Can procurement unlock value-based healthcare?

  • Posted on 02.03.2020

Can procurement unlock value-based healthcare?


Hans Bax

Senior Advisor MEAT Value-Based Procurement


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 the hospital’s ‘hidden factory’ of treatment complications, errors, patient insecurity and other inefficiencies. 

Traditionally, the focus of procurement is on driving down the purchase prices of medical devices and drugs. However, it has become clear that procurement can have a much greater impact on healthcare delivery by shifting the focus to the other 70-80% of total expenditure. 

By purchasing innovative technologies that reduce the total cost of care delivery, procurers can make the healthcare process itself more efficient, thus improving the overall outcomes of healthcare delivered, including the long-term effects on patients – and the long-term burden on health systems. 

To make this happen, we need brave men and women to take a bold step forward.

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