EFFICIENCY IN PROCUREMENT
NHE speaks toMark Davies andGrace Beardsley of the National Audit Office to discuss their landmark report on consumable procurement at NHS trusts.
T
he NAO made a lot of health man- agers sit up and take notice when it
suggested the NHS could save half a billion pounds simply through buying its consum- ables in a more intelligent way.
This would go a long way to meeting the £1.2bn in savings from procurement the NHS must make over the next four years, without having to actually reduce spend- ing on anything except unnecessary items.
Newspapers were particularly interested in the startling variety of similar items that various NHS trusts buy in – including 652 types of glove and 1,751 types of cannula. Margaret Hodge, who chairs the House of Commons Public Accounts Committee, called some of the buying practices “ridic- ulous” and “unacceptable”.
The NAO report, published in February 2011, says procurement should become a “strategic priority” for the NHS as it seeks to make efficiencies – but that it is cur- rently “failing” at this.
Value for money
Mark Davies, director of health value for money at the NAO, told NHE: “We’ve al- ways been very conscious of the scale of public money spent on goods and services across government, and in this case across the NHS.
“Being public sector auditors, we’re very keen to see what sort of value is being se- cured from that, particularly at this time with the current state of the economy and the public finances. The NAO has done a range of procurement studies across gov- ernment – it’s one of the areas we look at on a regular basis. In the NHS you have a large number of hospital trusts who buy something like £4.6bn worth of consuma- bles a year. One of our key findings is that the quality of the information out there, in terms of what is bought by individual trusts and what they pay, is not good; it’s pretty poor, to say the least.
“There is quite a range of prices paid by individual trusts for what are exactly the same commodities. There’s a wide range of things being bought by different trusts and
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there’s a question mark around whether the variety in the things being bought is necessary. With some sensible engage- ment between trust management and cli- nicians, there’s an opportunity to consid- erably standardise and therefore reduce the range of things being bought.
“There is a key opportunity being missed at the moment for trusts to actually go into the marketplace with committed volumes, across different trusts. They’re all going to the same suppliers to buy the same sorts of things. If they engage with the marketplace in a more thought-through way, looking at annual volumes of consumption, what neighbouring hospitals are doing, how de- mand can be amalgamated, they can go to the market and say ‘we need this volume of this commodity in this year’.”
Routes to market
“There are various routes to market, in- cluding NHS Supply Chain and procure- ment hubs,” Davies continued. “It looks a bit of a muddle out there; the nine hubs are all doing good work, but when you take them in the round, they’ve been set up un- der different arrangements, and it’s a bit of a free-for-all. Some are competing with each other for the same goods and there’s not complete coverage of every hospital in their region, for example.
“Somebody needs to take a good long look at the hubs; they don’t look very coherent at the moment and there must be a better way and a more rationalised approach to join up trusts and the market.”
“The NHS is missing the opportunity to exploit its purchasing power.”
Report co-author Grace Beardsley, an audit manager at NAO, said: “We also found lots of low-value, small-scale ordering going on, with a lot of inefficiency. Anecdotally, we’re hearing that a lot of these orders are in response to trusts simply running out of things – we didn’t look closely at inventory management, but we did hear about this problem with short-term ordering.”
So is the whole system to blame, or is it up to individual trusts to buy smarter?
Davies said: “This report should be aimed at trust chief executives. Procurement is not the most exciting thing on a trust’s management agenda, and one can under- stand why. You have a lot of people with a lot of procurement experience within trusts, but the problem is that there some- times isn’t a management grip on this.
What you then get is the risk of a lot of peo- ple being able to just pick up the phone be- cause the box or the shelf is empty and buy small amounts of stuff in low volumes.
“Look at supermarkets; a very much more simple operation than a hospital, of course, but there is management control over the way individual stores purchase, when things are purchased, and just more intelligent procurement.
“If you don’t have a board-level commit-
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