NHS hospitals in the UK often pay more than they need to when buying basic supplies, the National Audit Office (NAO) reports. A combination of inadequate information and fragmented purchasing means that NHS hospitals procurement of consumables is poor value for money. The NAO estimates that at least Â£500 million a year could be saved by the NHS on its spending on consumables, and potentially much more for some products.
Todays report points out that with no central control over Foundation Trusts, the Department cannot mandate more efficient procurement practices. Responsibility to demonstrate value for money in procurement falls upon the management of individual hospitals. The price that hospitals pay for the same items varies widely; the average variation between the highest and lowest unit price paid was 10 percent.
Some hospitals are not getting value for money because they are buying many different types of the same product. For example, trusts bought 21 different types of A4 paper, 652 types of medical gloves and 1,751 different cannulas. There is also a large variation between hospitals: one bought 13 different types of gloves, while another bought 177 different types.
There are unnecessary administrative costs because many hospitals make multiple small purchase orders. Taking just four items bought in high volumes, around Â£7 million in administration costs could be saved each year if the number of orders were reduced to the level achieved by the best performing 25 percent of hospitals.
Hospital trusts have complete freedom to decide what they buy and how they buy it. They can use regional procurement hubs or NHS Supply Chain or they can buy direct from suppliers. The limited evidence available suggests that new contracts are frequently being established which overlap and duplicate each other, incurring unnecessary administrative costs. There is no national performance framework for Hubs which would enable comparisons to be drawn between them or an assessment of their potential optimal performance to be made.
Amyas Morse, head of the National Audit Office, says, "At least 10 percent of hospitals spending on consumables, amounting to some Â£500 million a year, could be saved if trusts got together to buy products in a more collaborative way. In the new NHS of constrained budgets, trust chief executives should consider procurement as a strategic priority. Given the scale of the potential savings which the NHS is currently failing to capture, we believe it is important to find effective ways to hold trusts directly to account to Parliament for their procurement practices."
The 165 hospital trusts spend approximately Â£4.6 billion on consumables each year. Spending on consumables typically accounts for 25 percent of an average trusts non-pay expenditure and 10 percent of total expenditure.