Healthcare quality and efficiency support team: annual report 2013

Annual report in relation to improving the quality and efficiency of healthcare in Scotland.


NHS National Services Scotland: Modernisation of Home Oxygen Service


In August 2011, NHS Chief Executives approved a plan to integrate Community Pharmacy cylinder oxygen services with the oxygen concentrator service provided centrally by NHS National Services Scotland (NSS). A home oxygen service project steering board (HOSPSB) was set up to oversee the project. The transition was phased for completion by March 2013.


The combined costs of the cylinder and concentrator services were rising at a rate and to a level which the Scottish Government believed would benefit from a fundamental review. Short-term Scottish Government support was agreed but the position clearly had to be addressed.

There was also a clinical concern, whereby it was suspected that many patients were using short burst oxygen therapy for considerable periods of time without adequate follow-up to ensure clinical effectiveness. Also, some patients were using large quantities of static and portable cylinders at considerable expense and may have been better served by another method of supply, such as a concentrator or Homefill system. Some patients were using oxygen who did not need it.


The clinical aim was to ensure that patients would be assessed and placed on the most appropriate oxygen system for their needs and their oxygen needs served more appropriately.

The financial aim was to reduce the cost of the services being provided through better understanding and subsequent delivery of individual patient needs. Additionally, the VAT treatment of the service provided an opportunity to significantly reduce costs so this required review by HMRC.

Action Taken

A programme of patient assessments was carried out, with 3,000 patients being reviewed to ascertain as to whether an oxygen concentrator could be provided, rather than the patient relying on oxygen cylinders. Patients who require portable oxygen were assessed to see if a Homefill concentrator would be appropriate. These concentrators allow patients to fill portable cylinders at home, supporting patient mobility and allowing greater independence.

The cost for doing so is about £2.70 per day, less than 10 per cent of the cost of providing oxygen cylinders, which cost £30 and last only four hours.

Additionally, the contract with Dolby to support provision was renegotiated, resulting in reduced service costs.

Finally, as Community Pharmacies were able to reclaim VAT on their supply from BOC, a case was successfully put to HMRC and this has resulted in VAT now being zero-rated and resultant annual savings of about £1.1 million. As oxygen and oxygen equipment is supplied to some community hospitals and other NHS premises as a general supply, rather than to named patients, HMRC are reviewing whether VAT should apply to this part of the service but it accounts for less than 5 per cent of the total so the risk is modest.


The benefits are clear to the patient. Portable cylinders allow much greater mobility for patients, being able to refill at home rather than be dependent on new cylinders being supplied. Homefill patients are afforded greater independence and can now manage their own oxygen supplies.

A wider range of equipment is now available, including oxygen conservers, which allow cylinder oxygen to last longer, increasing the time available outside the home for some patients.

Patient satisfaction levels are being monitored and results for all patients and for cylinder oxygen patients specifically, show that about two thirds are very satisfied, with the remainder fairly satisfied - no patients voicing levels of dissatisfaction.

Efficiency Savings and Productive Gains

The new process clearly delivers significant efficiencies with the patient having much more control over their needs, reducing their dependency on much of the previous supply chain.

Supply costs for Dumfries and Galloway have fallen from £36,000 per month to £24,000 per month - a saving of 33 per cent and similar savings may well be replicated elsewhere, the position is being monitored as revised costs become available.

The total cost of the service for 2011-12 was £9.9 million, reducing to £8.2 million for 2012-13. The reduced costs include efficiency savings of £700,000, resulting from the improved service delivery, with the impact of VAT now being zero-rated saving nearly £1 million.

Costs are expected to fall further, to £7.2 million by 2014-15, by which time all of the benefits should be fully realised. The total reduction in cost from 2012-15 is therefore expected to be about £2.7 million, of which nearly £1.6 million relates to reduced costs directly linked to the new processes, with the balance, of over £1.1 million resulting from VAT relating to the provision of service now being zero-rated.

The £0.6 million efficiency recognised by NSS relates to the VAT saving against the oxygen supplies historically provided through NSS.


The new system will provide visibility of individual patient usage to alert hospitals and so support NHS Boards in providing effective support and in a much more efficient way.

Lessons Learned

NHS Dumfries and Galloway was used to pilot the new system and this helped greatly when being rolled out in other NHS Boards. In particular, implementation was, unsurprisingly, much easier to deliver to the smaller NHS Boards so the programme was revisited, with smaller NHS Boards being addressed first.

As a result of the lessons learned, NHS Greater Glasgow and Clyde was placed last in the programme along with NHS Highland as it became clear that there were particular challenges posed by the remote and rural communities.


Email: Dayna Askew

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