NHS Improvement said the healthcare sector had a budget deficit of £960m at the end of 2017-18 ©REUTERS/Neil Hall/AdobeStock
NHS Improvement said the healthcare sector had a budget deficit of £960m at the end of 2017-18 ©REUTERS/Neil Hall/AdobeStock

NHS procurement savings will 'kick in' next year

The NHS’s long-awaited centralised procurement overhaul will start seeing savings in 2019, according to the Health Care Supplies Association (HCSA).

Alan Hoskins, chief officer of the HCSA, which represents procurement and supply professionals in the NHS, told SM he expects to start seeing recurring savings when the new Future Operating Model (FOM) comes into effect next March.

His comments follow last week’s performance update from NHS Improvement, which provides financial oversight for the health service, that showed the sector’s end of year deficit year was double its target.

NHS Improvement said the healthcare sector had a budget deficit of £960m at the end of 2017-18, £464m above the target for the year. While most of the overspend was attributed to an unexpectedly large demand for NHS services, it added that many of the savings made were “dependent on non-recurrent items” that did not help the longer term financial sustainability of providers.

Speaking to SM, Hoskins criticised the distinction between recurring and non-recurring as being dependent on how organisations run their budgets, but said he expected the FOM system to see an increase in recurring savings.

FOM is a new structure for centralising the procurement of common goods across different health service trusts and organisations, based around a set of category towers. It was scheduled to replace the existing NHS Supply Chain contract, administered by DHL, in October, but the launch date has been pushed back to March 2019.

Hoskins said the majority of the category towers are already in place, ready for when the platform goes live, and that FOM would pick up a large amount of the increasing demand seen by the NHS.

He added that although the buying strategies for each of the categories have not been made public yet, they will have levels of savings aligned to them. “When that all kicks in we will start to see price reductions coming through,” he said.

Hoskins said he hoped FOM would free up procurement teams within trusts and other organisations to focus on other aspects of the procurement job, including increasing engagement with clinical staff. “You may not be contracting and going to market and all of that sort of thing, but what you will very much be doing is engaging and bringing the change,” he said.

Asked about the quality of contract management in the NHS, which was criticised this week, Hoskins said some but not all organisations have the necessary procurement skills. “Some organisations invest in procurement and commercial activity and they have teams with good technology, good tools.

“That is not the same across the entire NHS, there are some organisations that haven’t got that level of investment. The Future Operating Model is a way of helping the NHS because it’s doing it once, buying once for the NHS so the teams locally won’t be negotiating these things.”

However Hoskins cautioned against cuts to procurement training and skills and called for national funding for training. “We can’t just leave it to trusts to do it because trusts are so stretched,” he said. “The first thing that tends to get cut is that really intentional training and support.”

Hoskins said the whole NHS, including procurement, was having to work harder as a result of budget squeezes and the demand for services. “It’s everyone in the system really, it doesn’t matter if you’re a nurse, a doctor or an administrative individual doing finance, procurement or anything else. There is severe pressure on the system,” he said.

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