- New head of food procurement for NHS says price differences will be more visible
- Only a quarter of NHS spend on food is through central supply chain
- “Improved traceability” among benefits of new purchasing model
Trusts will benefit from greater price transparency when buying food, regardless of whether they choose local or national suppliers - according to the new head of food procurement for the NHS.
Oliver Cock, chief executive of Foodbuy, also told HSJ the new national procurement model should result in inhouse catering being “more cost effective” for trusts, and that trusts can continue to use local suppliers despite the push towards centralised purchasing.
In January, Foodbuy were awarded a £12.5m contract by the Department of Health and Social Care to buy food on behalf of the NHS, as part of a drive to make procurement in the health service more efficient.
The NHS spends an estimated £500m on food every year, but currently only around £120m of spend is channelled through the NHS Supply Chain.
The DHSC wants at least £400m of this spend directed through the new NHS Supply Chain, which aims to deliver £2.4bn savings by 2022-23 from the purchasing of common goods and equipment.
The new model replaces the current model in October, though Foodbuy’s contract formally starts next week.
Foodbuy buys food for a number of catering organisations and events, including Wimbledon. It manages around £1bn of spend, but none of this has been for the NHS so far.
The company is owned by Compass Group. Compass also runs a business called Medirest which provides food, retail, and cleaning services to more than 20 NHS organisations.
Mr Cock, who began his procurement career working in the NHS, told HSJ Foodbuy would reduce the cost of products through its deals with suppliers, and increase transparency for trusts.
Asked if trusts would still be able to use local suppliers, Mr Cock said: “For certain products buying locally absolutely makes sense, but for an awful lot you pay a premium.
“The combination of what we can bring and how the national procurement model will be run means there will be much better transparency.
“So if a trust buys a product locally and it’s X per cent more than buying from a national supplier, will the trust be prepared to pay that? At the moment no one has that visibility.
“The choice around who to use is still going to be at trust level, but what we can do is bring a transparency to some of the trade-offs.
“At the end of the day, the reason the DHSC has done this is because it wants to save money. Every trust using its own butcher does not make financial sense.
“And if you’re buying processed and manufactured products there are economies of scale.”
Foodbuy’s NHS procurement team will comprise around 12 buyers, as well as a dozen or so other staff. Around 10 people are moving across from NHS Supply Chain.
Understanding the fragmented nature of food procurement in the NHS and “educating trusts” on what Foodbuy can offer presents the biggest challenge to the company, Mr Cock said.
“Success for me means delivering more value to the NHS and getting more control of spend,” he said.
“Our hope is that by educating trusts around how we do things and changing the operating model, then the system should become more transparent.
“At the moment, it’s difficult because you’ve got a different funding model, some bits going through the NHS Supply Chain with its own margin built in, and some trusts have their own team.
“If you take that noise away it comes down to who can buy it better and as long as we can demonstrate that’s us then we should be fine.”
He said some trusts would not be as aware of the changes to food procurement as to the medical categories of spend, because the former has not been as big an area of focus for trusts.
“Food wasn’t the core part of what NHS Supply Chain did, they – quite rightly – focused on the big spend items,” Mr Cock said.
He said the company would look to strike deals lasting mainly six to 12 months with suppliers.
Asked about individual suppliers approaching trusts in an attempt to undercut the national prices, Mr Cock said: “If they can genuinely undercut then we haven’t done our job properly.”
On distribution, Mr Cock said some costs may need to be “recovered” by DHSC depending on how products are sent to trusts.
This depends on what type of service the new logistics provider of NHS Supply Chain can offer, for example in terms of which temperatures food can be stored in while it is transported to hospitals.