NHS missing out on tens of millions in procurement savings, PAC report warns

27 March 2024

NHS Supply Chain failing to demonstrate it is the answer the NHS needs on procurement savings

The NHS is missing out on savings amounting to tens of millions of pounds. In a report published today, the Public Accounts Committee (PAC) warns that NHS Supply Chain, which was created to save the NHS money through pooling hospitals’ purchasing power, has failed to persuade NHS trusts to use it to make billions in purchases.

NHS Supply Chain was created to solve the known problem that the NHS was not making the most of its collective buying power to get the lowest prices for its purchases. The PAC’s report finds that the organisation has so far failed to demonstrate that it is the answer the NHS needs. Of the £7.9billion spent by NHS trusts on medical equipment and consumables, £3.4billion is outside of NHS Supply Chain. This means that it is only achieving around 57% of market share to a target of 62% (a target revised down from an original 80% by 2023-24).

Trusts’ satisfaction with NHS Supply Chain is low and in steady decline (down to 54% in 2023-24 from a peak of 67% in 2021-22). Over two-thirds of trusts say they shop elsewhere because of limited availability through NHS Supply Chain. The report further raises concerns that a focus on costs may impact on the quality of outcomes for patients. The report, which finds that clinicians are not convinced that NHS England (NHSE) and NHS Supply Chain value quality over price, calls for clinicians to be involved in purchasing choices to ensure that better patient care is considered alongside value and cost.

The report also questions the level of savings NHS Supply Chain reports it has made for the NHS. NHSE shared the organisation’s reported savings with it, but using two different methods which generated two very different figures - £3.3billion from 2016-17 to 2022-23, and £1.7 billion for the same period, risking confusion over how much NHS Supply Chain has actually saved. Trusts do not always recognise the savings that NHS Supply Chain reports, causing frustration and mistrust.

The PAC’s confidence in savings claimed by NHS Supply Chain is further undermined by the fact that the cumulative £3.3billion claimed has not been validated by either the Government or NHSE, with the organisation effectively marking its own homework.

Chair's comment

Dame Meg Hillier MP, Chair of the Committee, said:

“The problem NHS Supply Chain was created to address is well-established. Given the scale of the NHS’ collective billions of pounds worth of collective spend on procurement, ensuring the best value for money for the taxpayer is essential. But our report finds that trusts do not have the requisite confidence in NHS Supply Chain to utilise its services, leaving it at risk of being an answer to a question no-one is asking.

Cost is of course only one factor when making high-stakes decisions around which equipment to use for patients, and it is essential that clinicians are given a seat at the table so that better patient care is considered alongside best value. All agree that high-quality equipment must be readily available to NHS trusts at the best possible price. The hard yards must now be put in to build trust in the systems that are there to deliver these outcomes.”

Further information

Image: PA