“Through the coming years, every part of the NHS needs to make every penny count for patients” – Andrew Lansley, Secretary of State for Health.
“The 15% savings target of the next three years represents the start of a huge challenge to procurement in the NHS” – David Coley, Head of Procurement, Heart of England NHS Trust.
The NHS aims to achieve savings of up to £20bn over the next four years. How can such a great deal of money be saved without damage to patient care? There is no question that substantial procurement savings will be sought in the efficiency plans of NHS trusts and foundation trusts. Excluding GP practices, the NHS procures some £20bn of goods and services each year. Whilst procurement of medicines is centrally managed, the remainder is procured through various organisations and structures.
This disjointed approach is not efficient and the National Audit Office, in its review of NHS procurement published in February 2011, identified that over £500m of savings could be made annually if all NHS trusts were to take advantage of the outsourced procurement service, the NHS Supply Chain, provided by DHL. In 2010, Steria published a report indicating that a coherent approach to NHS procurement could deliver £1bn in savings. Another report, commissioned by the Department of Health and published by the Foundation Trust Network (FTN), identifies great savings being made by trusts sharing back office systems such as procurement. According to Tony Spotswood, who led the FTN report: “There is genuine scope to redirect funds to frontline services through the standardisation, simplification and sharing of back office services.” The potential of joint procurement has never been fully realised by the NHS.
Two years ago, the NHS introduced a new commercial strategy, disbanding the NHS Purchasing and Supply Agency (PASA), transferring work to Buying Solutions and creating regional Commercial Support Units (CSUs). The outsourcing of procurement to DHL via NHS Supply Chain was to increase and NHS Shared Business Services (a joint venture with Steria) was to play a greater role. The Quality, Innovation, Productivity and Prevention (QIPP) programme was created, with one of its strands being to promote collaboration in procurement. The expectation was that the regional purchasing hubs would be wound up. Now a new procurement strategy is being developed and most of the procurement hubs have survived. What will their future be with the winding up of PCTs and strategic health authorities? The role of CSUs is already being questioned. NHS procurement is restructured every five years or so, yet it would appear that the reorganisations are often seen to be of little relevance by those procuring at the sharp end: estates and facilities managers in the hospitals and trusts, and on whom NHS services depend.
The NHS, through Andrew Lansley’s reforms, is changing rapidly. Yet the pressure will be on all those responsible for procurement and commissioning to secure value for money. The clinical commissioning model could mean that the survival of some hospitals will depend on the quality of their procurement and estates management. Procurement in the NHS: every penny counts will help all those tasked with securing value for money to negotiate the shifting landscape, understand how to take advantage of the opportunities offered by the various procurement organisations and initiatives, understand the changes that are taking place and how to deliver the procurement savings that are needed if NHS services are to be maintained.