PROCUREMENT Initiative to divert extra spend to region's businesses

Published: 24/03/2005, Volume II5, No. 5947 Page 13

A pioneering scheme to improve the economy and health of a region that includes 44 per cent of English local authority wards with the worst ratings for ill-health or deprivation is being developed by the NHS in South Yorkshire.

The plan - the first in the country - is to divert more NHS spending to local businesses to create a 'health dividend' of economic development and improved health.

Equipment suppliers in the region currently account for just 28.4 per cent of a total health spend of£5.2bn in the Yorkshire and Humber economy.

Although a high proportion of the total figure is spent on staff, the non-pay spend in 2002-2003 was£1.5bn, set to reach£2bn in the next five years.

A series of workshops for local businesses held last year revealed that they view NHS procurement as fragmented, with buyers dominated by clinical teams, and find the 'riskaverse and red-tape culture' difficult to deal with.

'It is perceived that the NHS is strongly driven by cost and volume with little place for environmental and social considerations, or even quality issues, ' said South Yorkshire strategic health authority director of public health and clinical engagement Chris Bentley.

Working with Yorkshire Forward, the regional development agency, the SHA aims to change that perception, with a goal of diverting extra spend to local businesses using the NHS procurement programme. It plans to support the creation of healthcare 'virtual enterprise networks' that enable small and medium sized regional suppliers to pool their resources and bid for contracts that would otherwise be out of reach.

Mr Bentley said: 'The potential benefit of [the NHS] re-sourcing towards more local economies for our employment, our procurement and our use of capital is huge.' He sees the scheme as a means of addressing the region's pronounced disparities in health and deprivation. In Sheffield's affluent Hallam, life expectancy for men is 80, while just 15 miles away in Rotherham's Herringthorpe the figure is 68.

'We must raise awareness within the NHS to secure long-term commitment to the real value of the health dividend and the linkages to local business, ' Mr Bentley told the Yorkshire Forward business conference, reinforcing the message in the recent public health white paper.

Martyn Goodhand, chair of Sheffield-based Vantage Technologies, which supplies training and risk-management material to the health sector, believes the virtual enterprise networks offer 'an ideal opportunity to access potential contracts'.

'There is a finite amount of time small businesses can spend looking for contracts, ' said Mr Goodhand, who already has NHS clients.

'But if we can join with others to bid for contracts we would not otherwise engage with, that can only be good.'