Recoding purchase data generates savings

A healthcare trust in London is claiming it has saved £1m by recoding its procurement systems from freetext into individual items, allowing buyers to verify prices more easily.

Terry Ashmore, CEO of Coding International, the company that undertook the work for Chelsea & Westminster Healthcare Trust, told E-Health Insider that they processed one year’s worth of procurement data from the organisation. "What we do is take the free text descriptions and change them into standard descriptions using manufacturer’s description."

The company then gave the trust several breakdowns of how money has been spent that year, by product and supplier, and encouraged the adoption of a more focused coding system.

Many public service organisations, particularly in healthcare, only input coding into their systems at the subject, rather than the item level. This was akin to trying to work out how to save money from a supermarket receipt that didn’t list the items purchased, said Ashmore.

In Chelsea & Westminster’s case, the procurement data was in not categorised at all, and for one item, a breathable surgical gown, there were 46 different descriptions.

Vince Pross, procurement director at the trust, said: "Many people think that high-level heading information such as eClass or UNSPSC is sufficient; it isn’t. What they don’t understand is that the devil is in the detail."

"It’s the item level where we actually save money," said Ashmore. "You can easily save 10% on the prices of two syringes by going for the cheapest of the two."

The use of a structured system and a central catalogue would also discourage ‘off-contract’ purchases, seen by Ashmore as one major source of wasted funds.

Ashmore said that he would hope that hospitals and organisations would continue using the new system they were given, and not revert back to freetext. "Everything that they buy we will give them a standard description for it," he said. He encouraged organisations not to revert back to subject-level descriptions or free text.

Pross said that the reports generated by Coding International were useful: "The data provided… allows our department to simply upload a catalogue into whichever e-commerce system the trust decides to use. In addition the data can now be sorted in many ways to provide the information to enable quick price comparisons and quick change-over to alternative products and suppliers."

Originally part of the Purchasing and Supply Authority, Coding International started undertaking general public sector recoding work in 1991. The organisation was privatised in 2000, and mainly works with local authorities.