13. NHS Shared Business Services is a joint venture between the Department of Health and Xansa PLC, a company specialising in shared services. It is one of the more established public sector shared services. It began operating across the whole of the NHS in April 2005 and was selling procurement, finance and accounting services to 89 out of a total of 416 potentially eligible NHS bodies by September 2007.[32] This represents take up of 21%.

14. NHS Shared Business Services provides NHS bodies with the opportunity to reduce the cost of their finance function by 20% and reduce procurement costs through a computer interface to NHS Logistics.[33] However, to realise this level of savings, customers have to change their systems and ways of working, such as streamlining the number of different codes used in their finance systems.[34] NHS Shared Business Services supports its customers in carrying out this transformation.[35]

15. NHS Shared Business Services is not yet making a profit and has paid no dividend to either the Department of Health or Xansa.[36] It needs to attract a further 22 customers simply to break even.[37] To deliver its forecast savings to the taxpayer of £250 million by 2014-15 its customer base needs to grow from 21% of eligible NHS bodies to 65%, representing 180 further customers.[38]

16. Potential customers of NHS Shared Business Services may be deterred from signing up as the Department of Health itself is not yet a customer.[39] The Department of Health believes it needs a more bespoke service than NHS Shared Business Services currently offers.[40] A system redesign to meet the Department's needs is now complete. The Department of Health considers this will enable NHS Shared Business Services to tender for central government work in the 2008-09 financial year.[41] However, the Department has still not set a firm date to become a customer.

17. Some foundation trusts also have concerns that joining a venture sponsored by the Department of Health would compromise their independence.[42] The Department does not believe NHS bodies will compromise their financial independence by joining NHS Shared Business Services, but it has only exerted pressure to join in the case of NHS Professionals, which has less freedom than NHS trusts.[43]

18. Currently, the service is not achieving the levels of efficiency that would be possible if NHS customers adopted better business practices. Across the NHS, less than 30% of invoices received match to purchase orders, often because NHS bodies place orders informally without raising purchase orders at the same time.[44] When an invoice arrives without a purchase order, staff at NHS Shared Business Services must carry out expensive manual interventions to confirm that what was delivered and charged was what was ordered. The lack of purchase orders also makes it more difficult to maintain financial control and is bad practice.[45] NHS Shared Business Services is introducing an electronic invoicing system to make it impossible for a supplier to submit an invoice without a valid purchase order.[46] Such improvements would also lead to significant financial benefits in terms of increased productivity and timeliness, and better financial reporting within the NHS.

33   Qq 19-21 Back

34   Qq 22-23 Back

35   Q 23 Back

36   Qq 24-29 Back

37   Qq 30-33 Back

38   Q 45; C&AG's Report, paras 2.5-2.6  Back

39   Q 10 Back

40   Qq 11-16 Back

41   Q 10 Back

42   Q 35 Back

43   Qq 34, 36, 39-42 Back

44   Qq 122-123 Back

45   Q 124 Back

46   Qq 58-59, 127-128 Back