New report shows that better State procurement of medical devices could improve patients’ lives and reduce healthcare spending.

28^th June 2012

A new report outlining the current deficiencies in the current health procurement system for medical devices was launched today by John Perry, TD, Minister for Small Business. The report “A Review of Current Procurement Practices in Ireland” on medical devices, said that focusing on price reductions only led to poorer health outcomes for patients. It also stifled knowledge and development of new technologies in the market, and sacrificed long-term gains for patients, health professionals and healthcare facilities in return for short-term reductions in price.

The report was commissioned by the med-tech supply association, IMSTA, in partnership with Enterprise Ireland to carry out a review of current procurement practices for medical supplies/technologies.

Launching the report, Minister Perry said that:

"The Government, and my Department in particular, is committed to helping businesses in Ireland to grow, sustain jobs, and help them to compete by removing unnecessary bureaucracy, making procurement systems more efficient and effective, so that the Irish taxpayer gets the best value for money, and in the case of healthcare patients, the best outcomes for their quality of life. This review is timely in that we are seeking ways for the public sector to better engage with companies offering innovative solutions to problems rather than being prescriptive about how to solve those problems ourselves”

Alan Markey, chief executive of Baxter Healthcare, and the newly-appointed chairman of IMSTA, said that there are substantial opportunities for Government to engage with the med-tech sector to generate real cost-savings, and make better use of medical technology for improved patient healthcare.

“IMSTA has indicated previously to Government that working with our sector, over €200m a year in real savings could be achieved within healthcare expenditure. And that could happen over the next four years with a potential €800m-€900m positive impact for the national budget. Equally, the consequent health benefits for patients who can avail of this kind of technology are incalculable, but easy to see and experience in people’s day-to-day lives. This report is timely and I hope that it can be used as a stimulus for a wider and deeper engagement between the policy makers, the procurement professionals and the medical device industry in Ireland.”

Dr. Paul Davis of Dublin City University, the author of the report said that:

“The research revealed that procurement within the public sector is seen more as a traditional tendering role rather than a set of activities that can contribute more than the tender itself. In many cases, engagement with suppliers either through pre-market engagement or through on-going contract evaluation does not take place.

Research shows that centralised state procurement of medical technology can lead to a stifling of innovation and a reduction in competition and does not allow for local needs in relation to specific patients.”

The key recommendations of the Review were that:

• The use of most economically advantageous tender as a criteria should promote technical expertise or technology improvements in assessments, not just price
• Specialist procurement skills or advisers such as clinicians or biomedical engineers are required for specialist products
• Training should be provided to current procurement personnel
• Value for money mechanisms should be modified to take into account other evaluation criteria
• Tendering process should be simplified to encourage greater participation of domestic, indigenous companies
• Create a central database for suppliers to enter information and reduce paperwork
• Greater engagement between industry and health procurers should be encouraged
• Current Group Purchasing Organisations arrangements should be reviewed to see if best value for money is being achieved around medical device purchasing.
• A national database of standards should be made available to all procurement agencies
• Global standards should be adopted so that different operators within the healthcare system from public and private sectors operate to a common recognised standard.
• Total Cost of Ownership should be developed in conjunction with industry to be used as an award criterion. This would allow longer-term considerations to be part of the assessment and decision-making.
• Collaborative procurement should be encouraged involving both public and private sectors, and across jurisdictions where value for money is a priority.
• Decentralised or strategic procurement should be developed around patient outcomes
• Procurement should be involved in the early stages of health technology assessments (HTAs)
• HIQA health technology assessment guidelines should be updated to include a direct role for procurement

The DCU review highlighted that national procurement in Ireland was moving towards framework agreements (a system of pre-selecting bidders) and focusing primarily on price. International research findings showed that this approach can result in a failure to reduce total healthcare costs.

The approach to deal primarily with the tactical issues of price and delivery meant any investment in strategic activities to focus on total healthcare costs was being ignored.

Ireland is still struggling to move procurement to a strategic activity that encompasses new methodologies such as commissioning. In countries such as the UK this model has been widely adopted, whilst in Ireland it is still in its infancy.

The review found that Health Technology Assessments have little or no involvement of the procurement function. Currently there is not even a formal review process of existing HTAs on medical devices to realise the cost benefits available.

It recommended that where the procurement takes a lead on the purchase of medical technology, it is just as critical that clinical and biomedical engineering input be obtained for evaluation and subsequent procurement.

There is a growing use of standards across Europe and procurement professionals need to understand and have access to these. It is critical that a national access point be set up for the sharing of these standards with procurement.

Consultation with industry can drive a better understanding of the market, which leads to increased access/utilization of innovation and more cost effective solutions to key healthcare issues. Consultation with industry also will ensure that procurement professionals are up to date with current standards and practices in this fast developing field.

To avoid over-concentration on price-led procurement, the review recommends that the public sector work more closely with industry to develop total cost of ownership models. Public procurement should enable market access for local indigenous companies and SMEs, both manufacturers/developers and suppliers.

ENDS

Further information contact:

Aileen Gaskin 087 7724 717