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NHS hospitals often pay more than they need to when buying basic supplies, the National Audit Office has reported. A combination of inadequate information and fragmented purchasing means that NHS hospitals’ procurement of consumables is poor value for money. The NAO estimates that at least £500 million a year could be saved by the NHS on its spending on consumables, and potentially much more for some products.

Today’s report points out that with no central control over Foundation Trusts, the Department cannot mandate more efficient procurement practices. Responsibility to demonstrate value for money in procurement falls upon the management of individual trusts. The price that trusts pay for the same items varies widely. The average variation between the highest and lowest unit price paid was 10 per cent.

Some trusts are not getting value for money because they are buying many different types of the same product. For example, trusts bought 21 different types of A4 paper, 652 types of medical gloves and 1,751 different cannulas. There is also a large variation between trusts: one bought 13 different types of glove, whilst another bought 177 different types.

There are unnecessary administrative costs because many trusts make multiple small purchase orders. Taking just four items bought in high volumes, around £7 million in administration costs could be saved each year if the number of orders were reduced to the level achieved by the best performing 25 per cent of trusts.

Hospital trusts have complete freedom to decide what they buy and how they buy it. They can use regional procurement hubs or NHS Supply Chain or they can buy direct from suppliers. The limited evidence available suggests that new contracts are frequently being established which overlap and duplicate each other, incurring unnecessary administrative costs. There is no national performance framework for Hubs which would enable comparisons to be drawn between them or an assessment of their potential optimal performance to be made.

Amyas Morse, head of the National Audit Office, said today:

"At least 10 per cent of hospitals’ spending on consumables, amounting to some £500 million a year, could be saved if trusts got together to buy products in a more collaborative way.

“In the new NHS of constrained budgets, trust chief executives should consider procurement as a strategic priority. Given the scale of the potential savings which the NHS is currently failing to capture, we believe it is important to find effective ways to hold trusts directly to account to Parliament for their procurement practices."

Notes for Editors

1. This report examines the procurement of medical supplies and other types of consumable product by NHS hospitals in England. The report focuses on classes of goods that have to be bought regularly because they are routinely consumed or have a limited life, e.g. dressings, beverages or staff clothing.

2. The 165 hospital trusts spend approximately £4.6 billion on consumables each year. Spending on consumables typically accounts for 25 per cent of an average trust’s non-pay expenditure and 10 per cent of total expenditure.

3. Press notices and reports are available from the date of publication on the NAO website, which is at http://www.nao.org.uk/. Hard copies can be obtained from The Stationery Office on 0845 702 3474.

4. The Comptroller and Auditor General, Amyas Morse, is the head of the National Audit Office which employs some 900 staff. He and the NAO are totally independent of Government. He certifies the accounts of all Government departments and a wide range of other public sector bodies; and he has statutory authority to report to Parliament on the economy, efficiency and effectiveness with which departments and other bodies have used their resources.

All enquiries to Sarah Farndale, NAO Press Office: Tel: 020 7798 5350

Mobile: 07985 274421

• Full report - The procurement of consumables by NHS acute and Foundation trusts