2023-2024, Block 5 GW4009MV. Healthcare Procurement & Value Chain Management
WEEK 16
Inhoud
Workshop 2: Public procurement (16-4-2024)..................................................................................................3
1) What is public procurement and how is it different from private procurement?.................................3
2) What do you see as possible challenges of public procurement of innovation?...................................4
Notes during the workshop:.........................................................................................................................5
What goes on in public procurement?......................................................................................................5
The Purchasing Wheel:.............................................................................................................................5
How does public procurement work?.......................................................................................................7
Who performs public procurement?........................................................................................................8
Public procurement – when:.....................................................................................................................8
Procedures of public procurement:..........................................................................................................9
Compliance & Sanctions:........................................................................................................................10
Impacts of tendering regulations:...........................................................................................................10
Lecture 3. Purchasing of healthcare & Reimbursement (19-4-2024)..............................................................11
‘Traditional’ payment models.....................................................................................................................12
Fee-for-service........................................................................................................................................13
Capitation...............................................................................................................................................13
Salary......................................................................................................................................................13
Why do we need payment reform?.............................................................................................................14
Alternative payment models (APMs)..........................................................................................................14
Pay-for-performance...............................................................................................................................14
Bundled payment....................................................................................................................................15
Comprehensive population-based payment...........................................................................................16
Alternative Quality contract of BCBS (US)...............................................................................................18
Implementation of APMs............................................................................................................................19
Example of the BUNDLE research: large-scale evaluation of APMs in Dutch hospital care.................20
Which factors play a significant role in the development and implementation of APMs?..................21
Literature........................................................................................................................................................24
For workshop 2:..........................................................................................................................................24
VIII. Arrowsmith et al. (2011) – Chapter 1: Public Procurement: Basic Concepts and the Coverage of
Procurement Rules.................................................................................................................................24
Public procurement objectives...............................................................................................................25
1
,2023-2024, Block 5 GW4009MV. Healthcare Procurement & Value Chain Management
Key principles for implementing procurement objectives: transparency, competition & equal
treatment............................................................................................................................................26
For lecture 3:...............................................................................................................................................30
IX. Cattel et al. (2018). Value-based provider payment: towards a theoretically preferred design.........30
Key-value dimensions in healthcare....................................................................................................30
A theoretically preferred VBP design..................................................................................................32
X. Van Veghel et al. (2018). Health insurance outcome-based purchasing.............................................35
An innovative VBHC-aligned outcome-based payment model............................................................36
XI. Porter & Kaplan (2016). How to pay for health care..........................................................................38
How fee-for-service destroys value for patients..................................................................................38
Capitation / Population-based payment.............................................................................................38
Bundled payments..............................................................................................................................39
2
,2023-2024, Block 5 GW4009MV. Healthcare Procurement & Value Chain Management
Workshop 2: Public procurement
(16-4-2024)
Preparation:
Read the book chapter listed below (Arrowsmith et al., 2011). You must read the book chapter before
coming to the workshop. Bring your notes to the workshop. Please, also bring a laptop or tablet.
While reading this book chapter, develop answers to the following questions:
1) What is public procurement and how is it different from private
procurement?
ChatPDF:
Public procurement refers to the government's activity of purchasing the goods and services necessary
to carry out its functions. It involves the process of deciding what to buy, selecting a contracting partner,
and administering the contract for effective performance. Public procurement is regulated by legal rules
and other measures to ensure transparency, competition, and value for money.
Public procurement differs from private procurement in several ways:
Public Private
Objectives Often prioritize goals such as transparency, May focus more on efficiency and
accountability, and promoting social profitability.
objectives.
In addition to obtaining value for money.
Regulatory Subject to specific legal and regulatory May have more flexibility in
framework requirements to ensure fairness, decision-making. Such that there is
competition, and integrity in the process. room for negotiation and
“partnering”".
Stakeholders Involves government entities, which have a Is driven by the needs and goals of
duty to act in the public interest. individual businesses or
organizations.
Funding Funded by taxpayers money and must Is funded by private resources and
adhere to budgetary constraints and public aims to maximize profits.
scrutiny.
Social and May incorporate social and environmental May focus primarily on commercial
Environmental objectives into the process, reflecting considerations.
considerations broader public policy goals.
While there are similarities in the goal of obtaining value for money between public and private
procurement, the context, objectives, stakeholders, and regulatory frameworks differ significantly
between the two sectors.
3
, 2023-2024, Block 5 GW4009MV. Healthcare Procurement & Value Chain Management
2) What do you see as possible challenges of public procurement of
innovation?
