Hospital purchasing – still major price differences, says new Ernst & Young report

- November 19, 2012 10:31 AM
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Two years on from the National Audit Office report on how hospitals in England bought routine items, a new survey from Ernst &Young basically says that nothing has changed. The NAO found widely varying prices and guess what?  So have Ernst & Young.

This was all over the BBC this morning – although strangely I can’t find the actual report anywhere.

“For this investigation, Ernst and Young looked at 10 NHS hospital trusts out of 166 – and found the prices paid for the same box of medical forceps ranged from £13 to £23. For an identical box of blankets the lowest price was £47, the highest more than £120”.

None of this will come as any surprise to our regular readers of course – have a look at Andrew Butcher’s excellent contribution here and here for a very good insider analysis of the issues.  Lord Howe, a Health Minister,  has just been on breakfast TV explaining how the new bar-coding system will make everything better – but just how long will it be before it’s in place?

What no-one said on the TV coverage I saw is that this is (in part at least) the result of the deliberate policy to make all hospitals independent Trusts within the NHS. The Minister can talk about the need for hospitals to take procurement seriously (and what he said all made sense, to be fair), but no-one in the centre can make it happen now given this independence. Hospitals are also increasingly seeing each other as potential competitors, which doesn’t exactly facilitate better collaboration and comparison.

We’ve also pointed out in the past that whilst there are some very good people doing what they can in the Department of Health, the resources that “the centre” has put into procurement issues over the last few years have been minimal, given the overall scope and size of the issues.

But well done to Julian Trent of Peto who gets himself quoted on the BBC website:

Julian Trent, from the NHS price-comparison website Peto, said price visibility would reduce costs. “The government’s current review of procurement practices must put an end to unethical charging within the NHS so that trusts can purchase supplies of best value and quality.”

Certainly there are initiatives, whether private sector driven such as Peto and the Advisory Board, or the work being driven from within the system like bar-coding, that should help in time. But two years on from the NAO report, it’s clear that progress is very slow.

Great procurement jobs at Spend Matters search4 procurement! 

 

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Comments

  • Sam Unkim:

    “but just how long will it be before it’s in place?”

    It’ll all be over by Xmas
    since Simon Burns promised us ( the NHS ) bar-coding by the end of 2012.

    http://www.publictechnology.net/sector/nhs-health/govt-claims-standardised-barcode-will-save-nhs-millions

  • October:

    It is my understanding that there are national frameworks with agreed prices. Surely this report could have/should have indicated which companies were charging off contract i.e. ripping off the NHS.

    Surely it would be easy for Francis Maude/Simon Burns to hold them to account?

  • Mark Lainchbury:

    Please forgive the quick note, but getting really hacked off at getting beaten up in the national press, every time there’s a slow news day

    There are many many reasons why the NHS pays different prices.
    But tackling just the items in the article. The blankets are special ones used in operating theatres to keep patients temperature stable while they are sedated. These single-use blankets are connected to a hot air pump which is not usually purchased directly but via a higher price being paid for these consumables. (I’m sure there is a technical term for this but it’s the same as mobile phones). After the Pump is “paid-off” the price drops dramatically
    Secondly Price breaks (based on activity) are in most NHS contracts with larger Trusts who have fiercely standardised, being the most attractive to potential suppliers.
    I wouldn’t want you to think we NHS Buyers are asleep at the wheel.

  • PlanBee:

    Mark,

    You wont last long on this website if you keep on bringing reasoned well argued points to the table. You’ll take away all the fun for the rest of us ;-)

  • On the Sidelines:

    Two questions…

    What would be the product of dividing Earnst and Young consultancy day rate by the price of a box of nedical forceps?

    Were Earnst and Young commissioned (payed) to do this work – and if not I wonder what their motives might be?

  • Not quite so bitter and twisted:

    From what I can gather:

    The report was by E&Y and fronted for them by Joe Stringer. The work was jointly undertaken with Peto, fronted by Julian Trent.

    Both of whom worked for Tribal Avail Consulting under Martin Wilson on the CPH programme, who is now Chair of Peto and also of a commissioning consulting company.

    Looks like old mates drumming up business for each other to me.

  • Simon Walsh:

    HCSA media response to EY/Peto Press release:

    The Health Care Supply Association (HCSA) has deep concerns about the findings of the Ernst & Young report into price variations for products used by NHS Trusts. We would expect some variation for differing volume commitments and contract terms but these levels of variation don’t represent the ‘fair’ pricing regimes a publicly funded National Health Service should expect.
    The HCSA is already working with organisations such as ABHI, Peto, ADB Multiquote and the Advisory Board to encourage much faster NHS adoption of technologies and practices that deliver product price transparency and comparison. We also agree that the DH’s GS1 programme will benefit product comparison. Following another successful annual conference last week, which focused on improving access to better procurement management information and price benchmarking, HCSA is rolling out a series of webinars on these topics to ensure that its members and their NHS Trusts are fully aware of what is already available to support them now in the pursuit of a more efficient and transparent health system.

    Statement released by: Eugene Cooke, Chairman of the Health Care Supply Association and Associate Director – National Head of Procurement at NHS Blood and Transplant

    The Healthcare Supply Association (HCSA) promotes the work of purchasing and supply chain staff at all levels in UK healthcare. The HCSA provides training events and educational seminars, sponsors awards and hosts a high-profile annual conference. Membership is open to all purchasing and supply professionals within the healthcare sector in the UK. The HCSA is affiliated with the Chartered Institute of Purchasing and Supply (CIPS).

    • Final Furlong:

      This is just nonsense (not the text you posted Simon).

      E&Y (and Peto presumably) have such a rich repository of live data that they resorted to obtaining the data by, erm, an FOI request to each hospital (I hear). The accuracy of the data supplied (especially in absence of any underlying data) will be minimal.

      • Sam Unkim:

        Telling tales to the Daily Mail (& Local MP’s) is really beyond the pale

        I doubt Peto & E&Y have done themselves any favours taking this outside the “family” (CPOs, DoFs & CEOs etc.. )

        Hi FF I guess that, lack of faith in the data, is why the cited supplier names were not mentioned by the press

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