Public sector finances have just got worse. Since the EU referendum the pound has dropped 10% against the euro and the dollar. This means the cost of imports will rise. The NHS will be particularly badly hit because many of its purchases are from overseas businesses, but all parts of the public sector need to look at their procurement processes.
Now is the moment to make them as efficient as possible or price increases could swallow up most of the purchasing savings that the NHS and other parts of the public sector are trying to make to put more money into frontline services, including patient care.
The recommendations by Lord Carter, from which the current NHS procurement strategy is derived, are inadequate for today’s challenges.
Fortunately, there are still some huge untapped savings opportunities that have not been exploited. For example, falls cost the NHS £2bn a year [pdf]. NHS Shared Business Service has introduced a technology in the Salford Royal Foundation Trust that can reduce patient falls by up to 57%.
Another example is the Countess of Chester Hospital, where the commercial procurement team has introduced a light therapy sleep mask to tackle progressive blindness caused by diabetes and macular degeneration. It is claimed that it could save the NHS up to £1bn a year. The benefits to patients from both these initiatives would be huge.
One might expect every NHS trust to scramble to adopt these opportunities. However, the opposite is the case. Businesses tell me that selling to the NHS is a nightmare. Even when a product is approved, is on a purchasing agreement and the savings and patient benefits are huge, they still have to attempt to persuade each hospital, one by one, to adopt it. Small- to medium-sized businesses cannot afford to do this. Several have told me that they are giving up on the NHS and are looking to the growing market in south-east Asia.
However, these issues are not confined to the NHS, as the communities and local government inquiry into procurement observed in 2014 [pdf], though NHS trusts may be the most reluctant to adopt initiatives proven in other trusts.
There are many other excellent initiatives by suppliers, people working in the public sector and sometimes the public. How much could the NHS save if such initiatives were quickly rolled out nationally throughout the relevant parts of the public sector?
There are a number of problems suppliers face. First, procurement people focus on reducing purchase prices rather than looking at the bigger picture of what delivers lowest cost for their organisation. Second, suppliers cannot get to see the relevant people, eg budget holders and clinicians. Third, the fragmented purchasing structure of the public sector turns the adoption of new products into a postcode lottery.
There are answers
– Create a body, possibly within the Crown Commercial Service, to receive and quickly evaluate initiatives submitted to it, no matter from whom they originate and whether or not technology is involved. It must assess which should be applied regionally or nationally and in which sectors, and mandate a programme to implement some and strongly recommend others.
– Encourage further innovation through financial rewards for public sector staff and the public whose initiatives are accepted.
– Create a taskforce to support implementation in organisations that lack the capability.
– Get rid of the postcode lottery. The creation of an integrated public sector procurement organisation is long overdue.
Article by The Guardian