New approach to public procurement helps NHS save money
Our research has helped the NHS save around £500 million on goods and services worth £18 billion a year.
Simplifying complex inter-organisational networks
The NHS is the single biggest organisation in the UK and should be able to use the economies of scale this implies to its advantage.
But it has often paid too much for many of its supplies, not made best use of the capabilities of its supplier base, and spent too little on developing procurement itself.
NHS procurement has traditionally involved complex inter-organisational networks spanning suppliers, manufacturers of medical technologies, NHS procurers of technologies, clinical teams, patient representative groups and stakeholders such as the Royal Colleges and Universities.
The lack of a collaborative approach to procurement among these parties, and the disconnected purchasing points across the NHS system, meant potential savings were rarely achieved.
New framework sparks immediate savings
The team recognised that there was little understanding of how effectively to leverage network resources in highly regulated, complex public sector systems. Therefore, their engagement with the NHS involved creating a ‘system of innovation’ that:
- brought a network of key players together
- offered facilitation of the process
- helped the NHS to produce a new strategy relating to best value-for-money procurement decisions
Using this framework, Audiology Services have been able to provide digital hearing aids to patients free of charge, at the same time saving £252 million on the purchasing price of the aids and cutting service costs by £45.5 million annually.
This approach was also applied across all NHS expenditure categories and achieved savings of around £500 million on goods and services worth £18 billion a year.
The research has also shaped the Department of Health's Commercial Strategy encouraging a more strategic use of network resources for the benefit of patients and taxpayers.
This research was part of our REF 2014 submission for Business and Management Studies.