Why clinically-led commercial decisions are the next frontier of NHS financial recovery
For NHS provider leaders, the challenge is clear. Many organisations are being asked to deliver significant Cost Improvement Programmes (CIPs), reduce structural deficits and improve productivity, all while maintaining quality, access and operational performance. Most have already exhausted the easier opportunities, with procurement teams consolidating suppliers through using national frameworks and using data to identify obvious outliers to drive better efficiencies across the board.
Yet the financial challenge remains
The uncomfortable reality is that many of the largest remaining opportunities for recurrent savings sit in the decisions made every day about products, suppliers, service models, contract performance and variation in clinical practice. In our experience, 60% of non-pay expenditure is directly or indirectly influenced by clinical decisions, yet many NHS savings programmes continue to focus predominantly on procurement processes or financial controls.
This creates a significant opportunity
Across NHS providers, clinically managed categories often represent around 60% of non-pay annual spend. Within these areas, organisations frequently identify 4%-6% addressable savings opportunities through a combination of product reasoning, demand management, supplier challenge, contract optimisation and improved governance. The challenge is that these opportunities are often the hardest to unlock.
The next generation of savings will not come from Procurement alone
Historically, many NHS organisations have viewed procurement as a function responsible for securing lower prices and compliant contracts. That remains important, however, the next generation of savings is increasingly dependent on clinical decisions with commercial consequences, such as selecting the product or device to use, clinical variation or the utilisation of a supplier, that procurement teams do not fully control.
The organisations achieving the greatest success are not those pushing hardest on price. They are those creating effective alignment between Clinical, Procurement, Finance and Operational leaders around a shared objective: delivering better value while protecting patient care. While on the surface this sounds straightforward, in practice, it is one of the most difficult organisational challenges in the NHS.
Why organisations struggle to unlock clinically-led savings
Clinical teams are rightly focused on quality, patient outcomes and service continuity, while procurement teams are looking at commercial performance, finance teams on savings delivery and operations teams on maintaining flow and performance standards. Each perspective is valid and important, but without the organisation and structure in place to bring all of these elements together, opportunities can frequently be missed.
Across NHS organisations we commonly see this complexity of balancing these core areas of delivery played out, through examples such as significant product variation without clear clinical justification, weak ownership of supplier performance and inconsistent adoption of best-value products and services, to name but a few.
A maturity gap exists across many NHS organisations
The most successful organisations typically move through four stages of commercial maturity.
Stage 1: Transactional Procurement
Focus on compliance, purchasing and contract administration.
Stage 2: Category Management
Focus on strategic sourcing, supplier consolidation and benchmarking.
Stage 3: Clinical-Commercial Alignment
Procurement and clinical leaders jointly evaluate variation, product choice, supplier performance and service requirements.
Stage 4: Integrated Value Management
Clinical, Procurement, Finance and Operational teams operate through a shared governance model with clear accountability for quality, value and outcomes.
Many NHS organisations have developed strong capabilities in Stages 1 and 2. The greatest remaining opportunities increasingly sit in Stages 3 and 4.
What good looks like in practice
One large NHS provider recently undertook a review of a clinically-sensitive service contract following concerns regarding supplier performance. Working collaboratively with clinical stakeholders, procurement and operational leaders, the organisation challenged historical assumptions, reviewed contract performance and renegotiated supplier arrangements.
The result was:
- Over £1M recovered from the supplier relating to historic performance issues
- Improved contractual protections
- Continued service continuity
- No adverse impact on patient care
The process strengthened clinical confidence in commercial input, rather than undermining it. Following the intervention, clinical teams actively requested reviews of additional supplier relationships. In another example, a trust combined benchmarking, supplier negotiation and clinician-led product rationalisation to deliver more than £1.1M of recurrent savings within a specialist clinical category. The value came from combining evidence, clinical leadership and commercial expertise.
Contract management is where non-pay savings are won or lost
Many organisations focus significant effort on the procurement process, but far less attention on the period after contracts are awarded and the work is being done. This is where substantial value is often lost, where in our experience, organisations can forfeit 10%-20% of expected contract value through:
- Scope expansion
- Passive renewals
- Poor supplier performance management
- Weak utilisation controls
- Inadequate demand management
- Lack of accountability
Contract award should be viewed as the moment true value starts to be assessed, with high-value, clinically sensitive contacts requiring active management, clear ownership and regular performance review from the beginning.
Why external support often accelerates results
Many NHS organisations recognise these opportunities but do not have the capacity, capability and pace of delivery to make it happen. Unlocking clinically led savings requires a combination of skills, such as deep category expertise, advanced analytics, and change management training, that are rarely available within a single internal team.
External specialists can bring additional capacity and skills, while working alongside internal teams to build sustainable capability. The most effective programmes help organisations identify, prioritise and realise opportunities that already exist within their own systems.
Five actions for NHS leaders
For CEOs, CFOs, COOs, Medical Directors and Chief Nursing Officers seeking sustainable financial improvement, five priorities stand out.
1. Reframe procurement as a strategic capability
Procurement should be embedded within financial recovery, productivity and transformation agendas, not treated as a standalone function.
2. Focus on clinically-managed spend
The largest opportunities often sit within categories where procurement influence has historically been weakest.
3. Establish clear accountability
Every major contract should have named ownership for clinical risk, commercial performance and financial outcomes.
4. Use evidence to drive clinical conversations
Benchmarking, variation analysis and supplier performance data should be translated into decisions clinicians can act upon.
5. Sustain focus beyond the procurement exercise
Savings are only realised when behavioural change and contract discipline are maintained over time.
The opportunity ahead
The NHS does not need Procurement to win arguments with clinicians. It needs Clinical, Procurement, Finance and Operational leaders to solve the same challenge together: how to protect and improve care while releasing recurrent value from non-pay expenditure.
The organisations that succeed will not necessarily be those with the largest procurement teams or the most aggressive sourcing strategies. They will be the organisations that build commercial discipline into clinical decision-making, create clear accountability for value and develop the capability to sustain change over time.
For many NHS providers, that represents one of the largest remaining opportunities to improve financial performance without compromising patient care.The opportunity is significant. The question is whether organisations are structured to capture it.
