NHS Supply Chain and efficiencies in procurement

Public Accounts Committee Closed Inquiry
Opened: 10 Jan 2024 Closed: 28 May 2024 Parliament page
NHS Supply Chain was set up in 2018, and manages the procurement and supply logistics for NHS trusts in England and Wales. Its original target was to make £2.4bn in savings, which it reports it has exceeded. The NHS spends around £8bn a year on buying hospital equipment and consumables, … Read more
8 Recommendations
17 Conclusions
1 Report
1 Oral session
2 Letters
1 Event
Activity timeline 6 events
28 May
2024
Report published
27 Mar
2024
Report published
26 Feb
2024
Correspondence
19 Feb
2024
Correspondence
7 Feb
2024
Oral evidence
7 Feb
2024
Formal meeting (oral evidence session) · The Grimond Room, Portcullis House
Oral evidence sessions 1 session
7 Feb 2024
View on parliament.uk
NHS Supply Chain and efficiencies in procurement
Amanda Pritchard · NHS England Andrew New · NHS Supply Chain Jacqui Rock · NHS England Julian Kelly · NHS England Shona Dunn · Home Office
Title HC No. Published Items Response
Twenty-Fourth Report - NHS Supply Chain and efficiencies in proc… HC 453 27 Mar 2024 25 Responded
Recommendations & Conclusions
25 results
2 Recommendation Accepted
Twenty-Fourth Report - NHS Supply …
Set out how NHSE will challenge and support NHS Supply Chain's modernisation plans.
NHSE has been weak in its oversight and support of NHS Supply Chain. Both the Department and NHSE failed to validate the cumulative £3.3 billion savings claimed by NHS Supply Chain, instead, they relied on NHS Supply Chain to make … Read more
Government Response
The government states that NHSE already provides challenge and support to NHS Supply Chain through existing annual business plan reviews, quarterly accountability meetings, a shareholder director on the Board, and various other regular engagement points.
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3 Conclusion Accepted
Twenty-Fourth Report - NHS Supply …
Use procurement data more systematically to challenge trusts to increase NHS Supply Chain purchases.
NHSE does not challenge trusts as to why they do not buy more products through NHS Supply Chain. Trusts submit data to NHSE on how much they spend on medical equipment and consumables, and through which suppliers (including NHS Supply … Read more
Government Response
The government states that NHSE already uses procurement data to challenge trusts on their use of NHS Supply Chain when prices are better, and also challenges NHS Supply Chain on pricing. They highlight the existing NHS Spend Comparison Service tool for providing insights to trusts.
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4 Conclusion Accepted
Twenty-Fourth Report - NHS Supply …
Assess trust acceptance of NHS Supply Chain's reported savings after new method implementation.
The way NHS Supply Chain has calculated and reported its savings has caused confusion and mistrust. NHS Supply Chain has used several different methods for calculating savings depending on the audience, for example, to government, trusts and suppliers. Each method … Read more
Government Response
The government commits that NHSE will review the compliance and effectiveness of the new savings methodology after its first year of implementation to assess whether trusts accept the reported savings.
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5 Conclusion Accepted
Twenty-Fourth Report - NHS Supply …
Provide a clear roadmap for NHS Supply Chain's transformation, modernisation, and benefit realisation timetable.
It will be several years before the NHS sees the benefits from NHS Supply Chain’s efforts to improve its business. NHS Supply Chain’s main vehicle for improvement is a transformation programme which is expected to run from 2022–30. We are … Read more
Government Response
The government commits that NHS Supply Chain will submit a business case by Winter 2024, which will include a clear and realistic roadmap for transformation and modernisation and a benefits realisation plan. This submission will also consider whether the eight-year timetable can be reduced.
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6 Recommendation Accepted
Twenty-Fourth Report - NHS Supply …
Set out how NHSE and NHS Supply Chain will involve clinicians in purchasing decisions.
NHSE and NHS Supply Chain have not convinced clinicians that they value the quality of products above price. We are concerned that a focus on costs may impact on the quality of outcomes for patients. We can see the value … Read more
Government Response
The government states that NHS Supply Chain already engages clinicians in sourcing decisions, and will further re-design the Commercial Service Proposition by November 2024 to enhance and clarify opportunities for representative clinical groups to engage in future commercial activity.
