Billions of savings proposed through smarter NHS procurement

In a recent report on health procurement, NHS Pathology Review Chairman, Lord Patrick Carter, forecast that £5bn annually could be saved by consolidating NHS England Trusts to use the same e-tendering portals and key performance indicators as well as by improving their orders and human resources.

These guidelines were made in the Review of Operational Productivity in NHS (an Independent Report for the Department of Health) commissioned in July 2014. In this Review, Lord Carter compared 22 leading hospitals to see how the NHS could get best value for money.

Value for money, he said, could be best gained by: improving workflow by minimising absences (a move which was forecast to save £2bn) as well as optimising hospital pharmacies, medicines and estates (with each sector’s efficiencies estimated to save £1bn).

Such efficiencies could be easily made, Lord Carter said, by unifying NHS ordering into one e-procurement portal.

He added: “The quickest way to solve poor procurement data, on prices and volumes, is to accelerate the implementation of a single NHS electronic catalogue.

“Our research told us the best way to control expenditure on products used in healthcare is to have a tightly controlled electronic catalogue, supported by strict policies, so employees and suppliers know there are no alternatives.”

These policies (alongside other good practices) could then be compared, from Trust to Trust, through a standardised set of key performance indicators.

Lord Carter explained: “My first recommendation for the NHS is to adopt and use the ‘Adjusted Treatment Index’ (ATI) developed with the cohort of 22 hospitals we have been working with.

“The ATI metric can serve as a barometer by which hospitals compare themselves with their peers, taking account of complexity of care provided, and be a baseline for future improvement.”

To envisage this future improvement Lord Carter suggested a ‘model hospital’ be highlighted as an example of good working practice.

He said: “Many hospitals have told us they would welcome more detailed guidance on what good looks like. We [plan to] publish, in stages, a model NHS hospital, in terms of operational productivity and cost.

 “This would include such modules as Emergency Department, different types of wards, operating theatres, pathology, radiology and administration costs. We intend to develop such a model over the summer.”

Writing to Health Secretary Jeremy Hunt, Lord Carter said: The great challenge we face is to lift efficiency to a consistently high standard in every NHS hospital and, where we already perform well, innovate to improve further.”

Health Secretary Jeremy Hunt is now calling on the NHS to ensure every penny is spent in the most effective way for patients to improve standards of care while reducing costs. The government particularly wants to see lessons learnt by hospitals that are not being as efficient as they could be across all areas of their work, and could therefore make bigger gains for patients.

The Prime Minister previously outlined that the NHS must modernise and move to a seven-day service.

Jeremy Hunt said: “I’m determined hospitals should focus their resources on patient care by helping them ensure they aren’t paying over the odds for basic items. The NHS has huge purchasing power as the world’s single biggest buyer of healthcare products, so we should be driving for the best-value deals every time.

“Nothing better embodies our belief in ‘one nation’ than the NHS, so I want to see a seven-day health service that delivers for working people. That means cutting out the waste and making sure every penny counts so that the quality of care continues to improve.”

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