Thursday 15th Aug 2019 - Logistics & Supply Chain

Health trusts miss out on best equipment deals, warn MPs

Too few English health trusts are taking full advantage of the framework agreements that NHS Supply Chain negotiates, according to a new report by the House of Commons Public Accounts Committee.

And the report, Managing high value capital equipment in the NHS in England, says that even where they do take advantage of the agreements, money is being wasted because trusts don’t join together to buy equipment and get the best deals by exploiting their bulk buying power.

Committee chair Margaret Hodge said: “High value equipment in the NHS – like MRI and CT scanners – is worth around £1 billion, but the way this equipment is bought and used is not providing value for money for the taxpayer.”

The report says that the procurement and management of high value equipment is fragmented and uncoordinated, leading to wasted resources and variable standards of services.

“Trusts have three main ways to purchase high value equipment: by dealing directly with suppliers; through framework agreements, managed by NHS Supply Chain; or by joining up with other trusts in collaborative purchasing arrangements. The committee was told that framework agreements are generally a more efficient way to purchase one-off equipment orders yet one in five of these machines are bought outside framework agreements and the department has no power to mandate trusts to use them.

“Even within the framework agreement there remains much greater scope to save money by bundling orders together across trusts, as the department showed through its cancer equipment programmes of 2000-2007 which delivered savings of around £38 million through aggregating demand.

“NHS Supply Chain has, however, so far placed no bulk orders for any of these three types of machine we looked at, despite now purchasing over 80 per cent of such machines for the NHS. All orders have been placed individually with no aggregation to larger volumes. This is a lost opportunity to use collective buying power to get lower prices and the committee expects NHS Supply Chain and other collaborative procurement bodies to work with trusts to share plans on future needs and get better prices and value for money by exploiting the joint buying power.”

The report has been welcomed by NHS Supply Chain, which is operated by DHL. Andy Brown, NHS Supply Chain’s managing director, diagnostics, said: “We are currently working with the Department of Health to consider the recommendations in the report”.

Mr Brown added: “Buying and maintaining equipment during times of budgetary restraint will provide a significant challenge for NHS trusts and our range of frameworks to plan, aggregate, purchase or lease and maintain high end equipment will be invaluable to the NHS.

“Our planning team use trusts’ capital equipment plans to identify opportunities to buy expensive capital equipment together and place multi-machine orders. This has resulted in additional savings over the framework prices of 12 per cent for mammography, 16 per cent for ultrasound and 19 per cent for flexible endoscopy”.

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