Reforming Public Health Procurement of Medical Technology Position Paper December 2010

Transcription

1 Refrming Public Health Prcurement f Medical Technlgy Psitin Paper December 2010 Medical Technlgy Assciatin f Australia Limited Level 12, 54 Miller Street Nrth Sydney NSW 2066 Australia P: (02) E: receptin@mtaa.rg.au 1

2 Cpyright 2010 Medical Technlgy Assciatin f Australia Limited (MTAA) T the extent permitted by law, all rights are reserved and n part f this publicatin cvered by cpyright may be reprduced r cpied in any frm r by any means except with the written permissin f MTAA Limited. 2

3 Table f Cntents 1. Executive Summary Abut the Medical Technlgy industry Public health system prcurement Past attempts at refrm Health prcurement in ther cuntries Prpsals fr refrm Natinal alignment f public prcurement fr medical technlgy Gvernance arrangements fr public prcurement fr medical technlgy Achieving best practice in public prcurement fr medical technlgy Skills develpment in health prcurement

4 1. Executive Summary The Medical Technlgy Assciatin f Australia (MTAA) has develped this psitin paper t prpse refrms t the prcurement f medical prducts and medical technlgies in the public health system. MTAA member cmpanies supply mst f the prducts used by public hspitals and clinics. The suppliers bserve many instances where unnecessary csts are incurred by the custmers as a result f inefficient and duplicative prcesses, r as a result f a shift in the equity balance between custmer and supplier. This psitin paper prpses several areas fr refrm. These are: Natinal alignment f prcesses fr public prcurement f medical technlgy thrugh the use f standardized terms and cnditins and remval f duplicative requirements Imprved gvernance arrangements fr public prcurement fr medical technlgy t ensure the maintenance f discipline and transparency in the prcurement prcess Mechanisms t achieve best practice in public prcurement fr medical technlgy Supprt fr skills develpment f health prcurement fficials. MTAA members have seen previus effrts at refrm develp strng framewrks which are then nt implemented. MTAA seeks t wrk with the States and their purchasing units t address the issues identified by suppliers. Simplificatin and standardizatin f the prcurement f medical prducts and technlgies will help t address the increasing pressure n health budgets. 2. Abut the Medical Technlgy industry MTAA represents the manufacturers, exprters, imprters and distributrs f medical technlgy prducts in Australia. Medical technlgies are prducts used in the diagnsis, preventin, treatment and management f disease and disability. Medical technlgy includes a very diverse range f prducts including: Cnsumable items such as surgical gwns, drapes, bandages and syringes Operating theatre equipment such as lights, beds Implantable devices such as cardiac and rthpaedic devices, cchlear implants, intracular lenses Equipment t supprt remte mnitring f patients Diagnstic imaging equipment such as ultrasund, cmputed tmgraphy (CT), magnetic resnance imaging (MRI), and psitrn emissin tmgraphy (PET) machines. Many newer prducts cmbine bilgical prducts with bimechanical devices, and emply cnverging technlgies. Sales f medical technlgy in Australia in 2008/2009 were $7.4 billin, with $1.6 billin earned frm exprts f medical technlgy manufactured in Australia. Apprximately 80 per cent f the medical technlgy prducts used in Australia are imprted and nearly all f the prducts manufactured in Australia are exprted. The 4

5 industry emplys ver 17,500 peple. It is a highly innvative industry which invests heavily in research and develpment. 3. Public health system prcurement Public sectr purchasing f medical devices is largely cnducted at a state level t prvide fr the public hspital system currently under state cntrl. Differences in state purchasing agency structures and practices cntribute t inefficiencies in prcurement practices which result in a financial burden t bth the purchasers and suppliers f medical devices. Fr several years MTAA has negtiated with State health departments n an individual basis as tendering and cntracting issues have arisen. These have ranged frm insurance cver requirements t nn-cnfrmity because f incrrect ISO cmpliance (medical technlgy manufacturers are required t meet ISO13485 rather than ISO 9001). There are many instances where the prcurement arrangements are nt tailred fr medical technlgies. Medical technlgies cmprise apprximately 5% f expenditure within the healthcare system. Cnsequently reductin in expenditure n medical technlgy ffers nly limited ptential t cntain ttal expenditure 1. Savings are nt generated frm cst cntainment and restrictin n availability f prducts, but rather thrugh peratinal savings, including the cst f prcurement. Cst savings can als be generated thrugh a whle f system apprach. Fr example, the cmbinatin f preventative health measures with earlier diagnsis and interventin in cnjunctin with primary care and utpatients clinics, and remte mnitring f patients in their hmes, will reduce the need fr mre cstly hspitalizatin. MTAA strngly advcates fr imprvement in prcesses t achieve benefits in public health prcurement. These benefits can be translated t savings in healthcare expenditure. A recent OECD plicy nte 2 pints ut that public spending n health care is ne f the largest gvernment spending items, n average absrbing 15% f general gvernment spending in 2007 (mre than 6% f GDP n average), up frm 12% in The OECD prjects that public health spending culd increase by 3.5 t 6 percentage pints f GDP by 2050 acrss the OECD cuntries. By imprving the efficiency f the health care system, public spending savings culd apprach 2% f GDP n average in the OECD 3. The OECD paper suggests that, in Australia as with a few ther OECD cuntries, assigning respnsibility acrss gvernment levels and/r agencies in a mre cnsistent manner wuld lead t less duplicatin and/r better accuntability Past attempts at refrm There have been several previus attempts at refrm f prcurement f medical technlgies in the public health system. Hwever there has been a failure t fllw 1 LEK Cnsulting Best Practices in Medical Device Prcurement A Rad Map t System Success, a research paper prepared fr Medtrnic Internatinal Organisatin fr Ecnmic C-peratin and Develpment 2010, Health care systems: Getting Mre Value fr Mney, OECD Ecnmics Department Plicy Ntes N.2 3 Ibid page 3 4 Ibid page 8 5