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1 Conclusion Accepted
Twenty-Fourth Report - NHS Supply …
Initial review highlights evidence taken on NHS Supply Chain efficiencies and procurement.
On the basis of a report by the Comptroller and Auditor General, we took evidence from the Department of Health and Social Care (the Department), NHS England (NHSE) and NHS Supply Chain on NHS Supply Chain and efficiencies in procurement.2
Government Response
The government states that NHS Supply Chain expects to submit a programme business case to NHSE by Winter 2024. This will set out the conditions for achieving the 80% market share goal and include improvements to logistics and a new online ordering system in the 2024-25 business plan.
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7 Conclusion Accepted
Twenty-Fourth Report - NHS Supply …
NHS Supply Chain expects at least three-year delay reaching 80% market share target.
We asked NHS Supply Chain when it expected to reach 80% market share. NHS Supply Chain first told us that it would not be at 80% until it submitted its business case this summer to NHS England to seek the … Read more
Government Response
The government agrees with the observation, stating that NHS Supply Chain expects to submit a business case for its modernisation programme by Winter 2024, which will detail how and when the 80% market share goal will be met. The 2024-25 business plan also targets 65% market share by year end through specific logistics and system improvements.
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8 Recommendation Acknowledged
Twenty-Fourth Report - NHS Supply …
NHS Supply Chain customer satisfaction declining, failing revised targets due to infrastructure issues.
NHS Trusts largely have the choice whether or not to purchase equipment and consumables through NHS Supply Chain. NHS Supply Chain must therefore gain trusts’ confidence in its services. It carries out a customer satisfaction survey to measure how satisfied … Read more
Government Response
The government agrees, stating a business case for NHS Supply Chain's modernisation programme will be submitted by Winter 2024 to enable the 80% market share target and presumably improve services, but it does not detail specific actions to directly address declining customer satisfaction or gaining trusts' confidence.
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9 Conclusion Accepted
Twenty-Fourth Report - NHS Supply …
NHS England and Department fail to validate reported NHS Supply Chain savings data.
NHSE is the owner and shareholder of NHS Supply Chain, and as such, approves NHS Supply Chain’s annual business plan and funding requests. NHS Supply Chain reports its savings and other performance indicators to NHSE, but neither NHSE nor the … Read more
Government Response
The government agrees with the observation and confirms that a new value and savings methodology is being implemented across the NHS from April 2024, with NHSE reviewing its compliance and effectiveness after the first year by Summer 2025.
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10 Conclusion Accepted
Twenty-Fourth Report - NHS Supply …
Department and NHS England intentionally chose not to mandate NHS Supply Chain use.
When the Department set up NHS Supply Chain, it did not make it mandatory for trusts to use it and trusts are free to buy consumables and medical equipment directly from suppliers or other supply organisations. There are several reasons … Read more
Government Response
The government agrees, stating that NHS Supply Chain will submit a business case by Winter 2024 for its modernization programme, aiming to create conditions for achieving an 80% market share. Additionally, the 2024-25 business plan targets a 65% market share, with specific improvements including enhanced logistics channels by mid-year and a new online ordering system.
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11 Conclusion Accepted
Twenty-Fourth Report - NHS Supply …
NHS England withheld full requested funding, potentially delaying NHS Supply Chain IT improvements.
NHS Supply Chain recognises it needs to provide a better service to trusts, and increase trusts’ use of NHS Supply Chain, and has a programme of planned improvements that aim to transform and modernise the business.17 However, NHS Supply Chain … Read more
Government Response
The government agrees with the committee's finding and explains that NHS England's subsidiary company model provides proportionate oversight through annual business plan reviews and quarterly accountability meetings, which allow for balanced decisions on funding requests for modernization and transformation.
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12 Recommendation Accepted
Twenty-Fourth Report - NHS Supply …
NHS England fails to actively use procurement data to challenge trusts' purchasing choices.
Trusts submit data to NHSE on how much they spend on medical equipment and consumables, and through which suppliers (including NHS Supply Chain). NHSE makes this procurement data available to all trusts, but relies on them to analyse the data … Read more
Government Response
The government states the recommendation is already implemented, asserting that NHS England currently uses procurement data to challenge trusts regarding NHS Supply Chain usage and pricing, and provides a Spend Comparison Service to help trusts identify efficiency opportunities.
