NHS procurement

What is NHS procurement?

The NHS buys a large amount of goods and services to enable it to run from day to day. This is called procurement. The NHS’s procurement systems have been put under enormous pressure during the health crisis posed by the coronavirus pandemic, which has created unprecedented levels of demand for some goods and services.

What does the NHS buy?

The main goods the NHS buys are equipment and medicines. In response to the pandemic, this equipment has included ventilators and personal protective equipment (PPE) – gloves, aprons, surgical masks, eye protection and protective gowns. According to government guidance, all health and social care workers treating coronavirus patients must wear PPE.^[1]

The main service the NHS buys is healthcare. This includes everything from planned operations and emergency care through to GP and community services. The NHS also buys other services, such as cleaning, facilities management and IT for its hospitals and other buildings. NHS bodies mostly buy services from other NHS bodies, but some are delivered by the private and voluntary sector (which account for 7.3% of overall Department of Health and Social Care (DHSC) spending).^[2]

How much does it spend?

DHSC spent around £70bn on procurement in England in 2018/19, up from £68.3bn the previous year (spending is devolved in Scotland, Wales and Northern Ireland).^[3] The vast majority of this is NHS spending.

Health is by far the biggest area of government procurement spending; it is more than three times larger than defence spending, the next largest area. Most NHS procurement spending in England goes on healthcare, with around £18bn on medicine and nearly £6bn per year on ‘hospital consumables’ which include gloves and syringes.^[4]

How are goods and services purchased?

The NHS is made up of a complex patchwork of organisations.^[5] In England, Clinical Commissioning Groups (CCGs) purchase services locally for each area, which are delivered by hospitals, GP surgeries or other service providers. There are over 200 CCGs in England. (In the devolved administrations, the structure is slightly different: in Scotland and Wales, there is not such a clear purchaser-provider split as regional health boards also deliver some services; in Northern Ireland, a government department oversees health and social care.^[6]

In England, most goods are bulk-purchased centrally and distributed to providers by NHS Supply Chain, a wholly-owned company accountable to the secretary of state for health, which was established in 2016. Previously most goods were bought locally by hospitals and other health providers, but a government review found large inefficiencies as organisations paid variable prices for the same product.^[7] NHS Supply Chain now manages more than 4.5m orders a year – and aims to carry out 80% of all NHS purchases by volume by 2022.^[8] Medicines are procured through a separate system of regional pharmacy purchasing groups. 

The devolved administrations each have their own procurement systems: NSS National Procurement in Scotland, NHS Shared Services System in Wales and the Procurement and Logistics Service in Northern Ireland.

Who is responsible for NHS procurement?

Responsibility for procurement in England is split between several organisations:

• DHSC is responsible for setting the budget and top-line objectives of the NHS and is ultimately accountable for NHS procurement. In relation to pandemics it determines what is included in the national pandemic stockpile.^[9]
• NHS England, which is legally independent of DHSC, oversees the commissioning of NHS services and sets strategy.
• Public Health England, an executive agency of DHSC, is responsible for dealing with public health emergencies. It issues guidance on who should wear PPE, jointly with DSHC and other bodies, and maintains the national pandemic stockpile.

How has NHS procurement changed since the onset of the coronavirus pandemic?

NHS England has taken on CCGs’ powers to purchase services.^[10] This allows it to buy private sector beds on block and gives it greater ability to support the provision of services across the NHS during the crisis. CCGs will continue to purchase services as well.

The Cabinet Office has issued guidance on emergency procurement which sets out the routes government bodies can take to access goods rapidly, such as direct award (meaning no competition) and accelerated procedures.^[11]

What have been the problems with PPE?

Many hospitals and care providers have experienced (and continue to experience) severe shortages of PPE during the coronavirus pandemic, making conditions unsafe for staff. There have been reports of staff resorting to using homemade PPE. The Royal College of Nursing has advised nurses to refuse to treat patients “as a last resort” if they cannot access the necessary equipment.

The main reason for the shortages is that procurement systems have been unable to meet unprecedented levels of demand. Healthcare staff have to wear up to five different pieces of PPE and may need to change these four times per shift. DHSC has not released usage figures but the BBC has reported that one hospital trust is using 72,000 pieces of PPE per day.^[12] Matt Hancock, the health secretary, has said demand across the UK is “in the billions per month”.^[13]

There appear to be several problems with preparations, supply and distribution:

• The UK’s national pandemic stockpile was designed to respond to an outbreak of pandemic influenza (a less infectious and virulent disease), but it was not prepared for coronavirus.^[14] As such, it was ready to supply around 200 NHS trusts with protective equipment, rather than the over 50,000 NHS providers, GP surgeries, care homes and hospices that have required it in recent weeks.
• The UK normally relies on procuring PPE from other countries and, as a result, does not have a large-scale domestic PPE manufacturing industry, but global demand has been unprecedented. Several countries have implemented export bans and shipments to the UK have been cancelled or delayed. The UK government did not take part in an EU bulk-procurement programme for PPE.^[15]
• There are reports of a large number of UK companies offering to produce equipment, and criticism that the UK government has been too slow to draw on these. It has now created a portal for new suppliers.^[16] A key challenge is vetting and validating suppliers and products quickly enough.
• It is difficult to distribute PPE quickly to where it is most needed, and stocks are quickly exhausted. Hancock has said there has been some overuse of PPE, although others have criticised this claim.

The government has acknowledged supply shortages. On 15 April, Hancock issued a new PPE plan, setting out measures on guidance, distribution and future supply to ensure “everyone should get the PPE they need”.^[17] On 19 April, DHSC announced it had brought in Paul Deighton, former CEO of the body that organised the Olympics, to oversee PPE procurement.

Have there been issues with NHS procurement in the past?

The NHS has never had to cope with a public health crisis on this scale before. The main problems identified with NHS procurement in England in recent government reviews have been inefficiencies and poor procurement capability.^[18] Recent Institute for Government research found that procurement capability in the NHS is still seen by civil servants as a weakness.

Many other countries’ health systems are facing procurement problems given the unprecedented spread and severity of the coronavirus pandemic. How the NHS’s procurement systems across the UK have performed – and the procurement assumptions made in the government’s pandemic planning – will be important questions in a future public inquiry into government’s handling of coronavirus.