6 thrugh frm the reviews which recmmend refrms and implement the recmmendatins. The fllwing is a summary f previus effrts DASH Reprt by PWC, cntains estimated savings and recmmendatins fr supply chain practices. NHIMAC (Health Online) established the Natinal Supply Chain Refrm Task Frce (NSCRTF) t supprt jint planning by gvernments, hspitals, purchasing agencies and suppliers. Its wrk included e-cmmerce and standard cntract terms. NSCRTF was discntinued when NEHTA was frmed and viewed as the mst apprpriate agency t cntinue the wrk. NEHTA s wrk in the health supply chain has fcused n: Uptake f the Natinal Prduct Catalgue (NPC) eprcurement standards in cnjunctin with Standards Australia and GS1. While the cncept f the NPC as a single surce f data fr suppliers t ppulate is supprted by MTAA, the implementatin has resulted in a far larger number f fields than initially required and an undesirable financial burden n suppliers. It has als created a barrier fr smaller suppliers. The eprcurement ptins being implemented by sme states (eg. WA - fully available, NSW - slwly building) are welcme, but have nt yet been widely adpted. There is currently n bdy t address the incnsistencies and inefficiencies acrss state public health prcurement practices utside f the ehealth issues under NEHTA. 5. Health prcurement in ther cuntries The New Zealand public health system is under cnsiderable financial pressure. The public health system is respnsible fr 75% f the medical technlgy purchased in New Zealand. Annual expenditure n health has been increasing at an annual rate f 6-10% ver the past 10 years. New Zealand has had a significant refrm prgram underway, utlined in the Ministerial Review Grup reprt cmmissined by the Minister fr Health and released in August Amngst the recmmendatins are the centralizatin f shared services, centralizatin f natinal prcurement, and the intrductin f a health technlgy assessment system in New Zealand. 5 Murray Hrn, Meeting the challenge: enhancing sustainability and the patient and cnsumer experience within the current legislative framewrk fr health and disability service in New Zealand, Reprt f the Ministerial Review Grup, August

7 The medical technlgy industry in New Zealand has wrked clsely with the Gvernment n a series f prjects aimed at driving efficiency and cst savings. These include: Fur standard cntract ptins fr use acrss the public health system (in place f the previus 60 plus variatins) A c-perative rthpaedic sectr initiative aimed at categry managing the sectr and driving engagement and cperatin frm clinicians, suppliers and public health prcurement An ecmmerce prject that uses a cmmn platfrm t minimize csts and has already demnstrated savings in excess f $20millin. Imprtantly these initiatives have been achieved thrugh active engagement with, and supprt frm, suppliers wh have been able t add value t the prject. The United Kingdm als maintains standard terms and cnditins fr the supply f gds and services t the Natinal Health Service. These are reviewed regularly and updated, mst recently in Octber Prpsals fr refrm With an increased fcus n health refrm, n a natinal and State basis, it is timely fr Health Ministers and Department f Health fficials t again cnsider ways t imprve bth health utcmes and budgetary impact f a mre efficient, cnsistent natinal apprach t prcurement f medical technlgies. This psitin paper prpses three areas fr refrm: Natinal alignment f prcesses fr public prcurement f medical technlgy Imprved gvernance arrangements fr public prcurement fr medical technlgy Mechanisms t achieve best practice in public prcurement fr medical technlgy. Each area is examined in mre detail belw. 6.1 Natinal alignment f prcesses fr public prcurement fr medical technlgy There needs t be equity in the relatinship between supplier and custmer t deliver benefits. Fr example, if the purchaser des nt ntify timelines, r requires infrmatin far in excess f what is required t meet the requirements f a tender, the balance between supplier and custmer shifts. This has a negative utcme fr the healthcare system. Csts are created by the inequality which are passed back t the custmer. MTAA strngly believes that maintenance f the balance between the parties prduces a mre equitable utcme fr bth. In rder t achieve imprved natinal alignment f public health prcurement, MTAA recmmends a series f actins t be crdinated at a natinal level fr implementatin by the State and Territry purchasing bdies: 6 See r 7

