What is a Healthcare Procurement Strategy and Why is it Important?

What is Healthcare Procurement Strategy?

Healthcare procurement is the process of purchasing goods and services for an organisation. A healthcare procurement strategy is a plan that outlines the approach and process an organisation will take to purchase the goods and services.

Procuring the right goods and services is essential for any healthcare organization to provide top-notch care to patients while being cost-efficient. The healthcare procurement strategy is a systematic approach to ensure that the organization has the resources it needs to provide high-quality care to its patients, while maximizing efficiency and minimizing costs.

The strategy typically focuses on identifying specific and purchasing goods and services that are directly related to healthcare services such as medical equipment, supplies, services, and also maintenance. However, healthcare procurement may also include other purchases that are necessary for the organization to effectively operate such as office supplies and equipment, IT services, and facilities management. The specific goods and services that are included in a healthcare procurement strategy will depend on the specific needs and goals of the organization.

Why is Healthcare Procurement Strategy Important?

When it comes to healthcare procurement, a well-thought-out strategy can do wonders for an organization’s efficiency. By planning and managing the procurement process, an organization can make sure it gets the goods and services it needs in a timely and effective manner.

A good healthcare procurement strategy includes a process that guarantees quality, maximizes resources, clearly defines the needs of different departments and staff, and allows for informed decision making.

By streamlining the procurement process, the strategy not only saves time and effort, but it also frees up staff to focus on other important tasks. In the end, a solid healthcare procurement strategy can help an organization run like a well-oiled machine and better serve its patients.”

5 Key Challenges of Healthcare Procurement Strategy

Here are five key challenges that healthcare organisations may face with their healthcare procurement strategy:

1. Balancing Cost and Quality

Procurement of healthcare equipment and services can become expensive. Healthcare organisations find that there is a delicate balance between maximising value for money and quality to meet the patient needs. This is a difficult endeavour and healthcare organisations must also carefully evaluate potential suppliers, correctly identify the most needed medical equipment, and negotiate prices to ensure the balance between cost and quality remains.

2. Dealing with Limited Budgets

As many healthcare organisations operate on tight budgets, it becomes difficult to allocate sufficient resources to the procurement process. This can make it challenging for organisations to effectively manage the procurement process, and can limit their ability to obtain the medical goods and services they need to provide high-quality care to their patients.

3. Managing the Complexity of the Procurement Process

The healthcare industry is complex, and the procurement process can be equally as complex. This can make it difficult for organisations to identify and evaluate potential suppliers, negotiate prices and manage the procurement process in a way that ensures the organisation gets the best value for money.

4. Decentralised Procurement

One of the key challenges facing healthcare organisations is ensuring that their procurement processes are coordinated across different individuals and departments. Without a coordinated approach , the range of products and services that are purchased can get out of control. As a result, healthcare organisations may purchase abundance of one type of medical device, which takes away ability to purchases other critical medical devices.

5. Managing risks

Healthcare organisations face a number of risks when it comes to procurement including, but not limited to, the risk of purchasing sub-standard goods and services, the risk of supplier failure, and also the risk of potential fraud. Managing these risks effectively can be challenging, and organisations must be prepared to implement appropriate risk management strategies in order to protect their interests.

6 Key Benefits of Healthcare Procurement Strategy

Here are six key benefits that healthcare organisations can obtain with a well-designed procurement strategy that fits their healthcare organisation:

1. Improved Financial Performance

Obtaining and implementing a well-designed healthcare procurement strategy will provide healthcare organisations the ability to ensure that they can effectively obtain the goods and services. As a result, healthcare organisations can reduce costs and improve the organisation’s overall financial performance, which enables organisation to invest more in its core mission of delivering healthcare services.

2. Increased Operational Efficiency

A well-crafted procurement strategy can help organisations to streamline their procurement processes, which can reduce the time and effort required to manage the process.

3. Better Order Accuracy

A well-designed healthcare procurement strategy can help procurement decision-makers to understand where medical equipment is relocated and when medical equipment must be purchased. As a result, healthcare organisations can expect to reduce unnecessary costs.

At times the procurement decision-makers are not familiar with the medical affairs. At the same time, there could be a mismatch between the requested solution and the actual solution. Obtaining a digital procurement solution with standardised forms of entry for all orders and in combination with department coordination will increase the order accuracy.

4. Reduced Risks

Effective procurement can help organisations to manage the risks associated with purchasing goods and services, such as the risk of purchasing substandard goods and services or the risk of supplier failure. Healthcare organisations will be able to more easily gain the ability to evaluate and continuously improve procurement decisions.

5. Improved Transparency and Accountability

By clearly defining their procurement policies and procedures, healthcare organisations can improve transparency and accountability in their procurement processes. These organisations can ensure that their procurement processes are open, fair and transparent, which can help build trust and confidence among stakeholders.

6. Improved Communication and Increased Collaboration

A proper healthcare procurement strategy can help improve communication and collaboration within the organisation, as well as between the organisation and its suppliers.

By clearly defining the roles and responsibilities of various stakeholders in the procurement process, organisations can ensure that everyone involved is aware of their roles and responsibilities, which can help improve communication and collaboration.

7. Sustained Patient Safety

By ensuring that they have the necessary resources to provide high-quality care to their patients, organisations can improve patient outcomes. This can be particularly important in the healthcare industry, where the quality of care can have a significant impact on patients’ health.

