Why the NHS Is Struggling to Leverage Its Buying Power

The NHS is one of the largest healthcare purchasers in the world, accounting for around 80 percent of all healthcare spending in the UK and working with tens of thousands of suppliers. Yet despite its size, the NHS consistently fails to use its collective purchasing power to secure the best possible prices on goods and services. According to recent research from the Health Foundation and HFMA, this failure is not due to lack of scale but a series of structural and operational challenges that limit effective procurement across the system.

Fragmented Procurement and Limited Collaboration

One of the core findings is that NHS organisations do not collaborate effectively to maximise their collective buying power. More than 80,000 suppliers operate across the system, and individual trusts frequently make purchasing decisions independently. This fragmentation prevents the NHS from standardising demand and aggregating orders to achieve the volume discounts and commercial leverage that a unified system should enable. As a result, trusts often pay widely varying prices for identical products.

A lack of shared commercial strategy exacerbates the problem. Without a clear, centrally coordinated approach, procurement efforts remain localised and inconsistent. Discussions with commercial leaders indicate that hundreds of contracts for the same products exist with different pricing and terms, even though this variation offers no clear clinical benefit and undermines overall value.

Trusts Not Fully Using Central Procurement Services

Part of the challenge lies with uptake of national procurement services such as NHS Supply Chain. Although designed to aggregate purchasing and negotiate lower prices, many trusts still choose to procure outside these central routes. National Audit Office reporting shows that a significant proportion of spending on medical equipment and consumables continues to occur outside NHS Supply Chain channels, reducing opportunities for scale efficiencies.

Trusts cite issues such as limited product availability and satisfaction concerns as reasons for bypassing central procurement, further weakening the system’s collective leverage. When individual organisations source independently, even large national contracts cannot produce the full savings potential.

Lack of Price Transparency

Another major barrier to maximising buying power is poor price transparency. The HFMA research highlights that suppliers sometimes conceal the prices charged to different trusts, making it difficult for procurement teams to benchmark and compare costs. Without robust data on what others are paying, trusts lack the insight needed to negotiate better deals or standardise pricing across the system.

This lack of transparency also impedes efforts to identify best practice or to hold commercial partners accountable for value delivery. Trusts with access to better pricing information can adjust purchasing behaviour, but where data is incomplete or inconsistent, opportunities for savings are missed.

Why It Matters

The NHS’s inability to fully leverage its buying power has real financial consequences. Research suggests that standardising prices and improving procurement practices could unlock significant recurring savings and reduce unit price variation for goods and services. Improving collaborative procurement practices could also enhance consistency in quality and supply reliability across trusts.

Better procurement could help the NHS manage financial pressures while maintaining quality care, particularly in areas where budgets are tight and demand continues to grow.