8 Use f an electrnic tendering tl such as Tendermax, preferably enabled fr nline ldgment. Anther tl that might be suitable is the GS1 brwser template which enables cmpanies t cmplete tender infrmatin in a frmat which can be upladed t the Natinal Prduct catalgue. MTAA des nt mandate a specific tl the primary requirement is simplicity f use bth by tenderer and assessr The tl shuld be pre-ppulated with standard cmpany infrmatin t avid the need fr time-cnsuming entry n every ccasin. The tenderer shuld be asked t cnfirm the pre-ppulated data. The elements which culd be standardised with n custmizatin required include: Cntract details Terms f tender Crprate infrmatin Cmpany reference Insurance NPC readiness KPIs Agreement terms Cnditins which are unique t a State r Territry shuld be avided, eg. the requirement t cmply with VIPP in the Victrian tenders. These State develpment prvisins are generally nt relevant t the supply f medical technlgy Develpment f a standard frm cntract with schedules t be cmpleted fr each tender t avid the need t negtiate cntract terms with each tender. Cnsideratin might be given t the wrk currently underway in New Zealand, in cnjunctin with industry, t develp a standard cntract fr use by the District Health Bards. 6.2 Gvernance arrangements fr public prcurement fr medical technlgy Once a natinal apprach is develped, there needs t be a mechanism t ensure discipline in the event f refrms t the health system s that changes are nt made unilaterally. Cntract terms shuld be develped in a cperative arrangement between industry and purchasers. The terms must be reasnable, equitable, and achievable eg. cntracts shuld nt require evidence f insurance at a level which is nt unifrm as suppliers will nt have the requisite level f cverage; the apprpriate ISO standard shuld be referenced (medical technlgy is manufactured against a specific glbal standard ISO 13485) Once the template cntract terms are agreed they shuld nt be varied by the purchasing authrity, r supplier. Any special cnditins shuld be included in a schedule. The template terms shuld be reviewed n an agreed regular cycle eg. every three years, t ensure currency. This apprach mirrrs that f the Gvernment Infrmatin Technlgy Cntract (GITC) which was designed t assist gvernment buyers and industry suppliers t develp cntracts fr the supply f infrmatin and cmmunicatins technlgy (ICT) prducts and services in the mst efficient and effective manner. A similar 8

9 mdel and gvernance culd be cnsidered fr the supply f medical technlgy r prducts Enhance gvernance f the prcess s that special deals cannt be negtiated utside the cntract by individual hspitals (r lcal hspital netwrks). The service level agreements between the State and territry health departments with the lcal hspital netwrks shuld reflect the agreed prcurement prcesses 6.3 Achieving best practice in public prcurement fr medical technlgy Tendering systems face a number f challenges 7 : Effectively lwering ttal healthcare spend Maximizing patient access Ensuring sustainable cmpetitin Efficiently managing administrative burden. LEK Cnsulting in its reprt n glbal medical technlgy prcurement practices identified five best practice design principles with examples f bserved best practice: Evaluate ttal cst f care eg. crss-functinal invlvement in prduct selectin; use f healthcare ecnmics data Ensure clinical input eg. physician invlvement in purchasing; mnitring clinical impact f tendering Embed sme flexibility in cntracting eg. prvisins fr rapid adptin f new prducts; prvisins t allw fr ff-tender purchasing Encurage supplier diversity eg. selectin f multiple suppliers; avidance f whle-market tenders; increased frequency f cntract turnver Ensure prcess transparency eg. clear definitin f prcess and requirements; versight f bidding prcess; cmmunicatin f results and ratinale t all bidders. Sme f these elements have been bserved in current State and Territry practices, and are cmmended: Published tender schedule, which is adhered t Evaluatin reprts Briefing and debriefing Reviewing prcesses t refine clinician input Requests fr market infrmatin Draft tenders prvided fr industry cmment. MTAA als strngly supprts a requirement that tenderers fr the supply f medical technlgy prducts cmmit t cmpliance with the relevant industry cde f practice, specifically the MTAA Cde f Practice. This nt nly encurages ethical behaviur by all cmpanies wrking with healthcare prfessinals and hspitals, but als ensures a level playing field between thse cmpanies which are members f MTAA and therefre adpters f the Cde thrugh their membership, and nnmembers. 7 LEK Cnsulting, supra 9

10 7. Skills develpment in health prcurement One f the challenges fr suppliers and custmers alike is t have adequately trained persnnel with an understanding f the unique nature f medical technlgies. MTAA supprts training prgrams such as thse ffered by the Chartered Institute f Purchasing and Supply. While nt targeted specifically at health purchasing, MTAA wuld supprt a cllabratin with health purchasing units, t seek inclusin f a unit which explains the nature f medical technlgy prducts and the specific requirements fr tender assessment and cntracting in the health sectr. The recent wrk by the New Zealand Ministry f Ecnmic Develpment in establishing the NZ Prcurement Academy is a gd example f what can be achieved. 10