Medical Procurement is the process of purchasing medical equipment, services, and supplies for the diagnosis, curing, treatment, and rehabilitation of diseases. A functional health system depends mainly on the type of technologies used by the organizations. The quality of life is improved due to the application of health knowledge in medicines, vaccines, and developing devices based on the latest technology.
Ensuring good quality of medical resources is the main priority for any healthcare organization. Procurement of the necessary medical resources is essential for any functioning healthcare system. Procurement also includes installation and commissioning rather than simply purchasing or evaluating the resources.
A stable health technology procurement practice provides a safe healthcare environment. It is also economical and pocket-friendly since a number of deals at varied prices are evaluated before going forward with the procurement. Procurement also provides prompt delivery, among other such benefits. Medical Procurement is an essential factor while ensuring a prompt opening or upgrading of a medical facility.
Objectives of Medical Procurement
- To procure good quality equipment built with the latest technologies at competitive rates
- To follow transparent procedures
- To follow all the given parameters for diagnosis, technology, and research to provide the best healthcare services
- To meet the maintenance requirements and equipment purchase of various primary, secondary, and tertiary healthcare organizations
- To improve the patient experience
The Procurement Process
- Technology Assessment
A summary is formulated regarding the medical, social, ethical, and economic issues in accordance with health technology. This information is expected to be unbiased, systematic, and transparent. Previously existing reports are used to determine if a given technology meets the requirements of an existing health need.
According to the information obtained from these reports, further steps can be taken to ensure that the level of procurement is apt for a given health need. Technology Assessment is vital in providing an evidence-based decision-making process that includes plans and policies that facilitate the actual potential of a health-based technology.
- Device Evaluation
Device evaluation refers to the proper assessment of a device. This includes checking whether the device is working to its complete potential, as promised by the manufacturers. The performance and function of the device are evaluated under this. Before evaluating a device, the most sensible thing to do is perform market research to understand the range of the products available.
The evaluation centers or test laboratories that conduct the market research must be certified by the necessary authorities. Reviews can be used to get a wider understanding of the performance of the device. However, they may vary from region to region. This assessment of devices is extremely important as it proves to be useful while making purchases later on.
Planning is the process of turning healthcare requirements into future procurement requirements. Planning provides a proper course of action for securing the necessary services at a fair cost and promptly on time. Health policies that vary from country to country are the starting point for planning. Before going further with the medical procurement process, there is a need to evaluate the equipment inventory and population data.
The correct application of technology is also to be tested. A procurement plan must contain the timelines, the need for specifications, the market research, the funding sources, reference prices, supplier database, management guidelines, necessary approvals as well as strategies. Procurement plans must also be finalized after going through previously authorized models by the World Health Organization (WHO). Finally, the plan must also be tracked during the entire course of implementation.
- Needs Assessment
The evaluation of the desired healthcare procurements and the current situation is done under this. It measures the gap between the required healthcare and the current day scenario. Details such as the product type, quantity, value, location, due date, etc., are secured once this stage is reached.
Procurement refers to obtaining the services required. The contracts are formulated based on the receiving and opening bids. The various bids are then evaluated and compared as per the necessary specifications. The contract is then offered, and an order is placed while discussing the payment schedules. All negotiations must compulsorily be carried out as per the local rules and regulations.
The process of fixing the equipment into its designated place is completed once the delivery, storage, and placement of the required devices are done in the desired locations. The site where the placement of the goods is assigned must be prepared accordingly. Instructions must be given regarding the pre-dispatch and sample inspections. Once the shipping and customs charges are paid off, the transport and storage processes are easy to accomplish.
A checklist is important to check the status of the process. Regular checking of the stock must be done to remain updated. The procurement plan is to be followed strictly because there are many documented instances of this stage being the most critical one for the completion of procurement. Checking and reporting at every stage of this process is crucial.
Before the equipment is officially used, a series of tests must be run to check whether the device is safe and functioning to its optimum potential. Accordingly, adjustments can be made to maximize the usage of the device. All the documentation must be checked thoroughly before marking the device safe for healthcare use. Safety tests, calibration tests, and functioning tests are to be performed, and the results must be recorded.
The maintenance staff must also be trained with the equipment they are supposed to be dealing with. Once the device handover is completed, the equipment is ready for routine use by the users trained for its effective operation. The procured item should also be entered into the record before finally handing it over for medical use. The personnel in charge of reporting every step must be qualified and technically trained.
