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By | Anna Leach 15th May 2012 10:31

NHS 'pays up to THREE times over the odds' for IT gear

Health bosses told to stop blowing taxpayers' cash

The NHS is paying double or even triple normal prices for trivial tech gear including printer parts, cables and optical mice, according to a poll of IT bosses.

Here's just one example of how the Department of Health is cutting deals that are worse than what other wholesale buyers are getting - and worse than what average punters are paying for: Mercato ITelligence claimed that the health managers pay £10.50 for 4GB memory sticks that cost £5.28 online.

The NHS buys tech with "extortionate" markups that are out of whack with the rest of the business world, warned the analysts.

Blighty's public health service pays an average margin of 28 per cent when ordering ICT kit, where best practice margins for businesses buying in IT are normally 3 per cent. These price differentials become significant at large volumes.

University buyers also seemed to be routinely inking bad deals, paying an average 27 per cent margin on new tech kit and buying in some components with margins of 557 per cent.

Housing associations were the worst: they paid an average 36 per cent markup for new tech with some IT purchases hitting 731 per cent of cost price.

Banks, utility companies and telcos were cannier customers but still bought tech at seller margins around 19 per cent.

The research, published earlier this month, used answers from a survey of 150 ICT managers with annual budgets of over £50,000. Asked why the NHS in particular was getting fleeced, Mercato’s head of benchmarking Al Nagar said:

The NHS is overspending on its IT as a result of the radically fast moving market [...] Buyers need to monitor and benchmark prices to negotiate the best price with suppliers as ICT bought at better prices will enable budgets to be stretched.

The NHS could get more and better ICT for the same money. This means higher volume for the supplier and better fairer deals for the buyer.

Reseller margins, credit: screengrab of stats from Mercato

Fixed-price medium to long-term contracts with suppliers could be keeping prices high at previous rates instead of falling with market value. Responding to the criticisms, the Department of Health said it would shortly be "publishing guidance" on the matter.

"The NHS should not be paying over the odds for any products and services," said a spokesman for the department.

"It is important that every penny spent on the NHS provides value for the taxpayer and we will shortly be publishing guidance to help the NHS get the very best deal it can for equipment it buys." ®

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