Reforming EU procurement rules to improve healthcare

by Elisabetta Zanon 25 August 2011

Freeing up state health services, from bureaucracy, will allow them to make better use of their purchasing power

The timing of the revision to the existing European Union public procurement rules could not come at a more important moment for the National Health Service in England. As we are very much aware the NHS is tasked with making £20bn of efficiency savings by 2014, £1.2bn of which is to be made through improvements to NHS procurement practices alone. The National Audit Office recently published a report which stated that a combination of inadequate information and fragmented purchasing meant that hospitals' procurement of consumables provided "poor value for money". The House of Commons' Public Accounts Committee has also been critical of NHS hospitals wasting money through ineffective procurement processes. So what can we do at a European level to help the NHS meet this challenge and address the critics?

With EU public procurement rules, quite a lot. The rules govern the way in which public bodies across the EU buy goods, services and works. They apply when a purchase exceeds £101,000 - which, given that the NHS spends more than £30bn with commercial suppliers annually, makes them hugely important. Talk to an NHS finance director or procurement manager and you will quickly understand their relevance, but also their complexity. They will tell you that the rules are too detailed, complex, burdensome and costly; that there is often confusion over when they apply and what they apply to. They often feel pushed down procurement routes which they know will not get them the best possible results in order to reduce the risk of possible challenge, and that there is unnecessary bureaucracy within the processes. These are not just national issues; these are Europe-wide ones.

In January of this year, the process to review the union's public procurement rules started with a European Commission consultation acknowledging a number of key challenges, suggesting some possible measures in response - and asking some pretty fundamental, wide-ranging questions. We consulted with the NHS and fed back views on what the confederation thought could be done to position the new rules so that they really drive value for money and help foster innovation. In particular, we have called for a move to a core set of rules ensuring fair competition while avoiding over-regulation or micro-management of procurement arrangements.

In addition, we would like thresholds to be raised significantly to a level which makes cross-border competition economically viable for the supplier – justifying the time and resources spent on procurement procedure by public bodies. There also needs to be greater flexibility for buyers, allowing them more freedom to determine the best course of action and to make adjustments throughout the procurement process – and greater opportunity for buyers to discuss and test alternative solutions with bidders, and ultimately to secure better proposals and support innovation. Finally, we have asked for clarification on when contractual arrangements between public bodies are excluded.

New legislative proposals from the commission are expected at the end of 2011, or in early 2012, and will follow the usual EU co-decision legislative route to be adopted. While getting support for the proposals outlined above will not automatically save £1.2bn for the NHS, it is these strategic changes to the EU law - which will act as the key enabler in freeing NHS organisations to make the best use of their purchasing power in the future. The revision of the procurement directive offers a key opportunity that has to be seized.

Elisabetta Zanon is director of the NHS Confederation European Office

Original Source Public Service Europe: http://www.publicserviceeurope.com/article/769/reforming-eu-procurement-rules-to-improve-healthcare

Tags: NHS, health, procurement, purchasing