Trusts to miss out on cash discounts after payment scheme is scrapped

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Trusts will no longer be able to secure early payment discounts from NHS Supply Chain
Discount scheme scrapped ahead of changes to NHS Procurement
Chiefs say scheme has created an unfair “redistribution of wealth”

NHS trusts will miss out on discounts offered in exchange for immediate payments for goods and equipment, HSJ has learned.

NHS Supply Chain has told heads of procurement it is scrapping its Prompt Settlement Discount scheme from August, which rewards trusts that pay for products within a certain timeframe.

It comes ahead of radical changes to the way the NHS purchases goods and equipment.

The Health Care Supplies Association, which represents NHS procurement professionals, said it was “surprised and disappointed” the decision had been made “so hastily”.

Most of the NHS purchases products from NHS Supply Chain, but some trusts use the service far more than others.

The PSD offers trusts using NHS Supply Chain a discount on products in exchange for fast payment.

It has been used by some trusts as a mechanism for delivering recurrent annual savings worth hundreds of thousands of pounds.

However, some trusts have been unable to use PSD as emerging cash flow problems take their toll.

In a message to trusts, seen by HSJ, NHS Supply Chain’s chief finance officer Michael Parr said a review into PSD had found that while all trusts paid the cost of PSD, “only a small number gain from the receipt of it”.

This meant there was “effectively a redistribution of wealth through PSD payments”, he said.

He also added that PSD cannot be “absorbed” into the new way in which the NHS supply chain model will be funded.

The new model, which goes live in April 2019, will see tariff funding withheld from NHS trusts in favour of the central costs of running the new NHS supply chain.

This is a key part of the procurement transformation programme run by the Department of Health and Social Care, which aims to save £2.4bn over the next five years through better procurement.

Currently, trusts using NHS Supply Chain, which is run by DHL, pay a margin on products purchased.

Mr Parr said removing PSD was necessary in order to prepare for the supply chain’s new funding model.

All PSD schemes will therefore be discontinued by 1 August.

A spokesman for the HCSA said: ”A number of trusts will be impacted part through the financial year, which creates another thing to manage.

”We were surprised and disappointed the decision was made so hastily.”

HSJ has approached NHS Supply Chain asking about the impact on trusts that had planned for PSD savings throughout 2018-19, and how much the scheme had paid out in the last three years.