The Observer has reported that:
Inefficient hospitals [are] ‘wasting hundreds of millions of pounds each year'
and
Labour peer Lord Carter [is] to list poor NHS spending decisions, on items from gloves and pills to prosthetic hips
The aim is, apparently to save up to £400 million for the NHS by making more effective buying decisions that will reduce the product range used by NHS hospitals from more than 500,000 items to just 10,000.
Three thoughts follow. The first is that it is very obvious that Lord Carter is saying that splitting the NHS into hundreds of trusts each making their own buying decisions is hopelessly inefficient, as was always obvious.
Second, he is saying that if you create an inefficient system where cooperation is not allowed because that is contrary to the dogmatically imposed idea that competition produces optimal outcomes you will end up with excess cost.
And third, he is saying that imposing centralisation on the system could save a great deal, as I argued on this blog only last week.
But he may also be wrong in one respect: 10,000 product lines may be too few. Today's optimal supplier quickly ceases to be so if you make them sole supplier. That would remove competition where it is needed, amongst suppliers. And that would be daft, to be kind.
And there is a final point to note: the savings found total £400 million. Jeremy Hunt is requiring the NHS to find £22 billion of efficiency savings over the next five years. Only £21.6 billion to go.
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I was OK with this blog until these two words came up ‘Jeremy Hunt’ and then I totally lost it.
Must you mention him by name at all? He’s a……..well, you know……I lose all sense of restraint when confronted with it…I mean him.
At the risk of stating the obvious the base level when you start with the NHS are the two million people a year dying, being born and giving birth. The incidence and location of this is near predictable. At the other end of the scale you have rare, dangerous and expensive cases where the incidence and costs are not predictable. Then you have everything in between. In all of them demand, supply and pricing are fraught with problems. It is why so many health services are either run by governments or by network organisations linked to insurance schemes. What you do not have and cannot possibly have is anything like a real “market”.
You can’t have a real market because in a real market providers can choose to withdraw from it – look at the tools in Circle, the DoH et al. who honestly thought that they could pick and choose when to fully operate a major A&E unit and decide when all-comers could rock up for treatment.
The idea of Circle running a major establishment was lunacy of the highest order…..
What about the idea that cheapest doesn’t necessarily equate to best value?
(Something which would certainly apply to hospital food)
That’s a bit radical
It makes absolute sense that centralised purchasing creates massive buying power and an increased ability to negotiate on price, but I do agree that if it is Lord Carter’s intention to have only one supplier then that buying and negotiating power is cancelled out. Changing the VAT rules to allow our NHS purchasers to claim back the VAT they pay would increase the savings by a further 20% and level out the playing field for our NHS when they are submitting tendering bids for local services.
In my humble opinion the £22billion of savings by 2020 will never be achieved. The cynic in me says NHS England, Jeremy Hunt & our government know this and their intention is that when the savings have not been made in 2020 the government will declare the NHS is beyond our help, we must privatise it.
I think you are right
In a word Matt – Yep!
I understand the Scottish NHS have a national procurement office whereby they get ” good deals ” by shopping around.
Pretty sure they have done this for several years, not rocket science. Canny scots.
And what is needed
How far did Hunt get with the £20 billion ‘efficiency savings’ in the last government? Now he wants more -£22 billion? Even though, in the election Cameron said the NHS would get an extra £8 billion? Where are we going?
Good question
But the NHS market IS working…in providing private providers with cherry-picked profits such as things like hip replacements.
Notice they rarely ever want anything to do with expensive, time-consuming treatments, only the profitable ones. We will likely end up with a two-tier system; the cream to go to private hospitals, the rest to a state system.
If they get their way, the NHS will cease to exist.