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Last Updated: Tuesday, 5 September 2006, 06:58 GMT 07:58 UK
DHL to supply hospital equipment
Stethoscope
Privatisation examples include private firms running GP services
The NHS has struck a deal with German company DHL to privatise the supplying of goods and equipment to hospitals.

From 1 October, DHL - best known for delivering parcels - will supply everything from stationery to bed linen and MRI scanners to English hospitals.

The deal is opposed by trade unions and will see 1,700 NHS employees transferred to the private sector.

More than 22bn of orders over 10 years will be affected. The company says it will save the NHS 1bn in that period.

The contract will be officially announced on Tuesday.

DHL is best known for delivering documents and freight, but has evolved into a company that is also involved in logistics and supply chain work on behalf of organisations across the world.

Its deal with the NHS is one of many contracts it has as part of its DHL Exel logistics division, which was formed in 2005.

Market power

DHL Logistics chief executive John Allan told BBC News quality would not be sacrificed to save money.

Staff across the NHS will be watching this privatisation deal, which will be viewed by many as symbolic of what is to come
Unison

"We are hoping to achieve efficiency benefits in buying for the NHS, which they will be able to feed back into patient care.

"But we will be working very closely with clinical specialists - with doctors, with the trusts - to ensure we procure for them precisely the products they want."

Some critics fear that DHL may opt for cheaper, inferior products and that the company will have excessive market power which could lead to small manufacturers suffering.

But Mr Allan told BBC Radio 4's Today programme the doctors and trusts would decide which clinical products to buy.

"Our job then will be simply to get the best possible price we can for the standard of quality they have specified."

DHL had "set out to ensure" its former NHS employees' terms and conditions - including pensions - would be "protected", Mr Allan said.

Staff will actually be very positive once they see what it is we have to offer
DHL Logistics chief executive John Allan

He added the company planned to create more than 1,000 extra jobs.

The deal is effectively a privatisation of part of NHS Logistics as well as a part of the NHS Purchasing and Supply Agency.

The supplier's former chairman David Hall said it had a good performance history and was not a part of the NHS that "needs tinkering with".

"There are many more important areas that I would have thought would have had the government's attention," he added.

HAVE YOUR SAY
Higher costs for the same level of service
Ian Hearn, Reading

Hundreds of NHS Logistics workers who are members of Unison are already being balloted by their trade union after it was discovered ministers were considering outsourcing the contract.

'Sad day'

The union's head of health, Karen Jennings, said it made "no sense" to break up NHS Logistics.

"This is a very sad day for the NHS," she said.

"Staff across the NHS will be watching this privatisation deal, which will be viewed by many as symbolic of what is to come."

Results of the ballot are due to be announced next week.

The GMB union has said it will support members who want to take industrial action.

Savings promise

The move is the biggest example of what some regard as creeping NHS privatisation.

DHL says it can make savings by reducing the range of products available to hospitals - for example, at the moment hospitals have a choice of 133 different paper staplers to choose from in a catalogue.

Goods and services supplied by DHL will include food, bed linen, cleaning products, surgical and medical equipment and stationery.

Shadow health minister, Stephen O'Brien, said: "By gaining control of the NHS Logistics and most of the NHS Purchasing and Supply Agency, U.S. companies DHL, and its sub contractor Novation, will become responsible for spending 22bn of U.K. taxpayers' money."


VIDEO AND AUDIO NEWS
More on what the deal means for DHL



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