• Major supplier to NHS questions new procurement model
  • NHS trusts began subsidising NHS Supply Chain from April
  • Model could put competitors at unfair disadvantage 

A major supplier to the NHS has raised concerns with the Department of Health and Social Care that a new NHS procurement organisation could have an unfair advantage over the private sector.

Sources have told HSJ that Bunzl Healthcare is in discussions with the department over concerns Supply Chain Coordination Limited, which oversees NHS Supply Chain, could be breaching state aid rules by distorting the market.

State aid is any advantage granted by public authorities through state resources to organisations that could distort competition and trade in the European Union.

NHS trusts, in effect, fund SCCL’s operating costs. As of 1 April, a small portion of trusts’ income from tariff payments is withheld and given to SCCL.

It is hoped this will incentivise trusts to use NHS Supply Chain, which is aiming to double its share of the common goods and consumables market from 40 per cent to 80 per cent and thereby deliver savings of more than £2bn by 2022-23. In 2017, a DHSC official described the scheme as one of the “most high-profile programmes in government”.

HSJ understands Bunzl Healthcare has been in discussions with DHSC since the funding of SCCL’s operating costs was shifted to NHS providers. One option for the company is launching a legal challenge, but the DHSC and SCCL both told HSJ no such challenge has been received.  

Last year, another major NHS supplier, DHL Supply Chain, unsuccessfully challenged the DHSC over a £730m logistics contract awarded in connection with the NHS Supply Chain transformation. 

SCCL has been established as a subsidiary of the DHSC, which also means trusts can claim back VAT on certain products bought through NHS Supply Chain. This would not be possible if SCCL was not a subsidiary company. 

Bunzl Healthcare, which describes itself as one of the UK’s largest distributors of branded and own-brand medical consumables, declined to comment. The company counts many NHS trusts among its clients.

SCCL and DHSC did not comment further.