NHS overpays for IT by more than 900 per cent - survey

Charities aren't much better

The NHS is overpaying by more than 900 per cent for bog-standard computer kit, in some cases - not just PCs and laptops, but also cabling, memory sticks and other IT sundries.

And that is according to the IT buyers themselves.

The claim is made in a survey by benchmarking organisation KnowledgeBus, which revealed that one health service procurement head had paid 920 per cent above trade price for a particular (unnamed) item. The Society of Information Technology Management (SOCITM) suggests that buyers ought to be paying a margin of about three per cent.

"The research from KnowledgeBus reviewed IT spending across 20 sectors including banking, retail and manufacturing. This revealed that the NHS had paid a margin 920 per cent above the trade price for one product. One charity also paid a mark-up of 850 per cent," claimed the organisation.

It called on health trusts to sharpen up their procurement operations, which could save millions of pounds that could be better spent on medical services.

"The size of some of the margins is a concern. In all likelihood these will be products that fall below the scrutiny radar - the one-off or low-volume purchases, which may be a distress item or spontaneous buy. They may also be smaller items like extension cables, USB flash drives and SD cards," said Al Nagar, head of benchmarking at KnowledgeBus.

"The scrutiny of spending on these items cannot be neglected, however, as they often make up a larger than expected percentage of the budget - in some cases as high as 25 per cent."

On IT equipment generally, public sector organisations showed that they are gradually getting to grips with the average margins they pay. KnowledgeBus cited Housing Associations, which as a group have managed to reduce the average margin paid on IT products from 36 per cent in 2012 to 20 per cent in 2014. In general, the average across all industries dropped from 21.1 per cent in 2013 to 19.6 per cent in 2014.

"Achieving the best price on IT products can be difficult, with trade prices in a constant state of flux, and yet product lifecycles send prices down over time. Securing optimum price requires careful monitoring of the market situation and data analysis. In the main, IT managers and procurement teams are becoming more vigilant but the research has shown better value and savings could be achieved," said Nagar.

Some sectors have, however, gone in the wrong direction. The education sector, for example, had average margins of 12 per cent in 2012, but has since seen its margins creep up to 23 per cent in 2014.

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