About

 

How does the NHS obtain its goods and services?


The NHS is made up of 452 trusts (predominantly acute, mental health, foundation, primary care and ambulance trusts), each with its own budget to spend.

 

Most commonly, trusts purchase through:

  • national framework contracts negotiated by the NHS Purchasing and Supply Agency (PASA)
  • national framework agreements managed and negotiated by NHS Supply Chain
  • individual trusts' local contracts
  • consortium contracts, where a group of trusts work together to negotiate contracts –
    these groups have developed into collaborative procurement organisations
  • pan-government contracts


Collaborative Procurement


The NHS has long recognised the benefits of collaborative procurement, stretching back over many years. This followed successive reports on the subject, particularly around national, regional and area contracting.

 

Following the establishment of NHS trusts in the early 1990s, which brought about a more competitively focused and devolved NHS, there was recognition that NHS procurement must not allow itself to become fragmented. This fact was acknowledged in the Audit Commission report Goods for your Health, published in 1996. The late 1990s witnessed the creation and development of some pioneering NHS purchasing collaboratives, working together to deliver better value for their constituent trusts and complementing the work undertaken nationally.

 

NHS PASA was established in April 2000 and has been instrumental in encouraging the development of greater collaboration between NHS organisations. In 2002 PASA launched its report MODernising NHS Supply, coinciding with the publication of the Audit Commission’s acute hospital portfolio review - Procurement and supply – a follow-up to the Goods for your Health report.

 

MODernising NHS Supply saw the development and establishment of NHS collaborative procurement organisations coterminous with Strategic Health Authority (SHA) boundaries, known as supply management confederations. The policy was launched through a ministerial conference in May 2002 at which groups of NHS organisations were invited to submit applications for pilot confederation status. Following a rigorous selection process, six confederations were awarded pilot status.

 

In 2004, the Supply Chain Excellence Programme (SCEP) was launched by the Commercial Directorate (part of the Department of Health) to promote the creation of collaborative procurement hubs (CPHs) targeted to achieve £270 million savings by 2007-08. In the latter part of 2004, business cases for the establishment of three pathfinder CPHs were completed, and they commenced formal operation from 1 April 2005.

 

The CPH programme continues to develop. There are now eight established hubs, plus further progress on coordinated procurement across London and the South West.