Through intelligent procurement and making use of available analytical tools, NHS trusts could save millions, says Edi Truell
Cutting the number of product lines the NHS uses from more than 500,000 to less than 10,000 and being better at procurement could save up to £1bn by 2020, according to a new report by Labour peer Lord Carter, published last week.
Lord Carter, who chairs the NHS Co-operation and Competition Panel, was commissioned by the Department of Health last year to examine the practices of 22 leading hospitals.
‘With NHS trusts’ deficit rising, the pressure is on to cut spending and reduce waste’
His analysis has identified that latex gloves costing £5.44 a box in one hospital are bought for £2.39 in another. Aprons cost one hospital £2.51 each, but another pays £4.20. One hospital using the soluble version of a pill for liver failure was paying £1.50 per tablet, compared with just 2p for the solid version.
This has shocked many commentators. But it’s something we have been telling NHS bosses for months.
With the NHS trusts’ deficit rising to £822m last year – up from £115m – the pressure is on to cut spending and reduce waste.
The King’s Fund warned last month that the government will struggle to deliver on its pledge for £22bn of efficiency savings and may need the new government to give it even more than the £8bn extra a year it has already requested.
We believe it is critical not to underestimate the vast amount of supplies being procured by multiple trusts and the impact these costs have on the bottom line.
- Carter review sets out plan to save NHS £5bn a year
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I applaud efforts by the Royal College of Nursing to bring this issue to the fore and push for nurses themselves to be given more control over purchasing, but the key is to give experienced people the technology and tools to help them make better informed decisions.
Our electronic invoicing platform handled 14.8 million invoices last year, including those from a number of NHS trusts.
This generates vast swathes of data, which is why we have developed a spend analytics platform that allows teams to analyse where and how they are paying their suppliers, often uncovering significant opportunities to streamline their invoicing system.
If a hospital wants to buy a computer, it can see what every other hospital paid for a computer. That can help it to negotiate hard on the best prices and identify economies of scale.
The NHS has been slow to adopt this technology, compared with other public sector organisations around the world.
‘On average, business customers save 1.6 per cent of their spend when they use spend analytics’
Tungsten Network is currently working with organisations very similar to the NHS, processing billions of invoices every year. In one, we looked at their procurement of sterile dressings and found 104 suppliers being used forthat single product – you can do some very good procurement work with that kind of information.
A significant number of NHS trusts are already using e-invoicing technology to streamline their procurement. The government’s G-Cloud 5 framework can help accelerate business development as public sector bodies benefit from pre-negotiated terms and fixed prices.
The framework also eliminates the need for the public sector to tender competitively for the services covered by the framework, which in the UK can cost over £45,000 per process – the highest in Europe.
On average, business customers save 1.6 per cent of their spend when they use spend analytics. This streamlining can go further, however, with the help of artificial intelligence, which can be used to uneath more opportunities to cut costs and reduce overpayments. This, we believe, is the future.
It is now possible to use artificial intelligence to cross-check each and every invoice.
If something seems slightly amiss, such as a pacemaker at three times its normal price (this is a real life example identified by the analytics technology), flags are raised and it can be checked by someone, who can quickly rectify the mistake.
Artificial intelligence can be a powerful tool and so far we have only scratched the surface. Further research will be undertaken to delve into what can be done to help improve businesses everywhere.
‘The possibilities unlocked by artificial intelligence are endless’
Artificial intelligence isn’t just about robotic dogs. The possibilities it represents are endless, or at least further than the human eye can see. It’s time to start using these tools to make our businesses and government agencies more efficient, more cost effective and more intelligent.
With the outcome of the election now decided, the next step for our new Conservative government will be to deliver on its promises. Scrutiny on budgets is high and we would all rather see taxes spent on nurses and doctors than on needlessly expensive supplies.
Edi Truell is chief executive of Tungsten Network
- The new Tungsten Centre for Intelligent Data Analytics will support three senior professors and fund PhD and post-doctoral research programmes, and expect to begin delivering new artificial intelligence software for commercial applications within 18 months