Price variation between essential NHS supplies means £1 billion of savings could be lost before the next election

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New figures published today by EY and Peto, the product comparison website for the NHS,  show NHS trusts across England are paying over the odds for everyday products, costing the tax payer an unnecessary £500 million each year. Unless current procurement practices are reformed to ensure data is fully shared across the NHS, price variations could cost a further £1 billion pounds over the next two years.

The statistics come two years after the National Audit Office (NAO) and the Foundation Trust Network pointed out significant variations in the prices paid by different NHS Trusts for the same products. Today’s figures highlight that the situation has not improved, with some trusts paying over twice (164%) the average price for essential items like warming blankets.

The research by EY and Peto, based on an independent update and analysis of spending figures across 10 NHS trusts, shows that:

  • The same box of medical forceps is purchased for £13 by some trusts but others pay up to £23
  • The average price for adults warming blankets is £60 for a box of ten but some trusts pay up to £124 for the same box
  • Knee implants can be purchased for up to £1,109 when average price paid by trusts is £787

This new analysis shows that nearly two years on from the NAO warning, cost-efficient buying among the NHS has not improved, in fact the degree of variation has worsened. Across 11 everyday products reviewed in the report, the variation between the minimum and average price has increased from 18% to 20%.

Lack of price transparency means NHS trusts and hospitals are not able to ensure best value and quality of care through comparing products and their performance. The figures issued today come ahead of the Government Review of NHS Procurement Strategy.

Joe Stringer, Partner at EY, said:“Our analysis raises serious concerns about price variation and spending in the procurement of NHS supplies. At the root of this problem lies the lack of transparency in the market, leaving trusts unable to make cost-efficient decisions about purchasing supplies. There is a widespread misconception that price disparity is the inevitable consequence of policy decisions to encourage competition between NHS providers.  With the NHS facing sustained pressure to contain rising costs and demand within a flat budget, transparency must be introduced across the board.  The consequences of inaction in the back office will only be felt more acutely  in frontline care. “

Julian Trent, Managing Director of Peto, said:“Given the NHS’s £20 billion efficiency drive to cut waste, an obvious place to make savings without compromising patient care is by changing the way NHS buys products and services, costing the public £18 billion a year. Through the simple introduction of price transparency between NHS suppliers this figure can be reduced by £500 million. Price visibility will reduce costs and generate an opportunity for product suppliers and the NHS alike to deliver maximum value for the public purse.

“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.”