Supply chain £1 billion saving forecast

Over 1,000 new jobs will be created in NHS Supply Chain, with the outsourcing of parts of supply chain services of the NHS to logistics expert DHL. The outsourcing covers NHS Logistics and parts of the NHS Purchasing and Supply Agency (NHS PASA).

Under the agreement, DHL will be responsible for procuring a range of products and delivering them to NHS hospitals and GP surgeries.

By offering a wider range of goods to NHS Trusts at lower prices, it is expected that Trusts will make more use of the new service. This in turn will mean more products are distributed through the system, creating new jobs and safeguarding the majority of existing jobs.

Health Minister Andy Burnham said that although NHS Logistics had been a successful organisation in many ways, it handled less than one third of the NHS spend on such products and the outsourcing was necessary to deliver better value for the NHS.

The Department of Health says that the contract with DHL will, over its 10- year period, release an estimated £1 bn currently spent by NHS Trusts on healthcare products for frontline NHS care.

The outsourcing covers the supply and delivery of 10 categories of products. The NHS spends £3.7 bn a year on such products but only around 10% of the total are in the catalogue provided by NHS Logistics. Between them, NHS Logistics and NHS PASA account for only £1.1 bn of the total £3.7 bn spent across the categories of products. That means the remaining products are delivered through locally negotiated contracts in which Trusts do not necessarily obtain best value.

Under the contract, DHL has to reduce prices to hospitals. DHL will also work closely with clinicians in order to determine the best products for the NHS and ensure innovation is not stifled. r Concern over the new arrangements has been expressed by the Association of British Healthcare Industries (ABHI).

ABHI director general John Wilkinson stated: “A very efficient and collaborative supply chain partner stands to be replaced by a purchasing organisation which will be focused on price and will restrict choice for patients and clinicians.”