123RF
Consolidating the number of national suppliers for couch rolls, the tissue paper used to cover examination tables, could save up to 16% on an annual spend of £7m ©123RF

Price matching could save NHS £120m

6 January 2017

The NHS spends £6bn on goods with just 500 suppliers and this provides opportunities to save millions of pounds, according to the man heading procurement reform in the health service.

The figure was made visible by a new pricing indexing tool developed by NHS Improvement that aims to make spending across trusts more visible.

Using this tool to reduce the variation in prices paid by trusts for similar or the same goods, there is a realistic opportunity to save £120m across the NHS said Ian White, procurement lead for Carter Procurement at NHS Improvement.

“This wasn’t visible before, not in this way, this is completely new,” White told SM.

While many procurement partnerships have been analysing price differences across trusts on a local level, White said this was the first time price comparisons have been done on a national basis, and added that the data being collected was of a good quality.

The initiative was one of the recommendations of the Carter report, in which Lord Carter outlined how procurement could save £1bn a year across the health service.

The Purchase Price Index and Benchmark (PPIB) collates and analysises spending data from 200 trusts buying through NHS Supply Chain, and 140 trusts also send additional purchase order data covering independent procurement. In total, PPIB has so far analysed £2.6bn of spending.

“The interesting bit for [buyers] is about what they can do with the information now that they can see it. So our next bit is to continue to work with them on realising the opportunities that seem to be within the tool,” said White.

Anecdotally the numbers look good, he added. In just one trust the tool had suggested saving opportunities of between £325,000 and £1.2m. “They then further analysed it, identified opportunities of  £600,000 and are now going ahead and are delivering those opportunities,” he said.

Based on this one trust, White said £120m of savings from price matching alone were realistic across the NHS.

Of the back of this data, NHS Improvement are also working with NHS Supply Chain to move away from their current framework model towards more centralised procurement. The system they are developing is called the Nationally Contracted Products Programme (NCP).

“Say there are 10 suppliers and only three suppliers are needed to supply the whole country, then we would contract with three and we would remove the other seven from the catalogue for the year,” said White.

The Crown Commercial Services, the government’s central purchasing service, announced a similar move in 2015.

Already NCP has consolidated the purchasing of couch rolls – the tissue paper used to cover examination tables. The new contract comes online in March could save of up to 16% on a spend of about £7m.

Although “not the most exciting purchase”, couch rolls were a proof of concept, said White. There are 12 other NCP projects in the pipeline, with plans to quadruple that number this year.

Already 200 NHS trusts have committed to buying from suppliers selected through NCP, said White.

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