Why Unit Price Variation Persists Across the NHS
One of the most striking findings in recent NHS procurement research is the scale of unit price variation across trusts. Identical products are often purchased at materially different prices by different NHS organisations, even when clinical requirements are the same. This variation is not driven by quality differences but by structural and behavioural factors embedded in how procurement operates across the system.
Local autonomy versus national scale
A core reason for price variation is the high level of local autonomy in NHS purchasing. Trusts retain significant independence in deciding what to buy, who to buy from and how contracts are structured. While this flexibility can support local clinical preferences, it also fragments demand.
Without consistent aggregation of volume, suppliers negotiate separately with individual trusts rather than with the NHS as a single buyer. This weakens negotiating leverage and allows pricing differences to persist across regions and organisations.
Limited visibility of prices across the system
Another key issue is the lack of consistent price transparency. Procurement teams often do not know what neighbouring trusts are paying for the same product. In some cases, confidentiality clauses or commercial sensitivity prevent open benchmarking.
When buyers cannot easily compare prices, it becomes difficult to challenge suppliers or identify where value is being lost. Trusts with stronger commercial capability may negotiate better deals, while others pay more for the same items simply due to weaker information.
Variation driven by contracting complexity
Price variation is also linked to the complexity of NHS contracting. Differences in contract length, service levels, delivery arrangements and bundled offerings can obscure true unit costs. Two trusts may appear to be buying the same product, but under contracts with different structures and terms.
While some variation may reflect legitimate differences in service or logistics, much of it does not deliver proportional value. In practice, complexity often makes it harder to standardise pricing or assess whether higher costs are justified.
Clinical preference and standardisation challenges
Clinical engagement is essential in healthcare procurement, but it can also limit standardisation. Preferences for specific brands or products, even when alternatives are clinically equivalent, reduce the NHS’s ability to consolidate demand.
When multiple clinically similar products are used across the system, suppliers retain pricing power and competition becomes fragmented. This contributes to variation and undermines the ability to negotiate nationally consistent pricing.
Why price variation matters
Persistent unit price variation represents missed opportunity. Even small differences, when multiplied across the scale of NHS purchasing, translate into significant financial impact. Reducing unwarranted variation could free up resources for frontline care without compromising quality or outcomes.
Price variation also complicates financial planning and reduces confidence that the NHS is achieving best value for public money.