Health Procurement Reform
in Victoria
Tom Truman
Manager, Process Improvement
Health Purchasing Victoria
Health Procurement Reform in Victoria
 Why reform procurement?
 The Victorian model
 What reform looks like
 Challenge...
About HPV
Health Purchasing Victoria was established in 2001 as an independent
statutory authority under Section 124 of th...
Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes4
HPV organi...
WHY REFORM PROCUREMENT?
Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply ch...
Why do Americans speak English?
Why procurement reform?
Health Purchasing Victoria | Working with Victoria’s health sector...
Why procurement reform?
Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply ch...
Why procurement reform?
Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply ch...
Why reform procurement?
Two answers
 Compliance - ensuring probity
 Better outcomes
Health Purchasing Victoria | Working...
Why reform procurement?
Issues compromising procurement outcomes
 Fragmented approach / lack of visibility
 Reactive and...
THE VICTORIAN MODEL
Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain ...
The Victorian Model
 Health Services Governance
 HPV’s procurement program
Health Purchasing Victoria | Working with Vic...
Spend under HPV contract - trend
Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value ...
HPV procurement ROI
Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain ...
HPV collective procurement opportunities
Uncontestable
Current contract
Out of contract scope
Contestable, uncontracted
Po...
HPV legislative responsibilities
Health Services Act 1988, Section 131: Functions of HPV
HPV has the following functions
…...
WHAT REFORM LOOKS LIKE
Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply cha...
May 2013
Share
26 June 2014
1 October 2014
Health Purchasing Policies
Stream 2
Health Services
Guidelines
(The how-to for
...
HPV Purchasing Policies
 1. Procurement Governance
 2. Procurement Strategic Analysis
 3. Market Approach
 4. Contract...
HPV category management model
Category
Management
1
3
5
7
4
2
6
8 1
2
3
Opportunity
Assessment
Invitation to
Supply
Engage...
Process redesign
Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain out...
CHALLENGES
Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes26
Reform challenges
Health Services
 The need to invest in procurement
 Variation in scale of health services
 Developing...
Reform challenges
For HPV
 Access to health service spend data
 Managing contract spend data
 Developing staff capabili...
Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes29
Questions...
Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes30
Tom Truman - Health Purchasing Victoria - Heath Procurement Reform in Victoria
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Tom Truman - Health Purchasing Victoria - Heath Procurement Reform in Victoria

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Tom Truman delivered the presentation at the 2014 National Hospital Procurement Conference.

The 2014 National Hospital Procurement Conference explored a number of cost-saving measures in the hospital procurement ecosystem. Highlights included sessions on improving efficiency, savings and patient safety within Australian Hospitals.

For more information about the event, please visit: http://bit.ly/hosprocurement14

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Tom Truman - Health Purchasing Victoria - Heath Procurement Reform in Victoria

  1. 1. Health Procurement Reform in Victoria Tom Truman Manager, Process Improvement Health Purchasing Victoria
  2. 2. Health Procurement Reform in Victoria  Why reform procurement?  The Victorian model  What reform looks like  Challenges Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes2
  3. 3. About HPV Health Purchasing Victoria was established in 2001 as an independent statutory authority under Section 124 of the Health Services Act 1988. Purpose Health Purchasing Victoria achieves best value supply chain outcomes for Victoria’s health sector. Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes3
  4. 4. Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes4 HPV organisation structure Minister for Health HPV Board Department of Health HPV Secretariat
  5. 5. WHY REFORM PROCUREMENT? Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes5
  6. 6. Why do Americans speak English? Why procurement reform? Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes6
  7. 7. Why procurement reform? Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes7
  8. 8. Why procurement reform? Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes8 Samuel Pepys
  9. 9. Why reform procurement? Two answers  Compliance - ensuring probity  Better outcomes Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes9
  10. 10. Why reform procurement? Issues compromising procurement outcomes  Fragmented approach / lack of visibility  Reactive and transactional approach  Limited resources – focussed on service  Limited capability: people, process & technology  Poor contract management Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes10
  11. 11. THE VICTORIAN MODEL Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes11
  12. 12. The Victorian Model  Health Services Governance  HPV’s procurement program Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes12
  13. 13. Spend under HPV contract - trend Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes13 Millions
  14. 14. HPV procurement ROI Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes15
  15. 15. HPV collective procurement opportunities Uncontestable Current contract Out of contract scope Contestable, uncontracted Potential for collective sourcing $2,148 m Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes16 Total State Spend $11,637m (2012/13) $1,667 $481 $8,907 $581
  16. 16. HPV legislative responsibilities Health Services Act 1988, Section 131: Functions of HPV HPV has the following functions … (b) in relation to the supply of goods and services to public hospitals and the management and disposal of goods by public hospitals— (i) to develop, implement and review policies and practices to promote best value and probity; and (ii) to provide advice, staff training and consultancy services; … (d) to monitor compliance by public hospitals with purchasing policies and HPV directions and to report irregularities to the Minister; … (g) to ensure that probity is maintained in purchasing, tendering and contracting activities in public hospitals; … Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes17
  17. 17. WHAT REFORM LOOKS LIKE Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes19
  18. 18. May 2013 Share 26 June 2014 1 October 2014 Health Purchasing Policies Stream 2 Health Services Guidelines (The how-to for implementing the policies) Tools & Templates Stream 1 HPV HPV Procurement Policy & Strategy • Procurement Activity Plan • Supplier Engagement Plan • Contract Management Plan • Capability Development Plan Processes Procedures, Tools & Templates Reform Project Project Manager – Tom Truman Policy formation & process redesign Change & Innovation Transition Project HPV Sourcing Team Implementation Project(s) (Supported by RPA’s) Health Services
  19. 19. HPV Purchasing Policies  1. Procurement Governance  2. Procurement Strategic Analysis  3. Market Approach  4. Contract Management and Asset Disposal  5. Collective Purchasing Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes21
  20. 20. HPV category management model Category Management 1 3 5 7 4 2 6 8 1 2 3 Opportunity Assessment Invitation to Supply Engagement Negotiation Contract Transition Sourcing Strategy Analysis Contract Management Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes24
  21. 21. Process redesign Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes25
  22. 22. CHALLENGES Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes26
  23. 23. Reform challenges Health Services  The need to invest in procurement  Variation in scale of health services  Developing capability  Internal resistance  Compliance framework Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes27
  24. 24. Reform challenges For HPV  Access to health service spend data  Managing contract spend data  Developing staff capability  Implementing technology & process redesign Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes28
  25. 25. Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes29 Questions Level 34 Casselden Place 2 Lonsdale Street Melbourne 3000 T: 03 9947 3700 hpv@hpv.org.au www.hpv.org.au
  26. 26. Health Purchasing Victoria | Working with Victoria’s health sector to achieve best-value supply chain outcomes30

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