Why medical procurement needs a value-based overhaul

By April Lara

June 26, 2024

Medical procurement today

A recent study by Aalto University and other institutions raises a troubling trend: managers tasked with medical device procurement prioritise short-term cost savings over long-term benefits for patients.

The study presented managers and healthcare professionals with a hypothetical scenario: choosing between two pacemakers - a cheaper basic model and a more expensive one with features that reduce infection risk.

The results revealed that purchasing managers, incentivised by cost savings, were more likely to choose the cheaper option, even though it lacked long-term benefits.

Cheaper devices might lead to higher infection rates, requiring additional treatment and potentially increasing overall costs in the long run.

Beyond the price tags

The study delves deeper than simply price comparisons. The researchers found that presenting medical evidence on the benefits of the more expensive pacemaker had little impact on purchasing managers’ decisions. Therefore, this suggests current methods of presenting such evidence might be ineffective.

While existing literature emphasises the importance of medical evidence in decision-making, the study suggests a disconnect in practice. Managers may lack the training or tools to properly interpret this evidence, leading to decisions that prioritise short-term cost savings over long-term patient well-being.

There is also the potential role of individual biases in decision-making as managers might struggle with “bounded rationality,” which means they lack the resources or ability to fully evaluate all the complex information involved.

On the other hand, medical professionals might rely heavily on their own experiences, which can be subjective and not representative of broader data.

Addressing the challenges

The findings call for a multi-pronged approach to improve healthcare procurement. Upskilling procurement managers on medical evidence analysis is vital.

Last month, Lee Jackson, the managing director of North West London procurement services emphasised the importance of enhancing NHS procurement processes at a system level by ensuring accurate data is captured from the outset. He mentioned that good data will equip procurement teams to make evidence-based decisions that optimise every pound spend's value and allow for a strategic approach.

The study also highlights the challenges of implementing value-based procurement (VBP). The good news is that initiatives are underway to address them.

The NHS Supply Chain is working on a project to consider the practical application of VBP for Category Tower Service Providers, aiming to drive sustainable savings and improve patient outcomes.

Additionally, the government's MedTech Directorate, in collaboration with NHS England, is creating a consistent methodology for adopting VBP at local and national levels. This initiative, developed in April 2021, aligns with the NHS Long Term Plan's commitment to integrating MedTech and diagnostic technologies across healthcare services.

The study serves as a springboard for a larger conversation about the need for VBP in healthcare. By addressing the challenges and fostering collaboration among all stakeholders, the healthcare system can move towards a future where value, not just price, drives procurement decisions. This shift will ultimately lead to better patient care while optimising resource allocation.

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