Value Based Procurement: A Supplier’s View
Value Based Procurement: A Supplier’s View
We have been talking a lot about Value-Based Procurement (VBP) from the buyer’s perspective. But what does VBP mean for us, suppliers, and what should we do to implement the concepts of VBP within our organisations? My view is that VBP is a key source of competitive advantage. I see Public Tenders as the sea under a storm. Even if we are good sailors, we cannot control the waves. VBP represents our lighthouse.
Like skilled captains we should know our environment, we should know where dangerous rocks lay and what are the alternative routes to port. The EU Public Procurement Directive introduced the concept of market consultations. This requires contracting authorities to seek input from the market in order to improve procurement. If we want to drive the concept of VBP, we should develop pre-tender strategies to help our customers to implement it. We should take the opportunity to share clear and non-discriminatory value-based messages.
Diligent public procurers will start planning the tender as much as 12 months before the Invitation to Tender (ITT) is issued. To stay ahead of the curve, suppliers should begin executing a key stakeholders’ advocacy strategy at least 14 months before we expect the ITT. When the market consultations are launched, we can formally give our input which, ideally, should be consistent with the messages gathered from clinical and non-clinical stakeholders during the contracting authority’s internal consultation. We must remember that when the ITT is issued the contents cannot be changed anymore.
Value-based messages focus on the needs of patients, users and any other stakeholder that can benefit from our products and services. The list of value criteria in the MEAT-VBP Framework, developed by MedTech Europe in cooperation with BCG and experts from the procurement community, offers good support in selecting the appropriate awarding criteria.
Since becoming involved in VBP, I have worked with multifunctional teams in order to develop product/service-specific pre-tender strategies. I engaged with marketing, medical, and experienced sales professionals from multiple countries in order to gather a wide range of views and examples.
We followed a two-stage process. Using the MedTech BCG VPB tool, we first identified the most relevant criteria for assessing our product. Relevant criteria will potentially have a higher value/weighting in tenders. Then we selected those criteria where we likely had an advantage. Our pre-tender strategy then became clear: maximise the impact of criteria that differentiate our products, minimise the impact of those that penalise them. Of course, that’s easier said than done.
If we want to sell solutions or outcomes instead of products, the complexity of the tender process will increase. Procurers will likely need to compare offers that are different (apples with oranges) and probably their choices will limit the competition to a handful of players with the capacity to comply with more detailed proposals. This will move procurers out of their comfort zone – until now, only 2% of tenders are not open procedures.
French Group Purchasing Organisation UniHa proved this is possible through a great example. They essentially procured outcomes (body temperature along the patient’s pathway) instead of thermal blankets. As suppliers, we should be prepared to feed the procurement process with honest messages, clear direction and robust examples.
This means developing value-based messages that put patients at the centre, help hospitals to measure and improve clinical outcomes, and ultimately decrease long-term costs – improving the economical sustainability of health systems.
The 1st European Value-Based Procurement Conference A new paradigm in Health Care will be held on 12 December 2019 in Brussels. Organised by the Value-Based Procurement Community of Practice (VBP CoP) and supported by EHPPA, EUREGHA and MedTech Europe, this conference will highlight the latest developments to incorporate “value” in decision making and the role of value-based procurement to integrate the value from the perspectives of the different healthcare stakeholders. Learn more here!