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13 Recommendation Accepted
Twenty-Fourth Report - NHS Supply …
NHS England only challenges financially struggling trusts, not analysing broader procurement data.
We asked NHSE why it does not do more to understand the reasons trusts purchase through routes other than NHS Supply Chain. NHS told us that, given the resources it has, it only challenges the trusts that are struggling the … Read more
Government Response
The government claims the recommendation is already implemented, stating that NHS England already uses procurement data to challenge trusts and NHS Supply Chain on pricing, and provides the NHS Spend Comparison Service for trusts to identify efficiency opportunities.
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14 Conclusion Accepted
Twenty-Fourth Report - NHS Supply …
NHS England's procurement data is incomplete, impacting accuracy of savings estimates.
The data NHSE collects is incomplete, as 55 trusts (out of more than 200) do not routinely provide this data. When we asked NHSE about the completeness of the data, NHSE told us it is working with trusts that are … Read more
Government Response
The government states the recommendation is implemented, explaining that NHSE already challenges trusts on procurement data usage and provides the NHS Spend Comparison Service to give trusts insights into purchasing opportunities.
HM Treasury
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15 Conclusion Deferred
Twenty-Fourth Report - NHS Supply …
NHS Supply Chain improvements will take several years to benefit trusts and increase usage.
NHS Supply Chain recognises that it needs to make considerable improvements to its business if it is to give trusts a better service. While it has a programme of planned improvements, it will be several years before the NHS sees … Read more
Government Response
The government agrees with the committee's observation that improvements are needed and will take time. They state that NHS Supply Chain is developing a business case for its modernization programme, scheduled for submission by Winter 2024, which will outline the timetable and approach, pending necessary approvals.
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16 Conclusion Deferred
Twenty-Fourth Report - NHS Supply …
Complex challenges hinder NHS Supply Chain's ambitious transformation programme, rated red/amber for delivery risk.
NHS Supply Chain has started a transformation programme which aims to bring key improvements to the business. This programme runs from 2022–30 and its focus includes replacing or upgrading legacy IT and improving inventory management and supply chain capacity.23 The … Read more
Government Response
The government agrees with the committee’s observations regarding the transformation programme, stating that NHS Supply Chain is developing a business case for the modernization programme, which will be submitted by Winter 2024 and subsequently requires approval from NHS England, DHSC, and HMT before delivery.
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17 Conclusion Accepted
Twenty-Fourth Report - NHS Supply …
NHS Supply Chain's capacity and resilience for transformation delivery show notable weaknesses.
There are some weaknesses and strengths in how NHS Supply Chain is managing the transformation programme. Most notably, there are questions about the capacity and resilience of NHS Supply Chain to deliver the necessary change, particularly in light of the … Read more
Government Response
The government agrees with the committee's finding and describes existing NHS England oversight mechanisms, including annual business plan reviews and quarterly accountability meetings, which they believe provide sufficient challenge and support to NHS Supply Chain.
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18 Conclusion Accepted
Twenty-Fourth Report - NHS Supply …
Modernisation challenges and persistent delivery delays plague NHS Supply Chain's eDirect procurement route.
NHS Supply Chain is also trying to improve its procurement route known as eDirect, which has had well-known problems since 2018. Some £1.5 billion of orders came through this channel in 2022–23.29 NHS Supply Chain acknowledged that from a trust’s … Read more
Government Response
The government agrees and commits to NHS Supply Chain submitting a business case for the eDirect modernisation programme by Winter 2024, which will outline a detailed timetable and plan for implementing improvements, subject to necessary approvals and funding.
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19 Conclusion Accepted
Twenty-Fourth Report - NHS Supply …
Multiple, inconsistent methods for calculating NHS Supply Chain savings reduce clarity and cause mistrust.
NHS Supply Chain has in the past used multiple methods to calculate and report its savings depending on its audience, for example, to government, trusts and suppliers. Each method gives a different result, risking clarity over how much NHS Supply … Read more
Government Response
The government agrees, confirming that a new unified value and savings methodology has been implemented across the NHS from April 2024, aiming to standardize reporting, with NHSE set to review its compliance and effectiveness after the first year by Summer 2025.
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20 Conclusion Accepted
Twenty-Fourth Report - NHS Supply …
NHS Supply Chain's reported savings vary significantly depending on the calculation method used.
