Upon its 75th anniversary, there are still significant concerns that the NHS needs drastic reforms in order to continue providing the vital care it offers patients.

Workforce shortages, escalating costs and an increasing level of non-clinical activities are putting a strain on the NHS, leading to disparities in patient care and clinical outcomes.

In January 2023, waiting lists for hospital treatments reached a record of 7.2 million people, according to the NHS Key Statistics Report, published in March 2023. Pre-pandemic these levels were unheard of and the pressure on the NHS is now greater than ever.

Driving cost efficiencies

To tackle these issues, there needs to be a collaborative shift in the way resources are allocated in order to maximise cost effectiveness and create financial sustainability. Procurement teams have recognised the need for leveraging value-based procurement and robust supply chains to generate efficiencies, as external market factors continue to drive up costs and create supply shortages.

Additionally, procedure tariffs for 23/24 have risen by 2.9%, but non-pay costs for the NHS are estimated to have risen by around 10%. Therefore, procurement teams have a vital role in bridging the funding gap through various cost-reducing initiatives such as portfolio harmonisation, optimised contract management and service level agreements and increased productivity across patient pathways.

The independent sector has suggested to NHSE that, unless the tariffs paid are increased, they will not be able to pick up new NHS work. In order to manage the backlogs, NHS organisations and procurement will need to use existing resources and funding, whilst working towards the NHSE goal of delivering £12bn in annual savings by 2024/2025.

Creating a valuable operating model 

Many people are questioning why this has only just come to light, but the truth is that procurement and finance teams have been concerned about this for a long time. During our work with over 30 Trusts, we’ve observed that procurement has not been able to actively pursue efficiency initiatives. The focus on day-to-day activities has generated a very inward focus, leading efficiency initiatives to fall further down the priority list.

To achieve successful outcomes, senior management must ensure transparency, which requires organisations to evaluate efficiency and productivity opportunities across their suite of procedures and other core spend areas. In order to drive efficiencies, key areas must also be reviewed, including patient pathways, procedure mix, product and service availability, and contractual coverage.

For example, organisations may be able to modify patient pathways or introduce medical innovations which will reshape existing processes and enhance the capacity to increase procedure lists and accommodate the influx of patients. In addition, they may be able to perform a 'total cost of procedure' analysis to determine if their current operating model can be improved. 

Regardless of the approach, procurement teams can add value by supporting productivity and efficiency - and using the outcomes to harmonise and embed clinical best practices to enhance the patient journey. With the ever-changing NHS landscape, value-based procurement offers the potential to transform healthcare, alleviate waiting lists and reduce costs, while improving patient outcomes.

Find out how we’re helping the NHS to drive productivity through value-based procurement:

Written by

Hayley Wells

Hayley Wells

Senior Principal Consultant, Capita

Hayley has over 10 years’ delivery experience within the healthcare industry across both public and private sectors and has a proven track record in category management delivery across medical portfolios. She has experience of implementing a range of different strategies to achieve cost savings and engage effectively with key stakeholders to enable change and to drive delivery of projects.

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