Big picture thinking can save money

  • Posted on 03.02.2016

Big picture thinking can save money

Kjetil Istad_pres

Kjetil Istad

Director Sykehusinnkjøp HF, Norway & Vice-president EHPPA


This blog is part 3 of a series on the MEAT value-based procurement project, an initiative that advocates towards a shift from price-based procurement of medical technology towards value-based procurement. It does so by defining a Most Economically Advantageous Tendering (MEAT) framework that includes the value of medical technologies, services and solutions in procurement processes across Europe. Read part 1 and part 2. If you would like to contribute please contact the MedTech Views editorial team at [email protected].

As a public procurement professional, I have witnessed some welcome changes in how we select products for the public health service. However, to maximise the value we get from public spending, we must accelerate this shift in approach.

It is futile to talk about innovation and change in the public sector without rethinking procurement. Leaders in the field of procurement must stand up and embrace change in our own processes, in how we approach the market – and in how we think.

We need to put more focus on the effect of what we purchase rather than the cost of the items themselves – instead of buying inputs we should focus on buying outcomes.

In Norway, we have an agreement with the medtech industry which allows us to test equipment as part of the tender process. This gives us an opportunity to see whether the product solves our problem and to observe how users – doctors, nurses and sometimes patients – view it.

For example, when we ran a tender to purchase intravenous (IV) catheters we gave health professionals a chance to use it and sought feedback from patients.

During this two-month testing period, we found that the cheapest catheter was not as sharp or flexible as the competing product, and health professionals often needed to try more than once to puncture the skin. In some cases, the catheter had to be removed and replaced, costing time and money. The phrase ‘buy cheap, buy twice’ came to mind on these occasions.

The outcome of the tender process, however, was hugely encouraging and showed the value of this approach to the public service. Our scoring method allowed us to see the big picture and helped us to avoid buying a cheap product that would cost more in the long run. And, importantly, it improved the quality of the service we provide.

There are other examples but not as many as we would like. We need to overcome the structural and organisational barriers that prevent us from embracing this promising approach to public procurement.

We must work together to build complex and robust Most Economically Advantageous Tendering (MEAT) criteria that can capture the true impact of our decisions. In the example above, patient pain was an important yet small part of the equation. What we should really be looking at is how these products affect the way our hospitals handle patients over a long period of time. For example, does a particular syringe increase the rate of infection, lengthening time spent in hospital or readmission rates? This is where the real economy lies.

Going even further, we could look outside the hospital system and measure how quickly people return to work after hospital discharge, perhaps even taking account of the impact this has on tax revenue and public spending on welfare support. After all, we are dealing with public money and making decisions that affect that public balance sheet in a host of ways.

We have a long way to go. However, 10 years ago it would have been hard to imagine taking patient pain into account when buying IV catheters. Now we have to build on this and move towards a more holistic approach to decision-making.

We know change is possible because it is already happening.

Value in MEAT procurement

Healthcare procurement often focuses only on the purchase price. This fails to address the needs of other stakeholders such as patients, providers, health systems and society as a whole. It also clouds the true cost of care and does not account for the economic value of health and care.

The MEAT value-based procurement framework places at its core the outcomes that matter to patients, quality and further benefits for providers, health systems and society.

By choosing MEAT value based procurement instead of selecting the product with the lowest up-front cost, procurement authorities can factor the real value of a product into their decision-making and obtain the most economically advantageous solution.

‘Value’ in European law

The new EU directive on public procurement encourages this smarter, more holistic approach to procurement and innovation.

The MEAT value-based procurement approach can help to break down organisational silos within healthcare institutions, reduce inefficiencies and spur innovation-driven investments.

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