Centralised procurement – a blessing or a curse?

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Centralised procurement of medical technologies is an increasingly prevalent phenomenon in the EU, and one that all stakeholders in this field, whether for or against it, have strong opinions on. Purchasers have embraced centralised procurement as a means to drive down costs. Suppliers fiercely oppose it as it would limit market opportunities and slow down adoption of innovations. Some experts believe that centralised procurement might actually have a negative effect on quality of care in the long run, as it focuses too much on short term cash savings.

Yet, while great expectations as well as fears exist about its impact, centralised procurement is increasingly implemented on various levels (European, national, regional and hospital level). To me as a health scientist and medtech consultant who sort of grew up in the era of evidence based medicine, it is striking to see how little is known about the actual impact of centralised procurement on the health of our European citizens and the health of our medtech companies. Little, if any objective data exists, showing its influence on cost and quality of care, especially in the long run. And also the effects on market opportunities and medtech innovation strength are far from clear-cut.

Therefore, it is such a praiseworthy undertaking of Eucomed to support a study investigating the impact that procurement centralisation may have on the innovation strength of the medical technology sector in the long run.

This study, consisting of a large number of interviews, case study analyses and literature research (performed by Simon-Kucher and Partners, and the University of Twente), is one of the most in-depth and comprehensive studies done in this field. Its main contribution, in my opinion, is that is provides the so needed objective and balanced view on the impact of centralised procurement, in all its forms and complexity. It does so by considering the impact of centralised procurement for a wide variety of medical technologies in different countries and under varying procurement schemes.

This approach inevitably comes with the risk of the study’s results being considered too nuanced for some, while not detailed enough for others. And indeed, one of the main findings of the study is that the impact of centralised procurement depends on factors such as the type of innovation, the number of competitors in the field, clinician influence, and importantly how intelligible or short-sighted the procurement process is. Moving beyond that observation, the study tells us when centralised procurement is indeed a bad thing, for medtech companies and for our citizens’ health; when it is ugly, for its regulatory and administrative burden, yet not harmful nor helpful to anybody.

Finally, and as unsettling as this may be to some, the research also indicates when centralised procurement can actually be a good thing, for containing cost without compromising quality of care. Herewith, this study has gone beyond the surface of centralised procurement, revealing insights in its complex relationship with the health of innovative companies and with sustainable high quality care, which is absolutely necessary to get a better understanding of how to survive in the era of centralised procurement.

– Lotte M.G. Steuten, Assistant Professor, Universiteit Twente