The NHS’s monopoly in British healthcare can help not always hinder efficiency
Edmund Stubbs, 11 June 2015
To use a quote of unknown origin, ‘Nobody can do everything, but everybody can do something’. This principle certainly applies to the NHS in its current drive to become more efficient. Today, the Government published a report on an investigation led by Lord Patrick Carter into hospital ‘productivity’. This report’s findings represent the results of research Lord Carter’s team had undertaken in 22 large hospitals. It’s principle finding is that the NHS has the potential to save £5 billion per annum.
The report proposes that small, smart, savings made throughout the NHS can save the service money, but also to maximise such savings, the various branches of the NHS must combine to procure its consumables in the first place, for, as Lord Carter told the BBC, ‘…. we are one of the largest single buyers in the world’.
In short, bulk buying is cheaper. He further claims that NHS procurers could drastically cut the number of product lines it uses each day from half a million to less than ten thousand. Currently there are also large variations between how much different hospitals pay for the same products and pharmaceuticals. Lord Carter highlights as a telling example that of a hospital paying £1.50 for widely used soluble steroid tablets which could be bought for 2p in a non-soluble form of equal efficacy.
The fact that a hospital can spend 75 times more on a common steroid drug than is necessary neatly illustrates the potential that hospitals around the country have to become more efficient. This type of attention to detail in the utilisation of resources, when common to all trusts combined, would represent massive savings. In the case of the purchase of steroids, the hospital in question is presently managing to save an incredible £40,000 per year simply from changing from soluble to non-soluble tablets!
A further example noted by Lord Carter illustrates the high degree of heterogeneity in the costing of standard operations. These costs, he holds, are often linked at least in part to the quality of procured items involved in procedures (such as implants in hip operations), where some hospitals are procuring inferior quality implants at a greater cost than superior quality ones by others.
Lord Carter’s report also recommends that staff shift working patterns be modified to make them more efficient. He further recognises that at present much money is wasted by poor management of payroll administration, such as the organisation of annual leave arrangements and obtaining cover for staff absence due to illness. Such obvious inefficiency proves costly.
It has recently been revealed that the Department of Health plans to ‘black list’ some staffing agencies from supplying staff to the NHS if they charge more than the NHS deems reasonable for temporary cover. Possibly this measure, in combination with adopting the recommendations of Lord Carter’s report, might indicate a recognition of the NHS’s virtual monopoly of power within British healthcare to achieve positive results, one such being the enabling of better purchasing ‘deals’ throughout the service.
However, with the inauguration of foundation trusts and the possibility of the general decentralisation of healthcare administration (as is presently the case in Greater Manchester) there arises the risk that localities within the NHS will in fact become increasingly independent in their procurement strategies. Lord Carter’s report comes as a timely warning that regional devolution must not come at the cost of efficiency, especially in the light of the NHS’s looming funding crisis.
In summary, Lord Carter’s report suggests an obvious strategy to achieve greater efficiency. All staff and managers must look at their departments daily procedures and associated purchases and identify where ingrained habitual procedures should no longer be tolerated if viable and cheaper options are available. At the same time the NHS monopolising nature (argued by some to hinder efficiency due to a lack of competition) must be utilised to its own advantage, enabling it to establish more favourable prices with its suppliers.
Edmund Stubbs, Healthcare Researcher, @edmundstubbs1