Board may save $500,000
The MidCentral District Health Board is banking on being $500,000 better off this financial year after signing up to a national purchasing agreement.
On Tuesday, Health Benefits Ltd (HBL) and its shared service provider healthAlliance took over the role of negotiating supply deals for New Zealand's 20 district health boards.
It was the same day that MidCentral's board formally authorised its agreement to the deal at its board meeting.
HBL communications and engagement manager Steve Fisher said the arrangement had the potential to save district health boards up to $90 million in two years.
The boards spent about $1.3 billion every year on goods and services, he said.
By taking a national approach, through the National Procurement Service, the combined purchasing power of the boards was expected to ensure the best possible prices could be negotiated across the sector.
HBL's confidence was based on its experience in the last year, when $23.8m in annualised savings was achieved from working with the four Northern Region boards alone.
The buying arrangement covers capital equipment purchases, and goods and services supply contracts worth more than $100,000.
Responsibility for smaller purchases will remain with the individual boards.
MidCentral planning and support general manager Mike Grant said MidCentral expected to achieve $900,000 in savings through the agreement in the first year, but at a cost of $400,000.
MidCentral planning and accountability manager Vivienne Ayres told the board this week that the next phase of HBL'S programme needed to be reworked before it could be supported.
"Whilst backing the intent to reap potential efficiencies, the DHB believes the benefits indicated from the proposed changes are overestimated and unrealistic," she said.