The final step of any medical procurement process is gathering and managing the data to control the existing procurement. This paves the way for implementing future procurement plans. The equipment and supplier performance is checked along with cost-effectiveness and the sustainability of the technology. The accuracy of the equipment is also calculated and compared with the actual orders and requirements. Patient safety is also taken into consideration. A database of effective health technology, suppliers, and processes is created through monitoring.
Challenges Faced in Medical Procurement
Although medical procedures developed rapidly in the 21st century due to the innovations of technology, the procurement process remains to be traditional. Now, although patients can book appointments online or even order medicines online via various pharmaceutical apps, the medical procurement processes seem to have halted, as there is simply no progress.
In healthcare facilities, whether it be hospitals or pharmacies and even research laboratories, the process for medical procurement remains a manual one. Paper-based systems are still used in many healthcare facilities. This creates unnecessary delays in ordering, receiving, and even distribution of the inventory to the necessary departments. Such a delay can impact patient healthcare negatively. Due to the nature and diversity of the business and market segments, the healthcare systems face plenty of challenges.
- Cost variation due to supplier preferences
The healthcare institutions often have a preferred retailer for procuring medical equipment. There are also plenty of suppliers who are willing to dispense their drugs or use their equipment, but these suppliers do not provide cost-effective services. This results in an overall variation in the pricing system.
- Wasteful spending
Organizations, when unable to analyze the latest procurement data due to outdated data and manual processes, cannot control their spending adequately. The unmanaged supplies result in a noticeable overpricing system for the healthcare industry, preventing transparency and simplicity. Administrative costs and pricing failure are a result of poor procurement processes. This lack of pricing control leads to wasteful and unnecessary spending.
- Hidden costs
The costs are not limited simply to the final price of the product required. There are plenty of hidden costs that are visible in the organization’s bottom line later on. These costs include distribution, shipping, and customs costs, delivery of products on an urgent basis, as well as holding inventory for specific customers.
- Specialized medical equipment
The healthcare institutions require equipment that is highly specialized and are extremely costly. Supplies are usually purchased in bulk as per the specifications required. The main difficulty faced by both the healthcare institutions as well as the suppliers is regarding customized equipment. The customization of medical equipment is very costly and takes a lot of time, leading to increased expenditure and delay in delivery.
- The strain on the workforce
Along with negatively impacting patient care and rehabilitation facilities, the manual medical procurement procedures place an additional strain on the workforce. Doctors who have less access to the data are unable to move away from the labor-intensive procurement processes as they have to constantly source supplies or equipment for the patients. This places the teams under tremendous pressure when the departments are unable to reduce their costs.
Benefits of an E-Procurement System for Medical Procurement
Implementing e-procurement processes showcases reduced costs and process savings, amongst other benefits. Listed below are some of the benefits:
- Marketing and purchasing benefits
The e-procurement process includes a shorter buying process and an extremely easy purchase-to-pay cycle, among other advantages. Elimination of bottlenecks and silos is also observed due to the empowered employee requisitioning capabilities. E-procurement provides discount opportunities for various marketing possibilities. With built-in spending controls, automation of spending, as well as approval escalations, an e-procurement process provides an abundance of advantages that are visible in the purchasing life cycle itself.
- Finance and accounting benefits
While utilizing the e-procurement procedures, the finance and accounting teams also get hold of certain advantages. E-procurement accommodates cost savings, which lead to increased revenue as well as greater returns. The ease of use through integration with the accounting systems and the Enterprise Resource Planning (ERPs) are a direct result of the e-procurement process.
- Operational benefits
The overall operations have several obvious advantages from e-procurement, such as an increased inefficiency. This leads to a lowering of the procurement prices, lesser unauthorized purchasing of the equipment, and a faster procure-to-pay life cycle.
E-procurement processes eliminate the need for paperwork and its associated costs, provide greater ease of order to invoice matching, improve the audit trails, ensure faster delivery of the products, decrease the inventory levels, and provide a more streamlined approach to the entire medical procurement plan.
E-procurement is extremely beneficial as it reduces costs by 5 to 7%, causing an increase in profits across various healthcare facilities.
Measures to Improve the Medical Procurement Process
Although there has been a significant advancement in medical procedures and patient care, very little concern has been shown towards the various procurement challenges that are faced by the healthcare organization.
The higher procurement costs, longer durations to manage inventory that causes a delay in stocking up the supplies, and delayed procedures, are some of the challenges faced, which cause a negative impact on the patients. To optimize patient care, some measures can be taken in order to improve the medical procurement plans.
- Devising an efficient pricing strategy
The medical procurement process can be improved drastically if companies come up with a better pricing strategy. Organizations can track and manage information on the suppliers, labor as well as other expenses so that the pricing system is improvised. Organizations can also compare prices with their direct competitors by going through the publicly available database.
