Procuring Services in Public Healthcare: A Case Study Example

Context

This case study is based on practical implementation guidance shared during Health Procurement Africa’s (HPA) Ask the Expert webinar on procuring services in public healthcare. The session presented applied approaches from Kenya and Nigeria, delivered by HPA procurement experts, illustrating how public-sector health procurement teams can effectively procure and manage service contracts.

Watch the full Ask the Expert webinar recording here.

Introduction

Procurement in public healthcare traditionally focuses on medicines, equipment, and other physical goods. However, healthcare systems also rely heavily on services such as logistics, facility construction, consultancy, transportation, insurance, and waste management.
Unlike goods, services are largely intangible and delivered through people, expertise, and ongoing interaction between providers and users. This makes specifying, evaluating, and monitoring services more complex than purchasing physical products.

Understanding the Nature of Services

Characteristic	Implication for Procurement
Intangibility	Services are difficult to measure or compare objectively
Perishability	Services are delivered in real time and cannot be stored
Simultaneous production and consumption	Service delivery requires interaction between provider and customer
Variability	Service quality can vary depending on personnel and circumstances
Non-ownership	The buyer experiences the service but does not own a physical product

Measuring Service Delivery

Because services are difficult to measure objectively, organisations often use structured frameworks to define service quality expectations. One example highlighted during the webinar is the RATER model, which helps organisations assess service performance.

RATER Dimension	Description
Reliability	Consistency and dependability of service delivery
Assurance	Professional competence and credibility of staff
Tangibles	Physical elements associated with the service
Empathy	Ability of service providers to understand client needs
Responsiveness	Speed and effectiveness in responding to issues

Service Level Agreements and KPIs

Service contracts often include Service Level Agreements (SLAs) and Key Performance Indicators (KPIs). These establish clear expectations for service quality and provide measurable indicators to evaluate supplier performance.

SLA Component	Purpose
Scope of Work	Defines the services to be delivered
Performance Measures	Establishes measurable service standards
Roles and Responsibilities	Clarifies obligations of both parties
Payment Terms	Defines how the service provider will be paid
Review Mechanisms	Allows periodic assessment and contract adjustments

Case Application: Healthcare Services Procurement

Kenya Context

In Kenya, healthcare services procurement includes consultancy services, civil works for hospital construction, logistics services for transporting medical supplies, waste management, catering, security, and equipment maintenance.

One example involved the construction of the Kenneth Matiba Hospital in Murang’a County. The project was initiated in 2023 and completed in 2024 with county government financing. The procurement process followed national procurement regulations and required careful planning, stakeholder coordination, and monitoring throughout the project lifecycle.

Project Lifecycle Approach

Stage	Activities
Initiation	Define project scope, feasibility, objectives, and timelines
Planning	Develop project roadmap and identify stakeholders
Execution	Select contractors and implement construction activities
Monitoring and Control	Track progress, quality, costs, and project risks
Closure	Inspect, approve, and hand over the completed facility

Consultancy Procurement Example

Another example involved the procurement of the Murang’a Health Management System using a quality and cost-based selection method under a Request for Proposals process. Suppliers submitted both technical and financial proposals, with technical capability evaluated first before financial proposals were considered.

Nigeria Context

In Nigeria, commonly procured healthcare services include transportation of medicines, insurance for healthcare infrastructure, and warehouse management. These services support the delivery of medical products across healthcare networks.
Procurement teams emphasise the importance of clear evaluation criteria and guidance notes to ensure transparent and consistent scoring during proposal evaluation.

Implementation Challenges

Common challenges in procuring healthcare services include vague specifications, budget overruns, delays caused by stakeholder engagement, labour shortages, and difficulties balancing cost and quality.

Future Direction: Outsourcing Services

The webinar highlighted a growing trend toward outsourcing services in healthcare procurement. Rather than purchasing individual goods, healthcare organisations may increasingly procure integrated service solutions such as inventory management, logistics services, or equipment management.

Conclusion

This case study demonstrates how procurement of services requires a different approach from traditional goods procurement. By understanding the unique characteristics of services, defining measurable service standards, and applying structured evaluation processes, public healthcare procurement teams can improve service delivery and support more effective healthcare systems.

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