The UK's largest private hospitals group has begun rolling out enterprise resource planning software for testing in a bid to become efficient enough to compete for NHS business under the tariffs on offer.
Nuffield Hospitals, which runs 43 hospitals across the UK, needs to cut costs throughout its operations to make it sufficiently cost effective to bid for the NHS work, which is being offered at rates lower than those paid by private medical insurers.
Three Nuffield hospitals are due to begin testing Lawson Financial's ERP system as well as content management modules from software supplier Version One by the end of the month. Testing will continue until the end of the year before going live in January. Nuffield's other 40 hospitals will go live in clusters of two or three in the first half of next year.
Chris Cook, Nuffield Hospitals' IT director, said the period of extended testing was needed to ensure that the business processes were configured correctly.
Cook said the combination of Lawson Financials and Version One was chosen in part because it had a proven track record, with 300 hospital groups in the US using both applications.
He said once the system went live it would pay for itself within three years through efficiency savings and by opening the door to NHS business.
With goods and services accounting for about 40% of costs, Nuffield believes using Lawson Financials to create a central procurement function should quickly lead to savings.
Matt Oxley, Nuffield Hospitals' associate director of procurement and property, said, "We realised we had massive opportunities to improve our supply chain because we were effectively buying through 43 different business units.
"Our procurement processes were identified early on as highly inefficient from a headcount and a time perspective, and they were not giving us the control we needed to buy group deals."
Currently Nuffield hospitals hold an average of 60 days' worth of stock, with the least efficient hospitals holding 90 days of stock. By making procurement a central function, the stock held in hospitals should be reduced to 30 days.
Nuffield estimates that the stock held in its hospitals is worth £8m. By reducing its inactive inventory, the hospitals group will make smaller interest payments on the money it borrows to buy stock.