History of Healthcare Procurement Strategy

The history of healthcare procurement can be traced back to the earliest days of the healthcare industry, when healthcare organisations relied on local suppliers to provide the goods and services, they needed to provide patient care. Since then, the healthcare industry has grown and developed, and so has the procurement process. In recent years, the healthcare procurement process has become increasingly complex, as organisations have had to navigate an increasingly complex regulatory framework and manage a growing range of potential suppliers.

Emergence of Technology

One of the key developments in the history of healthcare procurement strategies has been the emergence of procurement software solutions, which makes it easier for healthcare organisation to manage the procurement process, increase communication between facilities and departments, and improve order accuracy. Today, some healthcare organisations use these software solutions to ease investment planning, define and approving budgets, manage investment request, forecast management, and enable follow-up and evaluation after the procurement has been finalised.

Value-based Procurement Strategies

Another key development of healthcare procurement strategies has been the growing emphasis on value-based procurement. Value-based procurement focuses on purchasing good and services that provide the best value for money, rather choosing the lowest cost.

This value-based approach in the procurement process has been largely driven by a growing realisation that purchasing lower-quality goods and services can ultimately end up being more expensive in the long run. This led to many healthcare organisations to adopt a value-based procurement strategy to ensure that they can obtain goods and services at the best possible price in correlation to the quality received. As a result, healthcare organisations aim to balance between cost and quality, while also ensuring that the quality meets the high standard required to perform patient care.

Future of Healthcare Procurement Strategy

The future of healthcare procurement strategies is likely to be characterised by a continued focus on value-based procurement and the use of technology to improve efficiency and effectiveness of the entire healthcare procurement process. This is due to that healthcare organisations will continue to face challenges related to cost, quality, and the ability to deliver high-quality patient care.

Another important development for the future of healthcare procurement is likely to be the continued adopting and growth of procurement software solutions. These solutions are expected to become more sophisticated and capable of easing more of the procurement activities through the entire process. This will enable healthcare organisations to make better informed decision-making on the good and services they purchase.

The improvements in decision-making and evaluation of previously purchased goods and services will lead to use of advanced analytics. These data-driven decisions are likely going to become increasingly important as healthcare procurement strategies  develop. By using data to better understand their procurement processes, organisations will be able to identify areas for improvement and make more informed decisions about the goods and services they purchase.

In short, the future of healthcare procurement is likely to be characterised by a continued focus on improving efficiency and effectiveness, and on using technology and data to drive better decision-making and improve the quality of care that organisations can provide to their patients.

Healthcare Procurement Strategy Activities

The specific activities involved in developing and implementing a healthcare procurement strategy can vary depending on the needs, budget, goal, and method of each healthcare organisation. In general, the overarching activities of the healthcare procurement strategy typically involves the following activities:

1. Investment Planning: The first activity is to identify the specific good and services that the healthcare organisation needs. This could be related to clinical engineering, IT, real estate, and other items. In this step clinical and other staff will identify specific items that are required, quantities, and the priority.
2. Budget Process & Approvements: Once the goods and services has been identified, the healthcare organisation will go through the budget approval process set by the healthcare organisation. Asking the question if this investment request is possible to approve in terms of cost within the fiscal year.
3. Investment Realisation: In this activity, call off cases can be created, moving the investment request to be reviewed by a purchase or investment group. A purchasing project starts once the request is financially approved by the group. The purchasing project begins.
4. Forecast Management: The fourth activity is gathering information and budget forecasting related to medical devices, and other goods and services. Providing an estimation on needs in the facility and individual departments. Reviewing investment within the fiscal year and forecasting towards the next fiscal year.
5. Follow-up & Evaluation: Once the investment is realised, it is important for the healthcare organisation to review the process and identify any areas for improvement. This includes making a retroactive review of the quarterly and yearly purchases, while also following-up the result of the investment decision. Checking if the investment had the expected result, if further investments are needed, if the price estimation matched the end costs, and similar questions.

The detail and depth of these procurement and investment activities can be adapted to fit the healthcare organisation. In addition to these activities, some healthcare organisations may also choose to implement additional processes and procedures to ensure that their procurement strategies are effective, some may choose to establish internal policies and procedures to govern their procurement processes, some will develop training programs to ensure that personnel involved in the procurement process are adequately trained and prepared to carry out their responsibilities.

If a planning and investment management solution that supports your hospital procurement strategies is compelling, you can continue reading about the PeRMit solution.

Summary

Healthcare procurement refers to the process of purchasing goods and services for a healthcare organisation. A healthcare procurement strategy is a plan that outlines the approach an organisation will take to purchase the goods and services it needs to deliver healthcare services. This strategy typically involves identifying the specific goods and services needed, researching potential suppliers, negotiating prices and managing the procurement process to ensure the organisation gets the best value for money.

The goal of a healthcare procurement strategy is to ensure that the organisation has the resources it needs to provide high-quality patient care, while maximising its efficiency and minimising costs. The specific activities involved in developing and implementing a well-designed healthcare procurement strategy can vary depending on the healthcare organisations’ specific needs and goals, but generally include investment planning, budget process & approvements, investment realisation, forecast management, and follow-up & evaluation.  

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