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Hospital e-procurement – modernising the dinosaur


Andrew Davies
Chief Pharmacist
Hereford Hospitals NHS Trust
County Hospital
E:[email protected]

Hospital pharmacies in the UK have been utilising electronic means to trade with a small number of their suppliers for many years. Usually this has been with their main wholesalers utilising bespoke point-to-point systems, and occasionally with a smaller number of other companies using EDI. Some trusts have fully embraced the concept of e-trading; however, these are few and far between.

The reasons behind this failure to embrace the new technological frontier include:

  • Pharmacy computer systems.
  • Local standing financial instructions (SFIs) and finance departments with strict procedures.
  • Suppliers who do not fully understand the working of hospital pharmacies.
  • Pharmacy staff who have never been given an explanation of how suppliers work.
  • The speed of change and availability of resources.

However, with major investments in IT in the NHS planned over the next two years and the imminent national coding system for drugs in secondary care, the time is now ripe for change in local hospital pharmacy procurement.

Current state of play
Ask the lead procurement technician or purchasing pharmacist in 80% of hospital trusts in the UK whether they trade electronically and you will receive a positive response. Probe deeper and ask with how many trading partners they have and you will discover that the vast majority deal with only one to three partners who are usually all major pharmaceutical wholesalers. Ask whether electronic invoicing is in place and you will get, in the majority of cases, an emphatic “no”.

The general retail sector has embraced the e-commerce model and utilises its systems to improve supplier management, maintain supply chains, reduce pricing inaccuracies and improve communications. Why therefore has the hospital sector failed to take advantage of e-commerce?

Pharmacy computer systems
The largest single limiting factor is the functionality of pharmacy computer systems. While they are designed to manage stocks, print labels and match invoices, they have not been developed to directly utilise e-commerce systems, usually because such systems were not in use when the pharmacy systems were first developed. There are several software solutions that provide an interface between the pharmacy system and the e-commerce solution of a supplier. In the vast majority of cases these are separate systems requiring different skills, the maintenance of separate files and some form of interface engine to translate between systems.

Of the eight hospital pharmacy system suppliers that cover 90% of hospitals within the UK,(1) all can interface with an EDI system; however, only 12 sites nationally can directly trade without an intermediary software system (see Figure 1). The main reasons for such direct interfacing being unavailable is the small market value for hospital pharmacy systems (242 sites), with poor historical development investment by the NHS and suppliers’ unwillingness to share technology that has been expensive to develop.


Standardised product codes
With the development of web-based trading environments, the bespoke nature of hospital pharmacy management systems was left even further behind.

A key element of the problem is the absence of a single coding system for medicines in the hospital sector within the UK. Each hospital can currently use any one of at least 10 individual coding systems,(2) together with a unique local code allocated by the pharmacy inventory management system in use that is specific to that single site only. The current developments at the NHS Information Authority will result in the introduction of a common United Kingdom Clinical Products Reference Source (UKCPRS) (, which will provide a unique code for all pharmaceutical products utilised in secondary care in the UK. This will be based upon the Snomed CT(®) reference source and will link with the Primary Care Drug Dictionary. The code will allow the use of international barcoding standards to support product identification, batch number and expiry date and should allow the eventual tracking of an individual batch of medication to the patients who received it.

The introduction of such a long-needed development will have a major impact on many aspects of pharmaceutical supply processes in hospitals, from ordering the correct product and pack size, checking off and booking in items received, recording batch numbers and expiry dates, stocking robotic devices, and interfacing with electronic prescribing systems, to recording the administration of a drug and improving patient safety. The presence of a single identification code for each drug will remove the need for interface engines between systems, which will not only save money but will also reduce the risk of errors developing. Pharmacy system suppliers must work closely with system users to ensure they are enhancing existing systems to utilise the new UKCPRS coding in a way that reflects the actual needs of the NHS and future developments such as electronic prescribing and patient safety systems.

The UKCPRS coding structure will also facilitate the work of the NHS Purchasing and Supply Agency (PASA) by supporting the process by which contracting for pharmaceuticals is undertaken. Having a single code will greatly improve the quality of historic usage data as it will be much easier to identify individual products down to a specific pack size and supplier. The code will also improve the importation of contract data into pharmacy systems.

Standing financial instructions
Local NHS trust finance departments have often been cited as a barrier to the development of electronic trading systems. As guardians of the public purse, directors of finance must ensure that robust controls are in place to provide auditable trails in NHS organisations. Historically, such controls have involved copious amounts of paper records, and the stipulations for what records must be kept are contained within SFIs. Moving to paperless systems for ordering and payment of invoices requires changes to be made to the content of SFIs – a process that will require the approval of the trust’s financial audit committee. As with the rest of the NHS, finance departments are modernising and national targets have been set within the NHS Plan for the adoption of e-commerce systems for electronic ordering and invoicing, thus removing some of the local barriers that may have been created by individual directors of finance.

Working in partnership
As is common in relationships, individual entities often do not always understand the workings of their partner. Supply methods that work in “for-profit” organisations such as retail pharmacy businesses will not necessarily work within a publicly funded body like the NHS where financial resources are limited and the speed of change can be remarkably slow. Innovation is starting to catch up within the NHS. Take, for instance, the remarkable acceptance of robotic dispensing systems, highly expensive but without real evidence of financial benefits! The current investment associated with the National Strategic Plan to deliver 21st century IT support to the NHS provides the ideal opportunities for hospital pharmacy system suppliers and users to develop the functionality of the pharmacy management software.

Pharmacy staff within NHS trusts likewise do not necessarily understand the commercial and organisational pressures on pharmaceutical suppliers, particularly when the typical hospital pharmacy orders from over 80 different suppliers on a regular basis, all of which work in different ways. The continued expansion of services provided by traditional wholesalers and the new breed of purchasing and fulfilment companies who provide an “honest brokerage” system between the NHS and its suppliers will continue to simplify the supply process. This, together with developments such as “cross-docking”, where supplies from multiple suppliers are amalgamated into a single delivery to a trust, better managing deliveries onto a hospital site, is changing the way pharmaceutical products reach the end-user – the patient!

Modernise or be modernised
Hospital pharmacies in the UK are entering into a period of major change. Procurement practices have to continue their modernisation or they will be modernised for us!


  1. Finesilver J. NHS Purchasing and Supply Agency review of pharmacy system functionality. NHS Purchasing & Supply Agency; 2002.
  2. Wind K, Thorp G. e-coding – enhancing supply from the manufacturer to patient. Hosp Pharmacist 2002;9:240-2.

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