The NHS is wasting £1 billion a year, or around 12% of its procurement budget, through paying vastly  different amounts for the same products, new statistics reveal.

The findings come from a new database on NHS expenditures set up by NHS Shared Business Services, a partnership between the NHS and Steria which provides finance and accounting, payroll services and e-procurement, to NHS organisations.

Giving examples of the widely different amounts which NHS Trusts are paying for the same products, NHS SBS managing director John Neilson pointed to up to 19 different prices for the same pacemaker, and 22 different prices for a surgical tool. These inconsistencies range right across the NHS, from GP practices to Foundation Trusts, he added.

Commenitng on the findings, Ira Gaberman, a partner at global strategy consultants AT Kearmey, said the NHS has “a long way to go” to best-practice procurement operations, and a mixed track record of adopting the changes needed to realise the billions in savings that could be captured and re-invested in patient care.

Bringing the buying power of the NHS into contract price negotiations is the easiest first step, and only part of the answer, but there is “an unhealthy view” that contract price improvements equates to procurement excellence, he says.  “Bigger savings require use of other market levers such as rationalisation and standardization,  while reducing the complexity of the supply chain and better management of inventory stock would deliver even further savings,” he says.

Mr Gaberman also points out that that there is often great reluctance to have the clinical discussions necessary for those measures to be accepted and employed in individual organizations, because of the belief that clinicians would not accept them.  However, he adds, that view is a “myth.”

“There is a convincing record outside the NHS of gaining clinical consensus on medical equipment and supplies, and of better management of the supply chain.  These are transferring large amounts of money from equipment and supplies providers back into clinical care.  The solutions exist and are ready for NHS application.  Current efforts will not get there,” he says.

Mr Neilson has also suggested that the NHS could save millions of pounds by outsourcing call centres for GP and hospital appointments to India, where a certain amount of administration work for NHS Trusts is already being done. However, such proposals have been opposed by patient groups and the NHS Confederation, who point to patient confidentiality issues and the undesirability of taking jobs away from the UK.

Mr Gaberman is also cautious. “Offshoring NHS activities might save money, but other options exist which could and should gain more political backing, especially at local level,” he says.

Currently, there is a dearth of shared services within the NHS in areas ripe for collaborative solutions - corporate functions are obvious candidates here, he says -  and clinical support services should also be addressed.  While pathology receives a lot of media attention as a result of Lord Carter’s review of NHS pathology services in England in 2008, elements of imaging, pharmacy and other support services should equally be shared to improve quality and capture efficiencies, he suggests.

Moreover, shared provision of clinical front-line services to enable clinical scale and leveraged scare expertise should also be occurring with far more frequency, although organisational boundaries and local politics often prevent such solutions. 

“In the NHS, these solutions are considered ‘bold’ and ‘risky’.  They are not.  They are standard, viable options that should be considered and put in place with far greater frequency,” says Mr Gaberman.