Press release

Buying smarter could save NHS £1.2bn

This news article was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

New ways of buying supplies and medical equipment could save the NHS £1.2 billion to reinvest in patient care, Health Minister Simon Burns announced today.

The NHS has been asked to ‘raise its game’ when purchasing goods and services, such as gloves and sutures, catering and energy, to save at least £1.2 billion over the next four years.

The Department of Health, working with the NHS Supply Chain, has also established a £300 million cash fund to enable the NHS to bulk buy large equipment such as:
• CT scanners,
• MRI scanners,
• ultrasound machines, and
• cancer treatment technology.

Thanks to this fund, £11 million has already been saved through orders that have been placed in advance via NHS Supply Chain with suppliers.

Traditionally, the NHS has struggled to make the most of its buying power as there was very little knowledge between local hospitals about their equipment needs.  This fund allows the NHS to benefit from the savings of bulk buying expensive medical equipment via NHS Supply Chain. 

Health Minister Simon Burns said:

“Waste is unacceptable when we know there are simple solutions. That is why the NHS needs to buy smarter and get the best value for the taxpayer for every penny spent.

“We know that at least £1.2 billion could be saved over the next four years if the NHS innovatively changes the way it buys goods and services.

“Already, over £11 million has been saved through bulk-buy discounts on the cash fund.

“This is the first step to better, smarter procurement in the NHS and we will be working closely with hospital trusts over the next six months to help them save even more money that can be reinvested in patient care.”

The recommended life of the majority of equipment such as CT and MRI scanners is ten years, after which it either needs updating or replacing because of wear and tear.  There are over 200 of these large scale items that will need replacing over the next couple of years and the NHS will be able to significantly benefit from the discounts achieved via these bulk buy deals when replacing this important equipment.

By having the cash fund available, the NHS Supply Chain are able to secure better bulk buys deals for the NHS with suppliers. As equipment is purchased by trusts, payment for it will go back into the fund, effectively replenishing it for future use. 

Andy Brown Managing Director of Business Solutions for NHS Supply Chain said:

“This important development will allow NHS Supply Chain to group together the purchasing power of the NHS for this vital equipment, make large commitments to suppliers and bring improved planning to the management and replacement of this equipment across the NHS and with suppliers.”

Procurement plays a valuable role in driving improvement in services.  Better procurement means these savings can be reinvested to benefit patients. Our ambition is to put in place a world-class procurement system in the NHS that is responsive to modern suppliers.  This will enable the NHS to adopt existing innovations and stimulate new ones that will benefit patients and taxpayers.

In addition, hospitals are now being asked to drive forward improvements through a series of actions, being more transparent and assessing how they buy equipment and services, including:
• Publish the details of all contracts over £10,000;
• Appoint a board executive to be accountable for procurement performance; and
• Regularly audit procurement.

These actions in Raising our Game will be taken forward immediately, whilst the strategy for developing world-class procurement will be published later this year.

It is vital that we have procurement that is not only better, but is world class. As a first step, Raising our Game sets out the actions that the NHS must take immediately.  It should be focused on outcomes, not just cost, and must be responsive to creative ideas from suppliers, procurement specialists, clinicians and managers. Transforming procurement in the NHS could enhance quality and value and the strategy for delivering this will be published later this year.

Notes to Editors

1. NHS Procurement: Raising our Game document, with the list of actions to be taken forward by the NHS has been published today on the DH website.

2. The £300 million fund is in response to recent recommendations by the Public Accounts Committee to better purchase large scale equipment.

3. It is estimated the NHS could save £1.2 billion - through a wide range of initiatives which go beyond negotiating better prices for the NHS and include improving how stock in hospitals is managed, reducing wastage and using information on what is spent to consider ways we can work better with suppliers to remove cost. 

4. As part of the development of a world-class procurement function, we will work in consultation with the NHS, industry, third sector organisations and a range of stakeholders and procurement specialists.

5. Sir Ian Carruthers will conduct a Procurement Strategy Review that will inform the strategic approach to procurement in the NHS.  The first element of this is an Open Call for Evidence and Ideas which is what is being published today along side Raising our Game.  This will culminate in a further report later this year.