The document discusses medical device procurement in Ireland and the UK. It finds that collaboration between medical device suppliers and buyers can improve procurement outcomes. Currently in Ireland, price is often the dominant evaluation criteria for tenders rather than quality. Suppliers are recommended to improve the quality of their submissions and develop cost-benefit models to better demonstrate value. Industry groups should work with health services to increase capabilities in evaluating devices and support adoption of evaluation frameworks.

1. Briefing Series
March 2012
Collaboration between medical
device suppliers and buyers leads to
improved procurement outcomes
Global health systems are finding it increasingly challenging to deal with
aging populations, increased expectations around outcomes and downward
pressure on budgets. The potential for medical devices and new care
pathways towards meeting these challenges is well documented, yet in
many markets, health purchasing favours more traditional forms of care and
Contacts: askew opportunities for improving health and economic outcomes with
technology.
Tony Corrigan, TenderScout
Justin Carty, IMSTA
Dr. Paul Davis, DCU
Procurement in the Irish Health Medical Device Procurement in
Medical Device Procurement in Service Executive (HSE) Ireland and UK
Ireland (2011)
The HSE will reduce it’s spending by The NHS spends almost 4 times
Number of Tenders
62 (approx.) €750 Million in 2012v bringing total (8.25%) as much of its budget as the
reductions since 2010 to almost €2.5 HSE on medical devices.vii
Value of Tenders Billion. Of the total budget of €13.3 The NHS has identified the potential
i
€ 300 Million Billion, some €4 Billion is spent on of medical devices and close
goods and services. collaboration with industry
% of all health service
tenders Until recently only 10% of this (suppliers) as essential elements to
41% expenditure appeared on public meeting healthcare challenges.
procurement websites (i.e. Focus has centred on developing
% of all health service etenders.gov.ie) due to various business propositions and
budget below threshold spends and
2.25% cost/benefit models to support the
recurring contractsvi. introduction of technology and the
The reduction in procurement transformation of care pathways.
Medical Device Procurement thresholds has seen an increase in Most NHS trusts are now partners in
Globally (2011) the number of tenders published by ‘collaborative procurement
the HSE (up from around 70 in each organisations’ where they can share
The size of the global market of 2008 and 2009 to over 150 in information and resources to
for medical devices was 2011, an increase of over 100%). achieve economies of scale.
estimated at $300 Billion in This gives suppliers an
2011.ii The US accounts for opportunity to increase
some 35% of the total, while sales and creates a
Europe accounts for another valuable bridge between
30%iii iv. supplying an individual
trust and responding to
national tenders.viii
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2. The NHS employs various support Key findings of Report into Current Procurement Practices
mechanisms for suppliers in cases
where a strong body of evidence has  Buyers should hold pre-tender consultations
been gathered but idiosyncratic
 Include technical expertise, improvements in technology and clinical outcomes
barriers (e.g. reluctance to change, amongst evaluation criteria.
and integration within legacy care
delivery pathways) are hindering the  Employ models to qualify costs and benefits of medical devices
adoption of the innovative medical  Price should not be the dominant criteria; most Economically Advantageous
devices by the NHS.ix Criteria (MEAT) should be employed consistently
 Collaborative procurement should be pursued to achieve economies of scale
Current Procurement Practices in
Ireland
as key enablers of improved buying The health service is not organised
outcomes. to effectively evaluate tenders for
IMSTA’s recently commissioned medical devices, however this is no
report A Review of Current Suppliers lose on quality before excuse for the poor quality
Procurement Practices in Ireland by they lose on price submissions. The perception that
Dr. Paul Davis, at Dublin City “it’s all about price” is self-fulfilling in
University makes compelling reading In the Irish context, price is often the absence of good quality
for both buyers and suppliers who viewed as the only evaluation submissions.
wish to understand how current criteria and it is true that the
practices impact on procurement of ultimate selection of suppliers often Buyers Views of Supplier
medical devices in Ireland. favours those with the lowest prices Submissions
Without models or frameworks to with the merit of their solution a
evaluate both clinical and economic distant second.  Minimal attention to improving ROI
benefits of medical devices, buyers Buyer surveys consistently note that  Average to poor quality responses
have tended to focus on price as the tender submissions by suppliers are  No cognisance of challenges facing
primary evaluation criteria. health system
only ‘average’x while TenderScout’s
 No appreciation for the rationale
Buying medical technology is own researchxi indicates that the
behind the RFT
complex; buyers do not always have majority of tender submissions score  Rudimentary approaches to
the expertise to fully understand the poorly, even before the price is contract management, risk sharing,
technical solutions proposed by taken into consideration. collaboration and value-adding.
suppliers. The systemic challenges The health service has limited
to the health service around cost capacity and expertise to evaluate
and delivery, combined with these medical technologies. A review of
technology specific complications tender submissions indicates that
increase the risk of unsatisfactory suppliers are not taking this into
outcomes from the procurement account with the consequence being
process. As a way forward, the that buyers migrate to the cheapest
report recommends collaboration solution or worse, abandon the
between buyers and suppliers, procurement process.
increased specialist expertise and
models for evaluating technologies
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3. Actions for Suppliers
Improve The overall quality of tenders needs to be dramatically improved; typically suppliers secure
procurement just 50% of non-cost marks. Submissions developed by companies with experience of non-
outcomes by Irish procurement are very often of a much higher quality. Suppliers should take every
increasing quality of opportunity to compete and improve their scoring across non-cost evaluation criteria. Where
submissions submissions perform well overall, challenges to the relative weighting of cost become more
sustainable.
