VBP

In recent years, there has been increasing attention on how we can address the biggest challenges in healthcare: variation in patient outcomes, unsustainable cost increases, and low-value care. As populations age and the rates of chronic diseases rise, we have no choice but to rethink how we get value from healthcare spending. In January, MedTech Europe and the Boston Consulting Group published their joint report ‘How Procurement unlocks Value-Based Healthcare’ on the current state of play regarding Value-Based Procurement (VBP) in Europe. VBP focuses not only on the price of a particular product or service but also on the overall value it can create. This should consider the value to patients (improved outcomes), value to payers (reduced total cost of care), and to health workers and healthcare providers (more efficient use of time and expertise). By taking a value-based approach, procurement can become an important lever for improving the quality of care while supporting the financial sustainability of healthcare systems. Wanted: bold action The MedTech Europe/BCG report points to growing momentum across Europe, with VBP being successfully implemented by several leading healthcare providers. There are encouraging examples of medical technologies being procured using the key principles of VBP. Organisations are establishing multidisciplinary teams that are motivated to find the best solution – not just the product with the lowest purchase price. Despite these encouraging words, VBP is not yet generally applied across Europe and the report points to several critical actions that need to be taken. Eliminating the true ‘root cause’ of unsustainable healthcare costs requires a paradigm shift in procurement. Hospital expenditure on medical devices and medicines amounts to approximately 20-30% of total expenditure, leaving 70-80% to other expenses. These involve mainly the cost of hospital staff to provide the ‘core’ care delivery services, but also the cost of...
Public procurement was established as a way of purchasing products that hospitals need. However, this one-dimensional view of procurement is changing very quickly. From humble beginnings as an obscure back-office function, I am pleased to say procurement is fast becoming a high-impact strategic partner for hospitals. What’s behind this shift? Traditionally, product price has been the key feature of a successful procurement process. A good price is important, but there are other elements to consider. The use of the most economically advantageous tender (MEAT) criteria offers scope to include quality and functionality of products and services. Of course, using criteria other than price increases the complexity of the tender, both for the customer as well as the supplier. So, is it worth it? At European Health Public Procurement Alliance (EHPPA), we believe the answer is ‘yes’. In my opinion focusing on price alone can obscure important value drivers. For instance, if you buy surgical gloves, and the focus is solely on price, you will get the lowest cost gloves. But is that a good deal for the hospital? It is not unreasonable to suggest that lower price means lower quality. If that means having to throw away gloves because they cannot be used, the cost of this should be part of the calculation. Using the MEAT criteria, quality can be calculated and incorporated into the decision on which glove to choose. Value-based procurement (VBP) goes one step further than MEAT. VBP is based on the idea that tenders should be evaluated based on what matters to patients. The introduction of VBP is a key priority of the EHPPA alliance. We would argue that this is also what matters to hospitals. This approach is rather difficult to apply if the starting point focuses on a particular product. VBP only works if...
To my mind, the overarching challenge of modern healthcare systems is to increase the value and outcomes of care, not just to control costs. As someone keenly interested in procurement, this leads me to question what it all means for how health systems buy the technologies they need. In a competitive healthcare system, like the Netherlands, healthcare provider organisations are increasingly establishing organisational strategies with clear objectives. By applying value-based procurement (VBP), which puts the primary focus on improving patient outcome, procurement systems are tasked with selecting the one(s) out of many medical devices available on the market (or to be developed) that contribute the most to the improvement of these outcomes. Identifying the outcome advantages to the stakeholders involved and finding the corresponding proof is crucial – but at the same time, very challenging – for procurement to do. Prescribing desired outcome levels, collecting outcome data and various indicators involve a lot of precious time and increase transaction costs. And of course, quite often there is a simple lack of consensus on valid and standardised measurement of ECO (economic, clinical & operational) outcomes. I believe that taking a best value approach, thus giving suppliers a proactive role in procurement, may help advance our field and deliver on the shared goal of improving outcomes. First, it is up to procurement professionals and provider organisations to determine together what outcome they wish to achieve or improve through the purchase of a specific product or solution. This could include reduced mortality, length of stay, improved patient satisfaction or increased staff efficiency, for example. Reaching out to the supplier market may also be of help here. Ideally, these objectives should be well alignedto the healthcare provider’s overarching strategic goals. Next, suppliers should be asked to submit their proposals and to identify how their...
VBP blog series
The essence of travelling, either by foot, train or plane, is replacing one's existing location for another more desired or needed one. But why do we do it? Sometimes it's the appeal of a new destination – perhaps a ski resort or a tropical island. On other occasions, the decision to move away is driven by a realisation that the current location is no longer sustainable. In healthcare, there is an emerging sense of urgency that it's time to move. You'll be familiar with the reasons: increasing demand for health care services, rising healthcare expenditure and unwanted outcome variations among healthcare provider organisations have put most European healthcare systems under pressure. I've been exploring the potential role of procurement in accelerating our journey to a better place. Traditionally, the focus of procurement was buying those products and services needed at the lowest price possible. Indeed, in some EU member states this is still common practise. However, with the transposition of the 2014 European public procurement directive into national law by all 28 EU member states, we now observe a trend of procurement slowly, but surely, selecting medtech products based on a consideration of both price and (product-) quality. Price as the sole factor influencing the buying process is a thing of the past; quality is taking its place. On average, 42% of medtech procurement processes included quality criteria in 2016. France, UK, Ireland and the Netherlands are leading the way with more than 80% of their awarded tenders based on quality versus cost. In addition, this value for money equation is legally the preferred awarding criterion in a limited number of EU member states already, such as the Netherlands and Finland. I see an even more encouraging trend: the application of pre-tender consultations, the use of competitive dialogue tender procedure...