NHS hospitals wasting £500m a year on basic supplies

NHS Hospitals are wasting up to £500 million a year by paying too much for basic supplies, according to Britain’s spending watchdog.
NHS hospitals wasting £500m a year on basic suppliesThe National Audit Office found that some health bodies are paying twice as much as others around the country for dressings, clothing and medical equipment.

In some areas, individual hospitals are purchasing 177 different types of surgical glove and putting in hundreds of small orders for A4 paper.

It comes even though the National Health Service is under orders to make £20  billion in efficiency savings over the next four years.

The NAO recommends that the Department of Health make it easier for trusts to compare the prices of products they buy, and that hospitals collaborate with each other to buy in bulk and so save money.

Because local trusts are independent of Whitehall control, the NAO says they should be held to account by Parliament to improve on the “poor value for money” they provide in procurement.

Margaret Hodge, the chairman of the powerful Public Accounts Committee, said: “It is simply unacceptable that so many hospital trusts are currently paying more than they need for basic supplies. Even for some of the commonest items, the price hospitals pay varies by more than 100 per cent.

“Too much purchasing is still done through multiple, low-value orders, which incur high admin costs.

“And the range of similar products that trusts buy is sometimes so wide as to appear ridiculous: how can it be, for instance, that while one trust does its work with just 13 different types of surgical glove, another requires 177?

“These are well-known recipes for poor value for money that really ought to have been addressed by now.”

The NAO report states that England’s 165 NHS hospital trusts spend about £4.6bn a year – a tenth of their total expenditure – on “consumables”, such as surgical dressings, drinks, staff uniforms, pacemakers and replacement hip joints.

Because there is no central system for buying these products, managers in individual hospitals make deals with 17,000 different suppliers. One trust employed 45 people in its procurement team.

Although it is “standard practice” in the private sector, health bodies are not required to give each product they buy an individual code, which would help them analyse data and reduce errors.

As hospitals do not know how much others are paying for products, and they buy items in different quantities at different times, price variation is common and the NAO estimates that up to £150m could be saved if it were eliminated. In some cases the amount paid varied by as much as 183 per cent.

In addition, NHS bodies are putting in on average 4,501 order for surgical gloves a year, and could potentially save £7m a year in admin costs just by reducing orders.

Further savings could be made by buying in bulk or joining regional “hubs” with other hospitals to make economies of scale and improve their bargaining power with suppliers.

Hospitals are also encouraged to standardise the products they use – one trust used 287 different types of tubes known as cannulas, while another bought 15 variations of A4 paper.

Amyas Morse, head of the National Audit Office, said: “At least 10 per cent of hospitals’ spending on consumables, amounting to some £500 million a year, could be saved if trusts got together to buy products in a more collaborative way.

“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.”

The Health Secretary, Andrew Lansley, said: “We welcome the publication of this report. The more efficient the NHS becomes, the more we can invest back into patient care. That is why it’s so important for hospitals to deal with wasteful procurement.

“While it is up to local hospitals to decide how they purchase products, Government has a role in providing support and robust information. We are therefore considering launching a review to help hospitals get better value for money from procurement, drawing on the expertise of Government advisers.”

From: http://www.telegraph.co.uk/Hospitals-wasting-500m-a-year-on-basic-supplies

Whilst Health Direct applauds the NAO’s research, we know that they are under quoting the waste.

On January 11, 2011 we piublished: NHS wasting £1 billion a year on supplies when we found that the NHS is wasting more than £1 billion of taxpayers’ money a year as managers spend vastly differing amounts on the same supplies, the head of a government backed healthcare efficiency drive has claimed.

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