- Improving the contract management
Organizations usually rely on the purchasing organizations to draw up the contracts to save some costs on the services purchased. In the healthcare system, the rates set by the competitors majorly affect the pricing set for the healthcare services.
So, healthcare organizations must ensure that they examine the pricing structure in the contracts. In order to avoid overcharging of the services, organizations must monitor the contracts and also understand the strict confidentiality clauses concerning the prices set by the retailer.
- Improve the efficacy of orders and services
The ordering process can often turn out to be a pain for organizations due to the many errors that block the process. Errors with the ordering process lead to untimely delivery of the products as well as revenue losses. The time cycle for procuring the products is increased due to the inability to place orders correctly.
Organizations must emphasize providing accuracy of the orders so that less time is wasted on reordering the services. One easy way of improving the accuracy of the order is a Computerized Provider Order Entry (CPOE) system. Organizations that focus on improving order accuracy improve the medical procurement process.
- Make use of analytics to improve operational efficiency
The latest technologies must be used by healthcare organizations to improve the medical procurement process. These technologies should be supported by analytics. Leveraging the data analysis helps in improving the efficiency of the procurement process.
With features of data and analytics, the healthcare system has the ability to transform into strategic business assets. Latest technologies also reduce the financial load and expenses. Medical procurement can only improve when healthcare organizations start focusing more on the data-driven strategies procured due to these latest technologies.
- Minimize retailers
While dealing with a variety of dealers, there can be a great deal of confusion because organizations may often overlook the other extensive demands of the lost efficiency whilst focusing only on the price. A dealer who can provide all services, including delivery and set up, is, therefore, much more feasible for the healthcare organization.
- Shrink the operational drag
Letting go of the traditional paper-based multi-step procedures is a major move to increase the efficiency of the healthcare system. The traditional system requires multiple purchase orders, reviews, filing processes, securing authorizations from various departments, and similar such steps.
Organizing the process via an automated procedure is time efficient and makes it easier for the people responsible for the various tasks in the medical procurement plan to communicate and carry out the process efficiently.
- Minimize the potential problems
Implementing a single procurement solutions provider reduces the chance of creating complications in the medical procurement plan. Even if there are complications, the impact is minimized to zilch. The delivery and service complications are incorporated to increase the operational efficiency while the off-site storage fees are reduced. The damage, as well as repair and service issues, are integrated into the medical procurement plan.
- Leverage the dealer’s experience
A dealer who has a couple of years’ work experience behind them may prove to be more systematized to work with. The dealer must provide the variety of medical facilities required, have cost-efficient products to fulfill the needs of the organization, and help the organizations pick out the best products and services. In addition, the dealer must also provide consultation concerning the technological difficulties.
Management of a Medical Procurement System
Every healthcare institution requires a proper stock of equipment, drugs, medicines, and other similar supplies to provide the best healthcare and rehabilitation facilities to the patients. An efficient medical procurement system is required in order to equip the staff with all the necessary tools that are needed to provide the best quality patient care.
- Assessing the needs and resources
Determining the type of medicines and supplies required in the healthcare facility is very important. The location must also be kept in mind for the purpose of shipping, storing, and distributing the supplies. A proper inventory is required to store the supplies.
The inventory space must have spacious cabinets, refrigeration, and a temperature control system. Well-trained staff must be responsible for managing and placing orders, tracking shipments, and storing the stocks to ensure increased efficiency and accuracy.
- Working with the ministry of health
Drugs and medical equipment can be procured via various sources; however, being acquainted with the ministry of health will make it easier for the medical procurement plan to follow all necessary national rules and regulations.
- Building the procurement team
A well-trained procurement team analyses the procurement needs, solicits donations, receives, and evaluates offers. They also purchase suppliers from vendors, organize the shipments and also track them, manage the arrival of the products as well as the storage of supplies. Furthermore, the team will oversee the distribution of the medical equipment and medicines to the assigned healthcare facilities.
- Sourcing the stock
The procurement of the supplies can be carried out via various means. The procurement decisions balance the urgency of purchase against its cost. Donations from medical supply recovery organizations and manufacturers, as well as purchasing from local suppliers, must be looked into first before making heavy purchases. Record keeping is the essential step to good donation management.
A successful procurement system is built on the ability to adapt or change the methods to provide the required patient care. Implementation of a good procurement system and effectively managing the medical procurement system ensures efficient delivery of health care. Procurement is a challenging task that requires attention and proper coordination for every minute detail. An effective medical procurement plan, in the long run, creates a sustainable healthcare system.