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INNOVATION UK73 Procuring innovation in the NHS John Warrington, a Director of the NHS Purchasing and Supply Agency ( PASA), discusses how NHS procurement can rise to the challenge of procuring innovation to help the NHS deliver better care to patients The NHS is one of the biggest spenders of taxpayers' money, responsible for over £ 100 billion of a total £ 568 billion. To deliver its objectives, the NHS requires the support of a huge number of external suppliers provid-ing goods and services and increasingly healthcare itself, as we drive for greater plurality and choice in healthcare provision. In 2007/ 8, it is estimated that some £ 40 bil-lion was spent with third- party suppliers, which not only has a significant impact on the UK economy as a whole, but is also critical to some industry sectors such as life sciences. This level of spending means that the NHS can be a powerful spur to innovation, or, if used without careful thought, it can be a potential obstacle to the develop-ment and diffusion of innovations. The NHS is unique, a taxpayer- funded national system that could be, and should be, a hotbed of innovation for suppliers. Oppor-tunities to move to more health prevention should act as a vital stimulus for industry to innovate and to use the NHS as a showcase for global export. But, we know this doesn't happen enough, which is why the Depart-ment recently published Creating an Innovation Culture to unlock this potential. But this responsibility is not one- sided. The current eco-nomic climate will lead to the NHS looking for ways to ensure the health budget not only goes further through improved efficiency, but also improved quality and the only way in which efficiency and quality can be achieved is through innovation. The new climate provides an opportunity to deliver a win- win situation, whereby key industrial sectors are encouraged to innovate, so the NHS can deliver more efficient and higher- quality care. But the NHS must mobilise itself to play its part. It can stimulate innovation by acting as the first customer and early adopter of new innovations, setting clear strategic directions and better communicating where and how it is seeking to procure innovative solutions in future. This is not easy, but the rewards are too important for us not to act now. Procurement is a vital lever in making this happen. A procurement function that creates and articulates intel-ligent demand from the NHS system and then encourages suppliers to develop innovative supply- side solutions, can help the NHS unlock its innovation potential. Creating the right environment In his Next Stage Review ( NSR), Lord Darzi confirmed that there was a desire to bring the benefits of innova-tion to patients more rapidly. Across the country, from the South West to the North East, he heard that there is much to be gained by the NHS working in partner-ship with higher- education institutions and the private sector. Clinical practice is constantly improving, offering new opportunities to improve the quality of care. This means that if quality is really at the heart of everything we do, accepting, embracing and leading innovation is an imperative, not an option. The NSR emphasised the need for innovation to be driven regionally by strategic health authorities who now have a new legal duty to promote innovation. We are now in a position to support the uptake of frontline innovation through the creation of substantial regional innovation funds held by SHAs. The funds' purpose will be to iden-tify, grow and diffuse innovation. But we know that innovation is no longer the exclusive domain of in- house scientists and R& D labs and that organisations such as Proctor & Gamble now source half their innovation from outside, believing innovation to be a multi- player game, and the issue is less about creat-ing knowledge than it is about knowledge flows. This is where purchasing professionals come in. Good ideas are more often coming from outside the firm and so a good set of antennae is important to pick up the signals and triggers from a firm's supply net-work. The procurement function in the private sector is increasingly stepping up to meet this challenge because Healthcare NHS Purchasing and suply agency ( PASA)