NHS buying IT goods at up to nine times cost price

Report from KnowledgeBus says margins NHS and other organisations paying for their tech a 'cause for concern'

The NHS has paid up to nine times above the cost price for IT equipment, a new report from industry benchmarking group KnowledgeBus has found.

The report - IT margins benchmarking study 2015 - analysed the margins 250 organisations paid in 2014, and found the NHS paid the highest margin of any organisation with it buying one IT product 920 per cent higher than the cost price.

KnowledgeBus said these buying prices are a "clear cause for concern", and noted the Society of IT Managers (SOCITM) saying margins should not be above three per cent of the trade price.

Other organisations found to be paying way over the trade cost included one unnamed charity, which paid 850 per cent mark-up, and housing associations at 711 per cent.

Al Nagar, head of benchmarking at KnowledgeBus, said: "The size of some of the margins is a concern. In all likelihood these will be products that fall below the scrutiny radar - the one-off or low volume purchases, which may be a distress item or spontaneous buy. They may also be smaller items like extension cables, USB flash drives and SD cards.

"The scrutiny of spending on these items cannot be neglected, however, as they often make up a larger than expected percentage of the budget - in some cases as high as 25 per cent."

The report did however find the average margin paid by the organisations it surveyed was lower than the previous year at 19.7 per cent, down from 21.1 per cent in 2013.

"A slight drop in margins across the board suggests that organisations are getting better at scrutinising their IT purchases," Nagar added.