Exclusive: 20 trusts face financial loss from new national efficiency scheme

HSJ understands trusts which buy few items from NHS Supply Chain – which sells common clinical consumables and other medical equipment – stand to lose between £100,000 and nearly £2m under proposals drawn up to incentivise trusts to increase their usage of the centralised service.

NHS Providers, which represents trusts, said trusts have “expressed serious concerns” that the proposals will result in increased cost pressures for some providers.

An NHS Supply Chain spokeswoman said “further discussions” will be had with trusts following the feedback.

From next April, all NHS trusts will see a small portion of income withheld and used to pay the operating costs of the new NHS Supply Chain. In 2019-20, those operating costs are estimated at £250m.

The Department of Health and Social Care hopes by incentivising trusts to use NHS Supply Chain more, the body will drive greater savings in the deals it strikes with suppliers. The DHSC has targeted around £2.4bn of savings in the next four to five years.

But HSJ understands around 20 trusts face making a net loss from the model in 2019-20, because their individual savings forecast from NHS Supply Chain is less than the proposed amount to be withheld from them to pay for the new model.

A Shelford Group trust is among the worst affected. Sources told HSJ it could lose anything between £500,000 and almost £2m, depending on the model’s success.

Several specialist trusts are also among those affected. 

The proposed amounts to be withheld form part of the tariff negotiations for 2019-20, which are the responsibility of NHS England and NHS Improvement.

Until final amounts have been decided, it remains unclear if NHS Supply Chain will be able to offer some form of discount to trusts negatively impacted by the implementation of the model.

The NHS Supply Chain spokeswoman said it will “refine its approach” during its discussions with trusts, “having listened to their feedback”.

“We have undertaken a high level assessment with a number of assumptions made on the impact of the new funding model on NHS trusts,” she said.

“We wanted to start discussions with trusts in order to understand the impact and work collaboratively to address any potential shortfalls next year, and to look at where we can add value now.”

Amber Jabbal, head of policy at NHS Providers, told HSJ the proposals could “load the financial risk of the new model onto providers”.

“While the intention is for trusts to save money by working together, the reality is that some – who are already clubbing together locally to negotiate savings – will end up with net losses.”

She said those losses would hit their financial positions, which NHSI “should take into account when regulating their financial performance”.

“A centralised service should be funded by trusts that would like to use it, with its running costs accounted for within its pricing structure,” she added.

The NHS Supply Chain was previously run by DHL, which held around 40 per cent of the NHS’s market share for common equipment used across hospitals, such as ward and theatre items.

The remaining 60 per cent market share is held by regional procurement bodies and trusts’ individual purchasing.

By paying specialist companies to negotiate better deals across 11 categories of products, the DHSC hopes trusts will increase their usage of NHS Supply Chain, which is targeting a market share of 80 per cent by 2021.

More than half a billion pounds will be withheld from trusts to pay for the new model over the next two years.