Press release

Minister launches radical new procurement strategy to save the NHS £1.5 billion

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

A radical new blueprint for how our NHS buys everything has been unveiled by health minister Dr Dan Poulter today.

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A radical new blueprint for how our NHS buys everything - from rubber gloves and stitches to new hips, building work, bed pans and temporary staff - has been unveiled by health minister Dr Dan Poulter today.

Dr Poulter’s new strategy for NHS procurement is set to radically change what our NHS does with its money by cutting wasteful spending - so cash can be ploughed back into the front line for patient care. It details ambitious plans to save £1.5 billion by getting our NHS to use its money more smartly and more efficiently.

The government’s NHS reforms are already making £1.5 billion of back office savings each and every year for our NHS by reducing unnecessary bureaucracy, but Monday’s document will show how our NHS can save much more, and support economic growth, by changing the way it buys supplies and does business.

Health Minister Dr Dan Poulter said:

The Government is putting an extra £12.7 billion into our NHS but that money needs to be spent much more wisely by local hospitals. When our NHS is the single biggest organisation in the UK, hospitals must wake up to the potential to make big savings and radically change the way they buy supplies, goods, services and how they manage their estates.

We must end the scandalous situation where one hospital spends hundreds of thousands more than another hospital just down the road on something as simple as rubber gloves or syringes, simply because they haven’t got the right systems in place to ensure value for money for local patients. This kind of poor resource management cannot go on, and this radical new strategy will help our NHS get a grip on wasteful spending to drive real change and improved procurement practices so that more of our NHS’s resources can be spent on frontline patient care.

The money saved though our plans to cut wasteful NHS spending can be spent instead on the things that really matter – such as more operations or revolutionary new treatments.

Dr Poulter’s new strategy, launched today ‘Better Procurement, Better Value, Better Care: A Procurement Development Programme for the NHS’, also takes an open and frank look at the procurement inefficiencies that currently exist in our NHS. Findings show there is little consistency in the way our NHS spends money, and that very few senior people in NHS hospitals know what good procurement looks like.

It also finds an over reliance on ‘framework agreements’ at the expense of the NHS striking radical money-saving deals, like hospitals getting together to bulk-buy equipment for a discount.

Dr Poulter sets out a number of specific actions to tackle these problems. They include:

  • The recruitment of a new NHS procurement champion with private sector expertise who will have the authority to drive better procurement practices across the whole of the NHS; recruitment will start immediately.

  • Dr Dan Poulter to lead a special top-level team, drawn from Government, the NHS and business to work with the new procurement champion to provide on-going scrutiny and guidance to the NHS in driving improvements in NHS procurement and productivity gains.

  • Mandating hospitals to publish for the first time what they pay for goods and services and setting up a brand new ‘price index’ especially for hospitals, through which they will be able to see how much they are spending on different products compared to other hospitals. This will drive improvements because for the first time ever, hospitals will have to publish what they pay for supplies and services, and be held accountable to patients and the public for what they spend. Hospitals and their boards will be able to see where they are lagging behind and could do better;

  • Cutting the temporary staff bill by 25 per cent by the end of 2016 (temporary staffing currently costs the NHS an eye-watering £2.4 billion every year), by helping the NHS learn from the best hospitals and use more efficient staffing arrangements;

  • A plan for the Department of Health to make the most of the market by working with top NHS suppliers directly to strike new, bulk deals for cutting-edge medical equipment like radiotherapy machines and MRI scanners;

  • Growing the UK economy by making the NHS more agile and better at working with small and medium-sized businesses; including implementing Lord Young’s recommendations on pre-qualification questionnaires, including simplifying them across the NHS, or even abolishing them for low value procurements;

  • Exposing poor value for money and bad contracts by making more data about the deals the local NHS is signing publicly available; and

  • Improving support to help senior NHS staff better understand procurement.

The new procurement strategy for the NHS is part of a wider government drive to save taxpayers’ money by being more efficient and make every taxpayer pound count.

The Government has already saved £3.8 billion by changing the way it buys goods and services, and enforcing sensible controls on recruitment and use of consultants. The Department of Health will continue to drive competition and innovation across the NHS and among a range of suppliers, including small and medium sized businesses, exploring every option to cut waste and make savings.

Background information

  • For more information, please call the Department of Health press office on 0207 210 5703.
Published 5 August 2013