The document discusses procurement strategies and processes in the health sector, highlighting that governments allocate a significant portion of spending to public procurement, with the health sector being the second largest expenditure area. Challenges include a lack of comprehensive procurement strategies, data collection issues, and the need for competitive tendering, with recommendations for transforming procurement into a strategic instrument leading to significant cost savings in various countries. Furthermore, the role of central purchasing bodies (CPBs) in enhancing procurement efficiency and achieving policy objectives is examined, alongside examples of innovative procurement practices in health.

1. PROCUREMENT
STRATEGIES AND
PROCESSES FOR
HEALTH
Janos Bertok, Division Head, Public Sector Integrity

2. • Governments spend 29% of total general government
spending on public procurement
• Health: second largest spending area (around 9% of
GDP; ranges from: 17% in the US and 5% in Turkey)
Challenge: generate savings and ensure high-quality
and efficient goods and services for a competitive
price
• OECD is working with health institutions to improve
their public procurement processes
(examples: PP reviews of the Mexican Institute of Social
Security and the State’s Employees’ Social Security, ISSSTE
and the Social Services Institute in Mexico, IMSS)
Public Procurement and the Health sector

3. • Lack of clear and comprehensive PP strategies in
some countries
• Lack of appropriate collection of PP data
• Knowledge and capability deficiencies that hinder the
development of an efficient procurement function
• Lack of market intelligence and engagement with
suppliers (via debriefings for example)
• Need for strengthened use of competitive tendering
(versus direct awards)
• Challenges related to planning and coordination with
regional / sub-national levels?
What are the main challenges and constraints
in the health sector (Lessons from reviews)

4. • Support the transformation of procurement from an
administrative task to a core strategic instrument (the
2015 OECD Recommendation on Public Procurement)
• Concrete action plans and recommendations, which form
a comprehensive view, have given first results:
• IMSS: Streamlining public purchasing, consolidation of
therapeutic goods and use of reverse auctions
 savings of 700m Euros a year (approx. 13% savings).
• ISSSTE: Consolidated healthcare purchasing
 savings of 134m Euros from 2013 to 2015 (approx.
12.70% savings)
From vision to results

5. • PP can also achieve Innovation as policy objective, according to
the ongoing OECD Survey on Strategic Innovation Procurement:
– Public purchasing is getting from a more limited administrative
procedure towards a ‘smart’ procurement management (example:
existence of Innovative Procurement Action Plans)
– Main Sectors of Organisations having sent Good Practice Cases,
including the health sector.
Strategic Innovation Procurement,
unlocking the potential for Health (I)

6. Strategic Innovation Procurement,
unlocking the potential for Health (II)
• Two examples of Good Practice Cases sent by OECD Countries:
‘Robotic Bedwashing Facility’
Erasmus University Medical Center, Netherlands
Robotics based bed washing system
Innovation Procurement Project www.ecoquip.eu
Winner of the European Public Procurement
of Innovative Solution (PPI) award 2014
http://www.innovation-procurement.org/award/
erasmus-mc
‘Digital Locking’
Smart digital locking system in hospitals, Finland
With the digital locking system developed by
iLOQ the public sector has saved a lot of money
and improved safety and energy-efficiency.
http://www.iloq.com

7. The role of Central Purchasing Bodies (CPBs)
Source: 2014 OECD Survey on Public Procurement
1
4
2
2
3
3
3
4
4
3
2
3
2
4
1
3
3
1
1
3
3
2
Ireland
Under Ministry:
28.1%
Government Agency:
43.8%
No CPB:
12.5%
State-owned
Enterprise:
15.6%
• CPBs: increased potential as market player through aggregation,
efficiencies and realising policy objectives
• Most OECD countries have CBPs, but legal
status differs among countries (see figure 1)
as well as their roles (see figure 2)
• Impact of CPBs reported to the OECD:
 Better price of goods and services
 Lower transaction cost
 Improved capacity and expertise
 Increased legal, technical, economic
and contractual certainty
 Greater simplicity and usability

8. The role of Central Purchasing Bodies 2
Role(s) of CPBs
Source: 2014 OECD Survey on Public Procurement
79%
79%
29%
36%
0% 20% 40% 60% 80% 100%
CPBs act as manager of the national system awarding
framework agreements or other consolidated
instruments, from which contracting authorities then
order
CPBs act as a contracting authority aggregating demand
and purchasing
CPBs establish policies for contracting authorities
CPBs coordinate training for public officials in charge of
public procurement

9. www.oecd.org/gov/ethics/integrityinpublicprocurement.htm
For more information on OECD work on public
procurement and integrity
www.oecd.org/competition/bidrigging