DHBs to combine purchasing power for $500 million of saving

MEDIA RELEASE

THURSDAY, OCTOBER 10, 2013

DHBs to combine purchasing power for $500 million of savings

District health boards (DHBs) are working together on a national Finance, Procurement and Supply Chain programme to combine their purchasing power. This programme is expected to save half a billion dollars over the next 10 years, with all the savings being reinvested back into supporting frontline health services.
DHBs are today starting consultation with staff on the programme. The programme, which will rollout out over two years, proposes 146 fulltime supply chain positions will be retained on site within DHBs, and 280 finance, procurement and supply chain positions will be spread across regional centres such as Christchurch, Wellington, Palmerston North and Auckland – with a net reduction of 13 full time positions, out of 439 affected positions across all DHBs.

“Every year DHBs spend about $1.3 billion buying goods and services, ranging from cotton-wool buds through to hospital beds,” says HBL chief executive Nigel Wilkinson.

“Traditionally, this has been done in a variety of ways across the 20 DHBs. There has been no single catalogue of the goods and services DHBs buy, no single process or system to order or pay for them and no single warehousing and distribution service.

“By working together, DHBs can reduce wastage of medical supplies, improve the distribution of stock between DHBs, eliminate inefficiencies, and enhance the way they manage emergency supplies.

“A national standardised approach for ordering, delivering, storing and paying for goods and services will allow DHBs to do things that are not possible at a local or regional level.

“For example, perishable products will be redistributed between DHBs so stock can go to another hospital rather than going to waste. DHBs will also be able to buy goods and services off a single national catalogue, which will offer competitive prices.

“Improvements like this have been proven overseas in places such as Queensland, Scotland and Alberta. For example, Alberta Health Services – which delivers health support services to 3.6 million residents – has generated savings of over $190 million on an annual basis over the last three years through product category management and purchasing initiatives.

Implementation of the new processes and systems will be rolled out to DHBs in waves over the next couple of years, starting in 2014. The programme is being led and supported, in partnership with DHBs, by Health Benefits Limited (HBL). HBL has been set up to help DHBs reduce their administrative, support and procurement costs, with any savings to go back into health services.

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