Source · Select Committees · Public Accounts Committee
Twenty-Fourth Report - NHS Supply Chain and efficiencies in procurement
Public Accounts Committee
HC 453
Published 27 March 2024
Recommendations
2
Accepted
Set out how NHSE will challenge and support NHS Supply Chain's modernisation plans.
Recommendation
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 Summary
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.
HM Treasury
View Details →
6
Accepted
Set out how NHSE and NHS Supply Chain will involve clinicians in purchasing decisions.
Recommendation
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 Summary
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.
HM Treasury
View Details →
8
Acknowledged
NHS Supply Chain customer satisfaction declining, failing revised targets due to infrastructure issues.
Recommendation
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 Summary
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.
HM Treasury
View Details →
12
Accepted
NHS England fails to actively use procurement data to challenge trusts' purchasing choices.
Recommendation
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 Summary
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.
HM Treasury
View Details →
13
Accepted
NHS England only challenges financially struggling trusts, not analysing broader procurement data.
Recommendation
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 Summary
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.
HM Treasury
View Details →
23
Accepted
Free' specialised devices create perverse financial incentives, conflicting with clinical judgement.
Recommendation
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 Summary
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
View Details →
24
Accepted
Absence of national clinical leadership and outcome monitoring for product use, impacting best practice.
Recommendation
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 Summary
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
View Details →
25
Accepted
NHS procurement's focus on acquisition costs alone disregards overall product value and patient outcomes.
Recommendation
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 Summary
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
View Details →
Conclusions (17)
3
Conclusion
Accepted
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 Chain). NHSE makes this procurement data available to all trusts …
Government Response Summary
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.
4
Conclusion
Accepted
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 gives a different result, risking clarity over how much NHS …
Government Response Summary
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.
5
Conclusion
Accepted
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 concerned that the risk to this transformation programme was rated …
Government Response Summary
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.
1
Conclusion
Accepted
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 Summary
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.
7
Conclusion
Accepted
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 broader funding required to build the capacity. It described logistical …
Government Response Summary
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.
9
Conclusion
Accepted
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 Department validate or check the savings data. Instead, NHSE confirmed …
Government Response Summary
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.
10
Conclusion
Accepted
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 why the Department did not mandate the use of NHS …
Government Response Summary
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.
11
Conclusion
Accepted
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 considers that it needs NHSE’s support for this to be …
Government Response Summary
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.
14
Conclusion
Accepted
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 not routinely submitting and considering what other actions and levers …
Government Response Summary
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.
15
Conclusion
Deferred
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 the benefits from these plans and starts to use NHS …
Government Response Summary
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.
16
Conclusion
Deferred
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 transformation programme was rated red/amber by NHS Supply Chain in …
Government Response Summary
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.
17
Conclusion
Accepted
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 heavy reliance on the Chief Executive Officer for NHS Supply …
Government Response Summary
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.
18
Conclusion
Accepted
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 perspective, while eDirect is working as it was designed, it …
Government Response Summary
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.
19
Conclusion
Accepted
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 Chain has actually saved. The method for calculating savings reported …
Government Response Summary
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.
20
Conclusion
Accepted
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 Chain’s reported savings through two different methods. For the first, …
Government Response Summary
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.
21
Conclusion
Accepted
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 that this method will mean that trusts are all going …
Government Response Summary
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.
22
Conclusion
Accepted
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 products to trusts. However, there is a risk of tensions …
Government Response Summary
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.