FINANCE: Trusts in the South Central region are in the process of setting up an “integrated supply chain”, with the aim of saving £358m over four years on procurement costs.

The scheme has been agreed in principle by trusts and the South Central strategic health authority has voiced approval for the plans. Final sign-off is expected in August.

The Royal Bournemouth and Christchurch Foundation Trust, in the neighbouring South West region, is also involved and has been appointed the “lead trust”, responsible for a legally binding consortium agreement between the bodies taking part and MedAssets, the service provider chosen to run the scheme.

According to a business case put to Solent Trust, all South Central trusts are involved except Southern Health, Berkshire Healthcare, Heatherwood and Wexham Park, and the Ridgeway Partnership, also known as Oxfordshire Learning Disability Trust.

The document says that, acting alone, trusts have to pay high prices for goods, comparing it to the economies of scale found in other sectors. “Tesco buys for all stores,” it says.

The business case also says the scheme will be a more effective alternative to central procurement: “NHS Supply Chain is often seen as a high price provider to be used only when preferred sources are out of stock.”

Under the terms of the agreement, all those taking part are required to channel 100 per cent of spending in the relevant categories to the project.

Failure to route 95 per cent or more will result in financial penalties. Trusts will have to conduct internal monitoring to ensure there is no “maverick buying”. The initiative aims to deliver savings of 20 per cent of non-pay spending over a four year term.

Cumulative savings are expected to total £358m. For Solent Trust, that will amount to cumulative savings worth £10.8m – a return on investment of 7:1.

The SHA said the project was forecast to deliver quality, innovation, productivity and prevention savings of £200m-£300m over four years.

A report by chief executive Andrea Young said there would be a risk to QIPP savings across South Central if the project was not implemented.

She noted that the integrated supply chain could also lead to more standardisation of equipment in the region, which would “greatly improve” patient care and safety.

At its 28 July board meeting, the SHA also approved a £660,000 contract with AT Kearney, which has been appointed to support the commercial process behind the scheme, having previously given advice on developing the programme.

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