Value Based Procurement

Case 1: The Erasmus Medical Centre in the Netherlands wanted to buy hospital beds for its new facility. Rather than basing its decision on purchase price and product features, the centre sought a supplier that could offer a smarter, comprehensive solution to generate longer-term value and solve some critical challenges Erasmus faced in care delivery. For example, the new facility’s design included doors with no windows, requiring nurses to open each door to make sure patients were still in bed. Digitally connected hospital beds, by contrast, can automatically alert nurses when patients who should be in bed are not (potentially due to a fall or restlessness). The beds also improve workflow efficiency (for example, by automatically measuring patient weight, saving a step for nurses and freeing them for more important tasks) and reduce pressure ulcers and the risk of infections. After evaluating these benefits against its predefined, value-based award criteria, Erasmus purchased a comprehensive service contract that included more than 800 hospital beds, mattresses, a robotic bed-washing solution, integrated digital monitoring devices, and process and outcome improvement commitments from the medical equipment supplier. 

The service arrangement was structured as a 15-year partnership through which Erasmus and the supplier will collaborate to capture real-world evidence of value from the advanced beds and, over time, jointly develop an even more value-enhancing hospital bed solution. In terms of financial savings, an early estimate projects that Erasmus will be able to reduce labour costs in nursing by more than €500,000 per year. “We shared our unmet needs with the suppliers to raise awareness of future opportunities,” noted an Erasmus executive. “It was crucial for us to create trust with suppliers early on, to have them engaged in the process.” Furthermore, Erasmus expects to reduce length-of-stay by a day for some patient groups, thanks to improved weight and fluid monitoring. For the supplier, the connected hospital beds bring its product development teams much closer to daily clinical work and allows them to measure performance in a real-world setting. Constant user feedback helps the supplier shorten R&D cycles and continuously improve its products.

Case 2: NHS Wales used VBP to improve its services for patients who require blood thinners. Rather than looking for a single product, it sought a broader, solution-based offering, including medical devices, diagnostics and consumables, training, software, and care expertise. The new approach will allow patients to monitor their own blood levels—in conjunction with a health care provider—rather than requiring them to go to a hospital. That increases the quality of life for patients and frees care providers to focus on more critical patients and needs. (Currently, NHS Wales conducts nearly 400,000 blood tests for this group of patients each year.) With the new approach, some patients will be more likely to stay on top of their blood levels and not need to schedule (and potentially miss) a formal appointment with a doctor. As a result, the approach will reduce the likelihood of a patient showing up in the emergency room due to a blood clot or a more severe complication, such as a stroke. The tender resulted in contracts being awarded to a single supplier of testing equipment and consumables, and another single supplier for anticoagulation dosing software. The solutions provide an opportunity to generate consistent information that, when added to broader data, documents the impact of this approach on patient care.

“We need to change from a focus on volume at the lowest cost to one of improved effectiveness in the use of our resources,” said Alan Brace, director of finance for the Health and Social Services Group in the Welsh government. “This is particularly true in our procurement activities. The disruptive effects of personalised and precision medicine will expose the traditional procurement practices as no longer fit for purpose. The health systems that embrace VBP quickly will be able to engage in the future as equal partners.”

Case 3: Zilveren Kruis, the largest health insurer in the Netherlands, put out a tender for comprehensive, integrated care for patients with cataracts. Rather than the traditional criteria (primarily price and volume), the tender was for an integrated care solution based on long-term value: improved care outcomes at a lower total cost, with key value criteria defined by the care providers themselves, not by Zilveren Kruis. In this case, four providers won the tender. All of them had expertise in eye care and were able to establish their ability to provide high-quality care during the tender process. The tender was extremely novel in that the insurer did not follow the usual process of defining minimum standards for product and procedure features; instead, it sought a broad solution based on outcomes (including the incidence of complications) and long-term cost of care (including cost of re-operations and follow-up care). It then allowed the providers to compete on the basis of the quality criteria that they themselves defined, using quality-of-care measurement techniques based on their expertise. The Zilveren Kruis example shows that VBP is not just for providers—it also helps payers contract for high-quality, value-based care.

Case 4: The University Hospital Clinic de Barcelona (HCB) in Spain conducted two pilot learning projects using VBP. The first covered a specialised technology for an advanced heart procedure known as transcatheter aortic valve implantation (TAVI): a means of implanting replacement valves for patients with severe aortic valve stenosis. The scientific literature shows that TAVI procedures are more costly than open-heart surgery but also less invasive, so they offer a shorter stay in the hospital. As a result, TAVI can lead to a substantial reduction in the overall cost of care for patients who require valve replacements, along with quality-of-life benefits for those patients.

One common post-procedure complication for TAVI patients is the need for a pacemaker, which can cost up to €8,000 in Spain. Suppliers in the VBP project submitted very different (varying by a factor of more than four) expected pacemaker implant rates for patients after TAVI procedures. Similarly, companies submitted data that indicated a variation of two to three times for the rates of other neurological or vascular complications. The project showed that using VBP to choose the right supplier (the one with the lowest complication rates and the best evidence thereof, as well as the most beneficial impact on total cost of care) can result in a substantial return on the extra time invested by the procurement and clinical teams.

The second pilot learning project focused on a category of disposable products: diapers and underpads for incontinent adults. These may seem like basic products, but more absorbent products can improve patient comfort and reduce complications such as skin rashes and bladder infections. Smarter design can also reduce the number of changes required, thus reducing staff time and the number of replacement pads needed. The result is a beneficial impact on total cost of care as well as better value, even if the initial purchase price of the products is higher.

Ferran Rodrígues Omedes, head of clinical and biomedical engineering and deputy director of infrastructure at the hospital, said that the learning projects were a critical first step for the organisation and that they clearly substantiated the promise of VBP. “Given the learnings from our VBP project, we looked back at relevant past tenders and saw that a significant number of those would have had a different result, with a higher price paid for a solution but substantially higher clinical and economic value for our hospital and patients.” HCB improved its procurement process as a result of the VBP pilot projects and is looking to expand the methodology to other areas.