Private sector input will save NHS millions, claims Minister

More than £220 million could be slashed off the NHS' costs bill through a new private sector partnership announced today.

The health department has said that the savings will be made over 10 years by getting more NHS Trusts to use centralised service centres to carry out back office work. The private firm Xansa has been brought in to "improve and expand" the range of corporate services provided for the NHS.

Trusts contracting to the new partnership are expected to save at least 20% on their current in-house costs – in areas such as payment of invoices, VAT returns, debt collection and bank account reconciliation – the department said.

Xansa will take a 50% share in the existing centres currently operated by NHS Shared Financial Services, creating a new company called NHS Shared Business Services Limited.

Under the partnership, Xansa will "invest people, resources and expertise to support the existing centres, in order to provide increased capacity, optimise services, and expand the service portfolio to include payroll and e-commerce for example". The joint venture partnership will begin on April 1 2005.

Health Minister John Hutton said that the venture would "generate significant cost savings" - enough to pay the annual salaries of over 3,000 GPs or 12,000 nurses, he claimed.

He added: "By entering into this partnership, we are utilising private sector experience to both improve and expand the range of corporate functions provided for the NHS. It's good news for the NHS and for taxpayers."

Two of the new services NHS Shared Business Services Limited will offer are intelligent procurement and payroll. As part of the new service, NHS organisations will be to purchase anything from beds to bandages using electronic procurement. The centres will also offer an integrated payroll system.

(gmcg/sp)