The Department of Health is expected to target “huge waste” in the cost of orthopaedic supplies when it releases its procurement strategy shortly, HSJ has learned.
John Warrington, the DH’s deputy head of procurement, told a conference earlier this month the cost of supplies for orthopaedics work was an area where he was seeking to “[improve] outcomes at a reduced cost”.
Mr Warrington said the relationship between doctors and suppliers’ sales representatives had led to a situation where orthopaedics supplies had twice the “cost to serve” [a measure of the commercial costs to deliver a service, which is reflected in the price the NHS pays] of other industries.
He also revealed his team had been combining clinical and commercial datasets to enable comparison between individual clinicians’ procurement costs.
He said: “In orthopaedics there’s a huge waste in the system because of the relationship between industry and the NHS, particularly clinicians.
“We’ve estimated that up 40 per cent of the price of the products, particularly hips and knees, is due to [profits and commercial costs]. That is twice the average of any other industry and that’s down to clinicians demanding things. So we’ve got a variation in what is used, they’ve got instrumentation all over the place as a result and we’ve got reps all over the place and reps in theatres, all of which adds cost.
“That can’t be allowed to continue.”
The plan is part of a broader attempt to drive down the NHS procurement bill. The DH has been expected to announce the strategy in the first week of August.
The DH had originally set a target of saving £1.2bn from its £20bn annual procurement spend by the end of 2014-15, but cost inflation has forced the department to acknowledge this is now impossible. The new target is to save £1.5bn by the end of 2015-16.