Recognise and The challenges within the Irish health service are replicated in other markets; costs and
address challenges patient expectations are rising while budgets are falling. Up to 30% of the overall evaluation
within Irish and criteria can be correlated back to underlying organisation needs, although this may not be
International health obvious from the tender documentation. Suppliers should demonstrate their understanding
services of the context of a specific tender and how their solution meets current and emerging needs.
Develop ‘best- There is an onus on suppliers to articulate the value of their solution such that it is
practice’ comparable to incumbent solutions and work practices and that the benefits are clearly
cost/benefit models demonstrated to non-technical audiences. Rather than focussing on the ‘price’ of solutions,
for medical devices suppliers need to:
 Establish cost/benefit models to quantify the value of solutions
 Develop innovative funding models to allay what are often prohibitively high upfront
costs; and
 Seek to proactively aggregate value of their solution within the health service.
Actions for Industry Groups
Changes to Policy Collaborate with other industry groups to encourage the introduction of national frameworks
for improving specific areas of care such as stroke prevention and rehabilitation, heart
disease, cancer, diabetes, mental health and care for the elderly. Engage with the health
service to identify targets in each of these areas and help to formalise the role of medical
technologies within the health service and provide a focus for specific technologies.
Promote changes to Align high quality care with the promotion of innovation within the health system. Even
healthcare working where a technology is demonstrably innovative or delivers improved outcomes, evidence
practice from the UK indicates concerns about how the technology will be adopted and the
implications of its introduction into the health service. Engage with the health service to
alleviate these concerns and support the adoption of innovation and new working practices
based on medical devices.
Support adoption of Where best practice cost/ funding and benefits realisation models do not exist, collaboration
cost/benefit models with the health service should to define those models and then proactively integrate them
for medical devices into the evaluation of tenders. Standardisation should be encouraged so that clinical efficacy
and improved economic outcomes can be readily established for medical devices.
Seek to increase Recognising the limited capabilities within the health service to evaluate medical devices,
evaluation work to develop an appropriate level of awareness and expertise within the health service.
capability within the This may be accomplished through pilots, collaboration on standards, awareness days and
health service for demonstrations of technologies and help the health service put in place appropriate
medical devices evaluation criteria.
Promote awareness Be a conduit for providing back to medical device suppliers so that they understand the
of health service challenges facing health services in respect of business models, change management and
needs to suppliers workflow transformation so that future submissions more accurately address needs.
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4. For more about procurement strategies and guidance please visit www.tenderscout.com or contact
tony.corrigan@tenderscout.com
For more information about IMSTA services, please visit www.imsta.ie
For more information about Procurement and Supply Chain Management at DCU Business School, please visit
http://www.dcu.ie/prospective/deginfo.php?classname=MSP&originating_school=50
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References
i
Review of Current Procurement Practices in Ireland, pg. 12, Dr. Paul Davis, March 2012, DCU
ii
http://www.zacks.com/stock/news/50398/Medical+Devices+Industry+Outlook+%96+April+2011
iii
http://www.espicom.com/Prodcat2.nsf/Product_ID_Lookup/00000110?OpenDocument
iv
http://www.slideshare.net/IHSHealthcareandPharma/medical-device-market-access-optimising-device-and-diagnostic-launches-in-
developed-markets
v
http://www.hse.ie/eng/services/Publications/corporate/nsp2012.pdf
vi
http://bestconnected.enterprise-ireland.com/case-study-observations-on-hse-procurement/
vii
www.nhs.uk/NHSEngland/thenhs/about/Pages/overview.aspx,
http://www.espicom.com/prodcat2.nsf/Product_ID_Lookup/00000598?OpenDocument
viii
http://www.pasa.nhs.uk/PASAWeb/NHSprocurement/Collaborativeprocurementregional/CurrentcollaborativesintheNHS.htm.
ix
http://www.healthktn.org.uk/supportmap/LinkedDocuments/Compliance%20to%20regulation%20-
%20NICE%20Single%20Evaluation%20Pathway.pdf
x
http://www.procurement.ie/sites/default/files/opportunities_report_final_version_pdf.pdf
xi
An Assessment of Tender Evaluation in Ireland, Tony Corrigan, TenderScout, 2011
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