Ernst & Young: £1 billion of savings could be lost

By Rob Starr, Content Manager, Big4.com

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, new figures published recently by Ernst & Young 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.

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 Ernst & Young commented:

“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,” he said. “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. “