How three NHS trusts achieved 12.5% savings on private mental health beds

By Jen He and Gil Gorev

Pressure on NHS bed capacity means independent sector provision is often a crucial – but costly – part of supporting patient treatment. Clinical activity naturally influences demand, but Procurement also has a role to play in managing spend, efficiency, and quality of care.  

For three community health trusts, a collaborative approach to procurement offered an opportunity to secure better value from independent bed provision. Significant spend was being channelled into independent mental health beds, with combined spend across two of the trusts alone reaching approximately £20m in FY24/25. To tackle rising expenditure, the joint procurement team for the trusts engaged Efficio to help deliver a coordinated approach to procuring independent mental health beds across the three trusts.

Despite multiple trusts purchasing similar services from the same market, independent mental health bed provision was historically negotiated at an individual organisation level, without Procurement involvement. This fragmented approach limited opportunities to take advantage of aggregate purchasing power, with smaller trusts in particular lacking enough demand to secure preferential commercial terms.

Rather than committing to fixed volumes, the trusts needed a commercial arrangement that would allow private bed usage to fluctuate in response to changing internal capacity and needs.

While reducing expenditure was important, the trusts ultimately needed assurance that independent providers would meet appropriate standards of care for their patients.

As a starting point, Efficio aggregated private bed expenditure, utilisation, and demand across the participating trusts to establish a shared evidence base and identify opportunities for collective leverage. The team then developed and executed a unified negotiation strategy that allowed the trusts to approach the market with a collective, and therefore stronger, commercial position.

Aside from the scale of NHS demand, leverage in negotiations also depends on wider provider market conditions: times of reduced demand for providers meant a more favourable negotiating environment for buyers. Using market intelligence, the client-Efficio team timed supplier negotiations to take advantage of weaker market demand. Combined with the aggregated purchasing power, the approach delivered a 12.5% annual run-rate cost reduction as well as greater commercial flexibility for the trusts.

As with most procurement programmes, the solution did not lie with Procurement alone. The client-Efficio team worked closely with a wide array of stakeholders in the trusts to validate and embed the updated procurement approach.

For instance, clinical and operational colleagues were heavily involved in assuring quality of care; they helped shape requirements and visited provider sites to assess care environments. Elsewhere, Finance validated savings assumptions and supported change management efforts, helping to build alignment across the three trusts around the new commercial approach.