Value-based procurement: a users’ guide to improving outcomes and delivering efficiencies in the UK

  • Posted on 23.05.2018

Value-based procurement: a users’ guide to improving outcomes and delivering efficiencies in the UK

BM 2018

Brian Mangan FCIPS MSc

Deputy Director NHS NW Procurement Development


This blog is part 9 of a series on the MEAT value-based procurement project, an initiative that advocates towards a shift from price-based procurement 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 1part 2part 3part 4part 5part 6part 7 and part 8.

Health systems across the globe are faced with unprecedented challenges. Demand and patient expectations are rising while financial resources are diminishing. To respond to these trends, we need a new approach to how we manage healthcare.

At NHS North West Procurement Development, we have been looking at how rethinking procurement can deliver better outcomes for patients, increased savings opportunities, and wider operational efficiencies.

We began exploring the principles and practices of ‘Value Based Procurement’ (VBP) in 2014. By working with the University of Liverpool and engaging with a wide range of stakeholders – including ICHOM, legal experts, suppliers and MedTech Europe – we have studied how VBP can work in practice and the changes needed to make it commonplace.

New framework for change

To move this process to the next stage, we have published a 30-page guide setting out the rational for embracing VBP, providing a framework for delivering change, and setting our vision for the future.

We want this to inform the work of procurement officials and suppliers alike, to inspire health professionals, patients, policymakers and others to change how they think about preparing our health system for the future.

Hospitals are busy places and there is rarely time to take a breath and consider reforming the system. That’s why we have aimed to make the new guide clear, concise and provide worked examples of what VBP looks like.

Whole life costing

One of the core messages is that we need to consider the full patient pathway and look at whole life costs when making purchasing decisions. Awarding contracts based on cost alone is no longer good enough: we have to consider the overall impact on the budget, on staff – and, of course, on patients.

Consider pneumothorax treatment devices. We have worked with a supplier of these products to understand the role the device plays in the patient pathway. This has allowed us to identify changes to how we use the product, leading to potential reduced patient admissions and savings around £1,628 per case.

Similarly, an illustrative analysis of tenders for total knee replacement products proposes that making short-term savings of between £50 and £150 can be a false economy in cases where the more expensive products require less theatre time or have a demonstrable impact on reduced length. By looking at the total cost of care we can determine which product will deliver the best value.

In audiology services, we have found that savings can be unlocked by choosing products that reduce the number of outpatient clinic visits patients that must make – thus saving staff time and reducing the burden on patients.

The road ahead

If we only focus on short-term, margin reductions, procurers potentially risk losing those suppliers that invest in product and service innovation to improve the value and overall cost of health services. Suppliers must work actively to engender trust, transparency and partnership working – which is key to the delivery of VBP.

Much work remains to be done before VBP becomes the norm. Procurement teams need legal, academic and technical support, as well as buy-in from people around them. Systems that allow the capture and analysis of real-time data will be essential turning the theory of VBP into practice.

We envisage all stakeholders in health systems across the world working together towards the achievement of value – that is achieving the outcomes that matter to people at the lowest possible cost. Procurement is a central part of this. Suppliers of products and services will need to demonstrate how their products and services improve value.

By working together we can reach our shared goals of a more efficiency, sustainable value-driven health service.

To receive a copy of the guide to value-based public procurement, contact NHS North West: <[email protected]>

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.

The comments are closed.