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Procurement


NHS needs to do more to leverage spending power


According to a recent National Audit Office (NAO) report, the NHS is not making the most of its spending power to save money in purchasing medical equipment and consumables. It has continued to spend more than £3 billion outside NHS Supply Chain, its purpose-built procurement route.


In 2016, the Carter report identified the scope for efficiencies through greater collaboration which would allow the NHS to aggregate its purchasing power, thus securing the best price. In 2017-18, the Department of Health & Social Care (DHSC) implemented a new operating model and delivery body for NHS procurement known as NHS Supply Chain (to replace the previous, fully outsourced model which was also called NHS Supply Chain). The new body was responsible for procuring products, warehousing, and delivering goods on behalf of the NHS. The UK’s independent public spending


watchdog recently examined how effectively NHS Supply Chain is making efficiencies across NHS procurement, and whether it has achieved its objectives of saving money and increasing its share of products (medical equipment and consumables) bought through it by the NHS. Responsibility for Supply Chain moved to NHS


England (NHSE) in 2021. For 2023-24, NHS Supply Chain estimates that annual NHS spending on products is around £8 billion. At its inception in 2019, DHSC set NHS Supply Chain a target to deliver £2.4 billion savings by 2023-24. As of 2022- 23, it told the NAO that it had exceeded its £2.4 billion savings target. Although NHS Supply Chain reported progress against this target to NHSE on a quarterly basis, neither NHSE nor the DHSC has validated or checked these savings. The NAO said that NHS Supply Chain has used


different methods to report savings to different audiences, which could cause confusion. Some NHS Trusts themselves said that they did not


recognise NHS Supply Chain’s claimed savings and, according to the NAO, this issue is causing frustration and mistrust. In summer 2023, NHSE, NHS Supply Chain, Trusts and stakeholders worked together to develop a new methodology for reporting savings which should be ready from April 2024. Supply Chain is now pursuing a new savings target of £1 billion from January 2022 to 2030 (£500 million by 2026).


Delivering the right products for the NHS, on time and at the best available price is essential to make every pound count for patients. The NHS has enormous buying power,


but it is not yet making the most of it. Gareth Davies, head of the NAO.


The NAO goes on to state that there is no


reliable baseline against which to estimate whether NHS Supply Chain achieved its 80% market share target. Supply Chain reported progress against this target until 2021-22. However, NAO points out that DHSC and NHSE did not reassess the value of the market during this period. As a result, the market share figure was most likely overstated. Supply Chain did not report a market share


figure for 2022-23 as it no longer had confidence in the original total market value. Supply Chain has established a new baseline for estimating its market share, although this is based on incomplete data from Trusts, the NAO report claims. Trusts spend approximately £3.4 billion outside of NHS Supply Chain’s function. Trusts are largely free to purchase goods outside


April 2024 I www.clinicalservicesjournal.com 45


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