EFFICIENCY IN PROCUREMENT
ment to this, the sorts of things we’ve found can easily happen. There’s a very big responsibility on individual trusts to put their own house in order.
“There is the challenge across the NHS to secure up to £20bn of savings in the next four years. Within that, that’s a target of £1.2bn of procurement savings. If I were a trust chief executive, I’d be looking closely at this report – there are some very quick wins.”
He said the NHS more widely does have a role in improving benchmarking, transpar- ency and performance indicators around procurement to aid trusts.
Case studies
Davies added: “Our case studies illustrate that where there’s a will, you can get clini- cians round the table, show them what’s being done at the moment and the current spend and the variety of commodities be- ing ordered, then do something about it.”
Some procurement managers have con- tacted NHE with thoughts on the report’s recommendations. Some made the point that having a variety of suppliers is healthy for the NHS, as it ensures they have to
compete on price – that excessive consoli- dation could drive smaller suppliers out of business, leaving the largest ones freer to hike prices.
But Davies said: “I think you can cover a lot of ground in terms of procurement ef- ficiency before you get into any of these potentially difficult trade-offs.
“Remember, the current situation doesn’t really work for suppliers either – they may be doing a good trade with the NHS by sell- ing to individual hospitals, but that means they have to invest an awful lot in their customer management to engage with so many individual trusts.”
Beardsley added: “It also depends on which market you are thinking about – there is a big difference between the markets for A4 paper and those for stents and hip joints, for example, as some are commoditised and some are specialised. The market structures mean it’s difficult to generalise.”
Checking the figures
Some procurement managers also ques- tioned the prices offered by NHS Supply Chain. Beardsley said: “As we did our field-
work, we did come across this perception or allegation about NHS Supply Chain be- ing more expensive and not a good deal, so we mined the data on what trusts actually paid to see whether the numbers stacked up.
“We found that overall, it’s about half and half – sometimes more expensive, some- times cheaper – so it’s not justified on the numbers to say it’s consistently more ex- pensive.”
There is also an allegation that suppliers raise their price to NHS Supply Chain and undercut that price through other routes, she said, and added: “What would really aid NHS Supply Chain is getting commit- ted demand from trusts, which would really help it drive good deals, but at the moment all of its incentives are around variety.”
One way some trusts drive down prices is through e-auctions, where various bodies get together to ask suppliers to name their best price for supplying a set amount of a certain commodity.
Davies explained: “I’ve been at one of these e-auctions for IT equipment; you’ve got people committing themselves to the outcome of the auction. You’ve got local authorities, central government depart- ments, health bodies, all putting their ‘de- mands’, their volumes, into a pot.
“It’s a ‘reverse auction’, because the price ticks down, and it was quite impressive to see you’d have this coming together of public bodies, putting their demands to- gether and going out to global suppliers.
“Doing better deals is at the heart of this. The current situation isn’t good in any- body’s book. The NHS really has a duty to make these savings.
“This is about win-win, not about closing wards – it’s spending less on what you’re already buying by doing sensible things.”
Grace Beardsley
Mark Davies
FOR MORE INFORMATION The full report is available at
www.nao.org.uk/publications/1011/nhs_ procurement.aspx
national health executive Mar/Apr 11 | 41
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