Better Procurement Practices Can Save NHS £1 Billion A Year

Obviously the NHS has been in a news a lot recently with the new government making widespread changes to various services across the UK – and one particular area of interest in regards to our health service is its procurement practices. There have been comments made that it could be a lot more efficient, and according to an article published on the Supply Management website, if procurement is done right it could save the NHS £1 billion every year.

Lord Carter – an NHS procurement champion – has been working with 22 NHS-run hospitals to help analyse their procurement strategies and provide insight as to where savings can be made and where efficiency can be improved upon.

In a report published by Lord Carter he stated that one possible course of action would be to create a national electronic catalogue of products used by the NHS, before creating four national “productivity collaboratives” for hospitals across the country to share their insights into best practice – one of which will focus on procurement itself.

Some of the figures that have been collated by Lord Carter include a possible saving of £5 billion by the year 2019/2020; as stated, one fifth of this could well come from optimised procurement practices. This is because a staggering £9 billion is spent on procurement in the NHS on an annual basis. One of the reasons why the NHS spends so much on procurement is due to it being way out of line with global best practices; across the world a catalogue of around 6,000-9,000 product lines for health consumables is generally used, with a variance in price of 1-2% – for the NHS, however, this catalogue reaches 500,000 products and price variances of up to 35%.

Another report is due to be published this autumn. What do you make of the procurement practices of the NHS? Do you think that with even better management more savings could be made?