Two recent public accounts committee reports suggest the NHS may still have a thing or two to learn about shopping.
August’s review of the embarrassing national programme for IT, which concentrates on the £7bn electronic care record system at the core of the grandiose project, concluded unsurprisingly that “the department [of Health] has not got the best out of its suppliers”.
The suppliers in question are Computer Science Corporation and BT, two corporate behemoths.
“The department is clearly overpaying BT,” concluded the committee, noting that “BT is paid £9m to implement systems at each NHS site, even though the same systems have been purchased for under £2m by NHS organisations outside the programme.”
It suggests one route towards reducing inefficiency might be letting trusts shop for themselves. But the committee’s May report on procuring consumables, which cost the NHS £4.6bn each year, appeared to favour centralisation, finding considerable waste in a “fragmented system of procurement”.
Trusts can at present choose whether to purchase via regional collaborative procurement hubs, by going through the NHS Supply Chain (currently operated by DHL under a 10 year contract), or by dealing directly with suppliers. For “trusts” read business units, clinical directorates, budget holders and whoever has delegated authority to spend.
The National Audit Office has estimated perhaps £500m a year could be saved through standardising products and negotiating harder with suppliers.
But with the quality, innovation productivity and prevention programme requiring £1.2bn of savings from slicker procurement, an even tougher government strategy is taking shape.
The DH’s response to the committee’s criticism concentrates on “tools and technologies which improve transparency of spend and price information”. In plain words, using the power of internet price comparison to avoid getting fleeced.
This reinforces a second cross-government front, aimed at breaking the multinationals’ grip on supply. As Cabinet Office minister, Francis Maude’s role is to bear down on public spending, including the NHS. But Mr Maude also has a personal mission: to ensure the EU’s current review of the public procurement regime allows easier access to the market for smaller suppliers. EU proposals are expected early in 2012.
The government’s answer, as so often, lies in competition.