Report finds that some parts of the NHS are wasting money and that cost saving initiatives could save as much as £1.5bn a year.
NHS trusts in England have been told to change the way they buy supplies and manage their estates to reduce procurement costs.
Ministers believe the cuts could save as much as £1.5bn a year.
A report published by the Department of Health found some parts of the NHS are wasting money by buying well-known brands of supplies when cheaper alternatives are available.
A new NHS procurement champion, with private-sector expertise, is to be appointed to push for better practice across the health service.
Hospitals will be required for the first time to publish what they pay for goods and services, and be held accountable for what they spend.
A new “price index” will also allow them to compare the deals they get with those obtained by other healthcare providers.
Launching the cash-saving drive, health minister Dan Poulter said: “The Government is putting an extra £12.7bn into our NHS, but that money needs to be spent much more wisely by local hospitals.
“When our NHS is the single biggest organisation in the UK, hospitals must wake up to the potential to make big savings and radically change the way they buy supplies, goods, services and how they manage their estates.”
Dr Poulter today published a document, entitled Better Procurement, Better Value, Better Care, which found little consistency in the way the NHS spends taxpayers’ money.
The minister – who is a qualified medical doctor – will lead a team drawn from Government, the NHS and business to work with the new procurement champion to provide on-going scrutiny and guidance to the NHS in driving improvements to procurement and productivity.
The NHS will be told to cut its £2.4bn annual bill for temporary staff by 25% by the end of 2016.
And the Department of Health will work directly with NHS suppliers to strike new deals to save money by bulk-buying expensive medical equipment.
Mike Farrar, chief executive of the NHS Confederation, which represents organisations which provide and commission NHS services, said: “Lots of NHS organisations are already doing great work to scrutinise the ways they can reduce the amount they spend on goods and services and plough that money back in to care.
“But many more could be much more efficient if they fully recognised the power of strength in numbers and came together to drive down costs.”