NHSE considers that the NHS Supply Chain has delivered real savings and that the method to show its savings against its original target to save £2.4 billion by 2023–24 is clear.34 NHSE shared with us figures setting out NHS Supply … Read more
Government Response
The government agrees, stating that a new value and savings methodology has been implemented across the NHS from April 2024, and NHSE will review its compliance and effectiveness after the first year by Summer 2025.
HM Treasury
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21 Conclusion Accepted
Twenty-Fourth Report - NHS Supply …
A new aligned methodology developed for consistent NHS savings calculation and reporting.
NHSE, NHS Supply Chain and stakeholders including NHS trusts have developed a new way to calculate savings which will be aligned with a savings methodology it has rolled out across the whole of commercial in the NHS. NHSE told us … Read more
Government Response
The government agrees, confirming that the new value and savings methodology has been implemented across the NHS from April 2024, and NHSE will review its compliance and effectiveness after the first year by Summer 2025.
HM Treasury
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22 Conclusion Accepted
Twenty-Fourth Report - NHS Supply …
Unmanaged disconnect exists between product cost, clinical choice, and patient care outcomes.
Both NHS Supply Chain and NHS England told us that trusts and clinicians need to be free to make decisions about which products to buy in some instances and NHS Supply Chain maintained that it offers an appropriate choice of … Read more
Government Response
The government agrees and states NHS Supply Chain will re-design its Commercial Service Proposition by November 2024, led by a new Clinical Executive Director, to enhance clinical team engagement in future commercial activity and streamline product selection. NHS England will also provide necessary clinical support.
HM Treasury
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23 Recommendation Accepted
Twenty-Fourth Report - NHS Supply …
Free' specialised devices create perverse financial incentives, conflicting with clinical judgement.
NHSE described how it has established an evidence base for which specialised products are best to use (formerly known as high cost tariff excluded devices and now known as the Specialised Services Devices Programme). NHSE explained in written evidence that … Read more
Government Response
The government agrees and claims the recommendation is implemented, stating NHS Supply Chain will redesign its Commercial Service Proposition by November 2024, led by a new Clinical Executive Director, to enhance clinical engagement in sourcing decisions. This aims to ensure procurement considers a broad range of value drivers, including patient outcomes and clinical efficiency, to counter the identified perverse financial incentives.
HM Treasury
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24 Recommendation Accepted
Twenty-Fourth Report - NHS Supply …
Absence of national clinical leadership and outcome monitoring for product use, impacting best practice.
NHSE acknowledged that it does not direct or constrain local decision-making or monitor the use of, or outcomes from use of, a product. As a result, while trusts have the freedom of choice over which products to buy, there is … Read more
Government Response
The government agrees and claims implementation, stating NHS Supply Chain will redesign its Commercial Service Proposition by November 2024, led by its newly appointed Clinical Executive Director, to enhance clinical engagement in sourcing decisions and national category strategies. NHS England will provide necessary clinical support to NHS Supply Chain to deliver savings programmes.
HM Treasury
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25 Recommendation Accepted
Twenty-Fourth Report - NHS Supply …
NHS procurement's focus on acquisition costs alone disregards overall product value and patient outcomes.
The Urology Trade Association told us in written evidence that it was concerned that the current focus by NHS procurement on acquisition costs alone is failing to acknowledge the importance of value for money across the whole patient pathway, and … Read more
Government Response
The government agrees and states NHS Supply Chain will redesign its Commercial Service Proposition by November 2024, led by a new Clinical Executive Director, to enhance clinical engagement in sourcing decisions. NHS Supply Chain will also continue to work with trusts to implement Value-Based Procurement initiatives and focus on a broader range of value drivers beyond acquisition costs.
HM Treasury
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Government Response AI assessment · 25 of 8 classified
Accepted 22
Acknowledged 1
Deferred 2
Total 8 recs + 17 conclusions
Correspondence 2 letters
26 Feb 2024 Correspondence from Julian Kelly, Chief Financial Officer, NHS England, re NHS Supply Chain and Efficiencies in Procurement, dated 15 February 2024
Parliament page
19 Feb 2024 Correspondence from Shona Dunn, Second Permanent Secretary, Department of Health and Social Care, re NHS Supply Chain and efficiencies in procurement, dated 14 February 2024
Parliament page