03 August 2006 | Paul Snell

The outsourcing of NHS purchasing and logistics is causing concern among suppliers.

They fear small players will be pushed out of the market, leading to a loss of competition and innovation.

John Wilkinson, director-general of the Association of British Healthcare Industries, which represents suppliers, said that at a meeting in June, US healthcare company Novation, which is expected to assume much of NHS purchasing, was "totally open about wanting to rationalise the market".

He added: "None of the smaller companies will be able to compete with the big boys. It'll be a disaster."

The chief executive of one surgical instrument supplier told SM: "For huge companies it's easier to get discounts that hurt suppliers. We are already suffering from hospitals coming to squeeze us for further discounts. Most small suppliers have already gone to the wall."

The managing director of another firm described it as "another nail in the coffin".

"The whole Pasa process is a total waste of time. I've worked in this business for 30 years and it's the worst it's ever been," he added.

Others are concerned about where the outsourcing of NHS purchasing will end. The head of another surgical supplies firm told SM: "If it goes further, it could affect small suppliers. This is very concerning and difficult for us."

Another commented that large companies often bring their own smaller suppliers with them, while an endoscope provider questioned whether a foreign provider would understand the UK market.

Wilkinson added: "These small, innovative companies are forging the latest medical breakthroughs for patients, yet the government's NHS policy is going to send many of them into bankruptcy."

He has written to health minister Andy Burnham to raise concerns about the level of buying power being handed to an outsourcing provider.

SMaug2006