Transparency would help solve the £500m a year wasted on inefficient NHS consumables purchasing
The Public Accounts Committee has published a damning report today into NHS procurement. Among other things, the report cites the National Audit Office which says the NHS is wasting £500 million a year simply by ordering supplies in small, frequent batches rather than less frequently but in larger quantities.
“The NAO has estimated that trusts could save around £500 million annually, 10% of their consumables expenditure, by amalgamating small orders into larger, less frequent ones, rationalising and standardising product choices and striking committed volume deals across multiple trusts.”
Too often we hear about the supposed cuts being ‘savage’, but this is exactly the sort of cut that any government ought to make. The money could be used to pay for services that people actually value, to fund a tax cut or to help reduce the Government’s huge deficit. Almost any use of the money would be preferable to wasting it on buying consumables at inflated prices. But how can such waste be cut? After all, hospital procurement staff and structures will be more or less the same in the near future as they would have been when the data was collected. The committee’s report was, in its understated way, critical of the culture in the NHS towards value for money:
“There has not been a culture of efficient procurement in the NHS. The lack of data makes it difficult for trust boards to challenge managers on the efficiency of procurement and there has not been sufficient control over procurement practices. At a time when all trusts are required to make efficiency savings - 4% in 2011-12 alone - they should seek to achieve as much of these as possible from improvements in procurement.”
Fortunately, there does appear to be a disinfecting light at the end of the tunnel. Just as non-jobs could be rooted out of local authorities by way of HR Transparency, so too could existing structures of NHS control be better placed to scrutinise wasteful, inefficient procurement with a bit more transparency there. As the committee reports,
“A lack of data has limited progress towards more efficient procurement, and the Department must now address this. The Department plans to require all products sold to the NHS to have standard bar-coding. Bar-coding of products would help trusts to rationalise the range of products they buy and compare prices, providing the data they need to benchmark their performance.”
This would make it far easier for NHS trust boards to scrutinise management and has to be a step in the right direction. But it shouldn’t be left just to boards of directors. The money being spent is taxpayers’ and the trusts spending it are public bodies. Details should be published routinely so taxpayers can see for themselves how their money is being spent and provide the pressure of additional scrutiny that would help cut down on waste.
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