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Spend wisely if you want cash, minister tells hospitals

Phil Wainewright Profile picture for user pwainewright January 16, 2015
The UK government warns financially ailing NHS hospitals and healthcare trusts to get their spend management in order before they ask for extra money

© Andy Dean -
Hospitals and health trusts in the Britain may lose access to top-up government funding unless they've got the data to show they're spending their money wisely. This was the stark message from junior health minister Dr Daniel Poulter MP, delivered as he addressed delegates at yesterday's Think Cloud for Health conference in London.

Although the UK's National Health Service is publicly funded, hospitals and their governing trusts have been given more financial autonomy in recent years, with the result that some have found themselves running out of money. New funding rules now in force will mean they can't count on the government bailing them out if they're not keeping proper tabs on spending, warned Poulter:

A key component of that guidance being that when we give that financial support to trusts in difficulty we will now expect — not ask for but expect — best practice in procurement, best practice in estate management and best practice in reducing temporary staffing and other unnecessary costs to the trust.

So this is something that everybody has a duty to make sure they take seriously because it's about freeing up money for frontline patient care.

It's also something [for which] there's going to be a much stronger steer centrally, to ensure that those organizations who do want money in future have to make sure they are doing their very best to ensure that every penny goes to patients.

Another £1 billion

In his remarks to the conference, Poulter said he believed better buying practices could save as much as billion pounds ($1.51bn) a year from the £22 billion ($33.3bn) in total that NHS healthcare providers spend on goods and services.

I'm very pleased to say that since we launched, a year ago, a drive to improve hospital procurement, that against projected trend we saved almost 250 million pounds and that's a very big achievement.

But there's a lot further we need to go. I think we could be looking at possibly a billion pounds worth of savings across the health sector just from improvements in procurement practice in the provider sector alone.

The minister, who is Parliamentary Under Secretary of State at the Department of Health, said that the requirement for healthcare providers to publish information about their spend and the prices they pay is helping transparency.

What is one hospital paying for syringes compared to another? What different manufacturers can provide and suppliers can offer. Clearly greater transparency in the system will help those people making decisions about procurement in trusts to make those decisions more wisely.

He pointed to the support available from private sector procurement services such as the e-procurement platform CloudBuy, which was a sponsor of yesterday's event. It was important that hospitals and trusts had the tools at their disposal to be able to improve how they buy, he said.

The key to that of course is having the data to underpin it. If you've got the right data to understand where your spend is going, then of course that means you're then in a much better place to understand where you can make savings, and where you can make the efficiency of how perhaps the goods pass through your hospital, where the waste in the system may be, and help your organizations to save money and free up that money for frontline patient care.

Data was also the key to making sure healthcare providers were buying the right products in the first place, he added:

We all know that the opportunity for improving technology is part of delivering efficiencies in the health system. It's also about the way that we can care for patients.

If we have the right data, that's to go about improving patient care, but also improving procurement data and getting our procurement practices right, also means that we are able to use the right equipment, the right goods and services, in order to support clinicians in delivering high quality care.

It's not just an exercise in finances, it's also something that also can help us to make sure that we're buying the right things to deliver the best care for patients.

My take

A stern warning for some institutions but a solid vote, then, from this government minister in favor of using technology to improve not only the financial health of the NHS but also deliver better healthcare outcomes for its patients.

There was much more from other speakers at the event on the topic of how data can contribute to healthcare and my colleague Derek Du Preez will be following up on this material. Slapdash procurement is bad enough but it's far worse when physicians are making bad decisions simply because the right data hasn't found its way to them in time.

Of course it has to be said that this is not the first time a British government has sought to apply technology to cure operational ills in the NHS and as my diginomica colleague Stuart Lauchlan will readily remind you, the historic achievement is far from encouraging. But those were classic big-bang projects unlike the more bite-sized and often cloud-based solutions coming into favor today. So there is reason to hope it could be different this time.

It must also be said that this government faces a general election in a few months' time, after which there could well be a different mandate in place. Where that leaves the hoped-for billion pounds a year of procurement savings (let alone the prognosis for financially ailing hospitals) is in the lap of the electorate and whoever succeeds Poulter and his ministerial bosses this May.

Disclosure: diginomica was a media sponsor of yesterday's Think Cloud for Health conference and the organizer is a diginomica affiliate.

Image credit: Piggybank © Andy Dean - Fotolia.

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