Improving Australia’s public health procurement

| November 22, 2016

A new report from Global Access Partners says there is significant scope for improvements and savings in Australia’s public health procurement; a more rational tendering process is required. Catherine Fritz-Kalish, Co-Founder and Managing Director of GAP, explains why these improvements haven’t occurred in the past. 

We have just released the latest report from the GAP Taskforce on Government Health Procurement. It summarises the deliberations of a cross-jurisdictional and multidisciplinary group brought together last year by the institute for active policy, Global Access Partners, to analyse public health procurement and offer practical proposals for reform.

The procurement of medical products, equipment and technologies in the public health system is complicated by processes which increase costs and delays for all stakeholders. While many attempts at reform have taken place, their effectiveness has been undermined by a failure of consistent implementation, due to the fractured and complex nature of Australian public health care.

Our challenge was to find new solutions to address broad problems with procurements as a whole, rather than better ways to manage traditional approaches in specific situations.

Most public healthcare procurement in Australia is undertaken by the states, but differences in agency structures and local practices increase costs for both purchasers and suppliers. No central body coordinates state procurement in the interests of efficiency and quality. Public service administrators and industry stakeholders acknowledge major opportunities to improve costs and efficiency. However, efforts to maximise value remain hampered by transactional issues, high tendering costs, arbitrary funding cycles and overly restrictive specifications designed to minimise risk and ‘future-proof’ purchasing decisions.

To address this issue, the taskforce has come up with a number of specific reforms to improve the procurement process and maximise value from equipment purchases. Some of these reforms call for a simplification of tendering rules, the relaxation of divides between capital and operational expenditure, and the distribution of equipment from larger city hospitals to smaller regional centers, just to name a few.