Procurement processes costing NZ District Health Boards

23 Sep 2010

Source:  New Zealand Herald
District Health Boards in New Zealand could make huge savings if they can improve on how they purchase supplies and services, according to an Auditor General report released yesterday. The report, which was developed between 2006 and 2009, suggested encouraged DHBs "share good practices" in order to avoid the need to "reinvent the wheel". The 20 DHBs spend about $6 billion of public money purchasing supplies and services from external organisations each year, out of a total spending of about $10 billion, the report said.

The Auditor General said even small improvements in how DHBs manage their spending could increase the money available for additional health and disability services. "For example, an average 1 percent saving by all DHBs would mean about $60 million each year that could be used for additional health and disability services."

Health Minister Tony Ryall said each DHB had strengths and weaknesses in their purchasing procedures. "The Auditor General report says two things. Firstly District Health Boards need to be much more willing to take back money from suppliers not up to standard and secondly, make sure they're not paying more than they have to. Mr Ryall said in that respect he would like to see the health sector run more like a supermarket chain and that if it could harness bulk buying then $700 million could be saved over five years.

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