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More Collective Buying Power Could Drive Significant NHS Savings

Wednesday 7 September 2011

NHS trusts face replacing half of all CT and MRI scanners over the next four years at a time when they have to deliver a 17% cut to their equipment budget a Public Accounts Committee (PAC) inquiry heard today.

In a report on this issue published by the National Audit Office earlier this year, it was recommended that in order to maximise taxpayer value and secure best prices, NHS trusts should collaborate in their purchasing of expensive capital equipment, such as scanners. This was a view echoed by NHS Supply Chain in their evidence at today’s inquiry. Appearing in front of the Committee, Andy Brown, NHS Supply Chain’s Managing Director, Diagnostics said: “Trusts were already making savings but could achieve greater value by grouping together requirements for new machines through NHS Supply Chain”.

Mr Brown said: “NHS trusts need to look at the whole lifecycle cost of their medical equipment in order to plan efficiently and to buy at best price. Implementing a significant budget cut at a time when half of scanning and imaging equipment reaches the end of its lifecycle is a major challenge, but is nonetheless achievable if trusts decide to work with NHS Supply Chain and exercise their joint buying power. There is no mandate to do this, so it is down to every trust to recognise the significant economic benefits of collaboration through working with NHS Supply Chain”.

The committee was convened to discuss the conclusions reached in the earlier NAO report which found that efforts to drive value for money from the NHS equipment budget was being frustrated by trusts’ failure to collaborate. The NAO report, Managing High Value Capital Equipment in the NHS in England, examined NHS trusts planning, procurement and use of expensive medical equipment in three areas: Computed Tomography scanners used for diagnosis, Magnetic Resonance Imaging (MRI) and Linear Accelerator (linac) machines for cancer treatment.

It stated that trusts were having to replace expensive machines over the next few years during a period where there was a 17% reduction in capital spending within the NHS. The report also acknowledged that three quarters of trusts were already using the NHS Supply Chain framework agreements to lower the costs but that more could be done if they worked together.

Mr Brown added: “Buying and maintaining equipment during times of budgetary restraint will provide a significant challenge for NHS trusts and our range of frameworks to plan, aggregate, purchase or lease and maintain high end equipment will be invaluable to the NHS. If trusts adopted good asset management practices for their medical equipment, this would enable them to plan better and buy better.

“The NAO report acknowledged that 75% of the NHS trusts are utilising NHS Supply Chain frameworks and are enjoying lower acquisition costs and equipment cost savings. Naturally trusts get the benefit of NHS Supply Chain’s national pricing and we are already providing services to support a number of the recommendations in the Report.

“However, there is no reason why the bulk purchasing arrangements we have already implemented could not be applied further with support from the NHS to co-ordinate and aggregate requirements. We have invested heavily in Capital Planning and Leasing contracts to support trusts and this facility, if adopted widely, will lead to more and more bulk buy opportunities for the Acute and Commissioning sectors.”


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Notes to editors

About NHS Supply Chain

NHS Supply Chain is operated by DHL as Agent of the NHS Business Services Authority. It supports the National Health Service (NHS) and other healthcare organisations in England and Wales by providing end to end supply chain solutions.

The organisation was formed in 2006 from the NHS Logistics Authority and parts of the NHS Purchasing and Supply Agency (NHS PASA). NHS Supply Chain aims to provide over £1 billion of savings to the NHS by 2016.

NHS Supply Chain manages the sourcing, delivery and supply of healthcare products and food for over 1,000 NHS trusts and healthcare organisations. It provides a single point of access to over 600,000 products ranging from baked beans to sutures, from gloves to implants, and even diagnostic equipment such as MRI scanners.

Its management of the procurement process negates an NHS organisation’s need to tender through the Official Journal of the European Union (OJEU). Costs can also be reduced through its one-route solution that consolidates all products onto one invoice and delivery – this saves up to £1 per product in back office administration costs and removes up to 40 deliveries going into a trust compared with ordering goods separately.

To ensure that its products are fit for today’s healthcare market, NHS Supply Chain works with suppliers of all sizes to ensure its range embraces high quality and innovative products; and engages with clinicians, the Department of Health and academic institutions to make sure that it is aware of the current requirements and latest developments in clinical practice.

NHS Supply Chain’s product areas include:

  • theatres
  • dental
  • audiology
  • catering, including food
  • infection control
  • orthopaedics
  • rehabilitation
  • capital equipment, including finance and maintenance.

Based in Alfreton, Derbyshire, UK, the business employs around 2,400 staff in ten locations.  

Last November NHS Supply Chain was awarded a prestigious healthcare procurement award by the Health Service Journal (HSJ) for innovative methods that save NHS trusts time and money when acquiring medical equipment, including bulk purchasing which releases significant savings and has the potential to make a major contribution to Quality Innovation Productivity Prevention (QIPP) targets over the next three years.

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