Here's where the NHS can save money

NHS Overspends £500 million on basic supplies


Now if you or I overspent by even £500 – we’d know about it.

There are precious few companies today that would allow employees to overspend by even £50

But it seems the NHS can throw £500 million around with gay abandon – and no-one seems to worry about checking the bills.

For ages I have been saying that if each Trust appointed one genuine business man or woman to oversee budgets, they would be able to show them how to save money – without all the cuts needed.

Now here comes proof:  National Audit Office (NAO) says “hospitals could be saving half a billion pounds a year if they reconsidered the way in which they purchase basic supplies”.

Why Hospitals need business-trained executives to oversee budgets

Can’t you just imagine what would happen if Alan Sugar, Nicola Horlicks, Gerry Robinson etc. cast their eyes over a hospital’s accounts?  They would soon come up with questions:  why are Trusts being allowed to order basics such as gloves, paper, etc. from different suppliers?

The NAO report “The procurement of consumables by NHS acute and Foundation Trusts” has revealed a lack of information and the fragmented purchasing attitude of Trusts. The severity of the problem is directly linked to the lack of central control over procurement. With the Health and Social Care Bill proposing that all hospital Trusts become Foundation Trusts, there are concerns this trend will accelerate.

Translation:  someone who understands accounts and purchasing should take the NHS by the throat and teach it good basic business principles.  Otherwise money is going to continue to pour down the drain.

Overspend by nearly £1 million per Trust

According to the report, the average trust could save £900,000

  • if they bought the same type and volume of products
  • and paid the lowest available price.

Could you imagine M & S or Tesco allowing each store to buy overalls, floor cleaning equipment, or any other basics from different companies?  No, a central office negotiates the price with a major supplier – and they award the contract to the company that provides the best overall product at a reasonable price.

But the NAO said “great variation in the range of basic supplies purchased by different trusts was also discovered. Trusts that NAO examined bought “

  • 21 different types of A4 paper
  • 652 different types of surgical and examination glove
  • 1,751 different cannulas
  • 260 different administration sets

Some variations were particularly striking. For example, the purchase numbers of hospital gloves varied significantly. While one trust operated with 13 different types of glove, another needed 177.

NAO concluded that “if hospital trusts were to amalgamate small, ad-hoc orders into larger, less frequent ones, rationalise and standardise product choices and strike committed volume deals across multiple trusts, they could make overall savings of at least £500 million, around 10 per cent of the total NHS consumables expenditure of £4.6 billion”.

So what is La La Lansley doing?

His office loves sending out press release after press release – but so far – NOTHING.

The head of the National Audit Office, Amyas Morse, says  “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.”

Er – sorry.  La La has announced the Government were considering the launch of a review “to help hospitals get better value for money from procurement, drawing on the expertise of Government advisers.”

Now why do stables and bolted doors come to my suspicious mind?

So should the companies making millions out of NHS be quaking in their shoes?  Er – not exactly.  According to La La Lansley, “We are therefore considering launching a review to help hospitals get better value for money from procurement, drawing on the advice of government advisers,” he said.

So that’s all right then.  CEOs of companies that supply rubber gloves, canulas, gowns etc. can get back on the golf course – knowing full well by the time the review comes out, the next Government will be in.

What can you do?

Have a look at the names of the non-executive Trust officials of your local hospital.  Is there a noted businessman amongst them?  If so, ask them what they are doing to scrutinise bills.

If not – suggest that a noted local businessman be asked to run their eyes over the accounts – and say where they think savings could be made.

But this will be difficult.  Contracts for services from cleaning to lift maintenance are awarded to certain companies – and they won’t want to be moved.  We have been trying to find out how our local hospitals can have allowed the firm that put in the telephone system to get away with it – last time I wanted Pysiotherapy the phone rang and rang;  eventually a voice said “Accident and Emergency”.

So far letters to the Chief Executive go unanswered.

To download the report “The procurement of consumables by NHS acute and Foundation trusts”, follow the link: http://www.nao.org.uk/publications/1011/nhs_procurement.aspx
The Guardian article: http://www.guardian.co.uk/society/2011/feb/02/hospitals-waste-money-says-nao-report

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2 thoughts on “Here's where the NHS can save money

  1. Irene February 4, 2011 at 5:06 pm Reply

    I used to work for a global healthcare company that supplied disposable medical products such as gloves, cannulae, disposable gowns in addition to services such as Pharmacy Services at cancer units (to prepare chemotherapy) and renal units. Many moons ago, probably 20 or so, I recall NHS policy operating a single cheque approach sourcing as many products and services from one company in order to leverage costs. I wonder what happened to this initiative?

  2. Michael Cure February 4, 2011 at 10:16 pm Reply

    Phillip Green was originally put in charge of scrutinising government departmental accounts and coming up with a solution. Like you so rightly say, the single cheque approach is the obvious solution so that the same products are bought on a single basis for all departments, etc.
    It is so blindlngly obvious it does not need a successful billionaire to point out what is so evident even to a five year old.
    What I am saying is that the buck stops at the top, and if a chief executive is not up to the job, then he should not be there in the first place . Imagine if the chairman of GSK or any other major company, answerable to a bevy of shareholders, was to admit that he could not see the difference between earning £100 million or £10 million in annual profit . How long would he last ? Why should different principles apply to the government decision makers ? The tenets are identical but the ministers seem to be unaccountable. Why doesn’t the opposition pick up on these errors ?

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