Health systems should buy better

Few of us think much about how hospitals and other health care organizations buy the products used to provide patient care – everything from MRI machines to bandages.

Recently, however, policy makers at the federal and provincial levels have started taking an interest in how we buy – or procure – in the health sector, suggesting a need to reform these systems to ensure the adoption of innovations and support “economic prosperity.”

As a health policy professor who has spent time studying procurement arrangements across several Canadian provinces, I see numerous opportunities to improve procurement in the health care sector. Unfortunately, it’s not clear that the reforms proposed by the federal and provincial governments will fix what’s broken.

Governments have been pushing procurement to produce savings in the health sector since at least the mid-1990s, with steady moves to aggregate spending through joint buying groups across and within provinces and territories. While bulk purchasing can be useful, the buying culture that’s emerged has prioritized upfront costs above other considerations.

Lately, however, industry representatives and clinicians have been pushing back on the focus on purchasing price in some areas. Both in Canada and internationally, the focus for offerings like medical devices and ehealth technologies is increasingly on forwarding “innovation” and “strategic procurement.” Unfortunately, it’s business-as-usual for everything else – meaning that hospitals continue to emphasize low upfront costs when it comes to everyday items like bed linens.

Consider the lowly diaper, which no one would consider a health “innovation.” And yet when I asked a patient advocate about procurement recently, “diapers” was the item she cared about. In my research, I have found that for products like diapers, health care organizations tend to buy the ones that offer the lowest upfront cost while meeting minimum requirements.

But saving on upfront costs doesn’t mean saving on costs – a cheap diaper may cost more because of the labour required to change patients more frequently or to change and wash bed linen in the event of leakage. As well, paying higher costs on such “lowly” items could lead to better patient outcomes – a more comfortable and better fitting diaper may encourage patients to be more mobile and socially active. Reformed procurement systems should take into account not just the upfront cost of an item but its long-term value, whether novel and innovative, or old and ordinary.

Another problem with current procurement reform efforts is their narrow focus on economic benefits. It makes sense to consider how investments in health systems – which now take nearly 50% of provincial budgets – can contribute to local industries, but why stop there? Leading health systems like Kaiser Permanente have implemented environmentally preferable purchasing programs – buying products with fewer negative impacts on the environment or human health. This should be a natural for the health sector, given its massive environmental footprint. Another natural interest should be human rights and ethical procurement. The British Medical Association has been active in supporting “fair medical trade.” And spurred by the efforts of a committed surgeon, the English NHS began to require that suppliers actively manage labour standards for products where the risks of worker abuse and child labour are significant, beginning with surgical instruments. Reformed procurement systems – described in various guides – should support markets that not only provide opportunities for economic development, but also demand fair labour practices and ensure low carbon.

The health care sector should stop focussing on products that are cheap and instead focus on products that bring value – inside and outside health care. Value can come in the form of better outcomes, reduced nursing requirements or increased patient satisfaction. Value might also come from providing a home market for Canadian firms and supporting the development of a vibrant health products industry. Value should also come from combating slavery and environmental degradation.

The truth is, procurement has long been seen as a “back office” support function, whose value lies in reducing costs so that money may be redirected to “front line” care. As well, procurement by governments and within the broader public sector is highly regulated to conform with the rules of trade law and policy. Intra-national trade agreements, provincial legislation and directives, and court judgments uphold rules whose purpose is to make public sector buying opportunities open to global companies, not to make them responsive to local needs. For example, international trade laws mean that Canadian hospitals aren’t permitted to favour Canadian companies.

There are significant problems to be overcome before health care procurement can live up to its potential. The health sector will have to play a much bigger role in policy debates about the legal framework that governs public sector purchasing. Legislation may need to change, and buying arrangements be reformed. But one of the biggest challenges may be just thinking differently about what procurement is actually for. To paraphrase the UK Sustainable Procurement Task Force, “too often the business side of healthcare – the purchasing, the employment, fails to reflect the policy goals of healthcare. The result – a sector that misses opportunities to do more to lead by example to achieve its own policy goals.” We need to start seeing procurement in health care not as simply buying products, but as buying health – healthy environments, healthy economies and healthy people.