ChatPDF:
Public procurement of innovation can face several challenges, including:
1. Risk Aversion: Public procurement processes are often risk-averse, preferring proven solutions over
innovative ones due to concerns about failure or budget constraints.
2. Lack of Expertise: Procurement officers may lack the knowledge or expertise to assess innovative
solutions effectively, leading to a preference for traditional options.
3. Legal and Regulatory Barriers: Complex procurement rules and regulations may hinder the ability
to engage with innovative suppliers or technologies, creating barriers to innovation.
4. Budget Constraints: Limited budgets and the need to demonstrate value for money can discourage
public entities from investing in innovative solutions that may have higher upfront costs.
5. Procurement Procedures: Lengthy and bureaucratic procurement procedures may not be conducive
to the fast-paced nature of innovation, leading to delays and missed opportunities.
6. Supplier Ecosystem: Limited competition or a lack of innovative suppliers in the market can restrict
the options available for public procurement of innovation.
7. Intellectual Property Rights: Issues related to intellectual property rights and ownership of
innovations developed through public procurement processes can be challenging to navigate.
8. Performance Measurement: Evaluating the performance and impact of innovative solutions in the
public sector can be complex, requiring new metrics and assessment frameworks.
Addressing these challenges requires a strategic approach to public procurement that encourages
innovation, fosters collaboration between public and private sectors, provides training for procurement
professionals, streamlines processes, and promotes a culture of experimentation and learning.
4
WEEK 16
Inhoud
Workshop 2: Public procurement (16-4-2024)..................................................................................................3
1) What is public procurement and how is it different from private procurement?.................................3
2) What do you see as possible challenges of public procurement of innovation?...................................4
Notes during the workshop:.........................................................................................................................5
What goes on in public procurement?......................................................................................................5
The Purchasing Wheel:.............................................................................................................................5
How does public procurement work?.......................................................................................................7
Who performs public procurement?........................................................................................................8
Public procurement – when:.....................................................................................................................8
Procedures of public procurement:..........................................................................................................9
Compliance & Sanctions:........................................................................................................................10
Impacts of tendering regulations:...........................................................................................................10
Lecture 3. Purchasing of healthcare & Reimbursement (19-4-2024)..............................................................11
‘Traditional’ payment models.....................................................................................................................12
Fee-for-service........................................................................................................................................13
Capitation...............................................................................................................................................13
Salary......................................................................................................................................................13
Why do we need payment reform?.............................................................................................................14
Alternative payment models (APMs)..........................................................................................................14
Pay-for-performance...............................................................................................................................14
Bundled payment....................................................................................................................................15
Comprehensive population-based payment...........................................................................................16
Alternative Quality contract of BCBS (US)...............................................................................................18
Implementation of APMs............................................................................................................................19
Example of the BUNDLE research: large-scale evaluation of APMs in Dutch hospital care.................20
Which factors play a significant role in the development and implementation of APMs?..................21
Literature........................................................................................................................................................24
For workshop 2:..........................................................................................................................................24
VIII. Arrowsmith et al. (2011) – Chapter 1: Public Procurement: Basic Concepts and the Coverage of
Procurement Rules.................................................................................................................................24
Public procurement objectives...............................................................................................................25
1
,2023-2024, Block 5 GW4009MV. Healthcare Procurement & Value Chain Management
Key principles for implementing procurement objectives: transparency, competition & equal
treatment............................................................................................................................................26
For lecture 3:...............................................................................................................................................30
IX. Cattel et al. (2018). Value-based provider payment: towards a theoretically preferred design.........30
Key-value dimensions in healthcare....................................................................................................30
A theoretically preferred VBP design..................................................................................................32
X. Van Veghel et al. (2018). Health insurance outcome-based purchasing.............................................35
An innovative VBHC-aligned outcome-based payment model............................................................36
XI. Porter & Kaplan (2016). How to pay for health care..........................................................................38
How fee-for-service destroys value for patients..................................................................................38
Capitation / Population-based payment.............................................................................................38
Bundled payments..............................................................................................................................39
2
,2023-2024, Block 5 GW4009MV. Healthcare Procurement & Value Chain Management
Workshop 2: Public procurement
(16-4-2024)
Preparation:
Read the book chapter listed below (Arrowsmith et al., 2011). You must read the book chapter before
coming to the workshop. Bring your notes to the workshop. Please, also bring a laptop or tablet.
While reading this book chapter, develop answers to the following questions:
1) What is public procurement and how is it different from private
procurement?
ChatPDF:
Public procurement refers to the government's activity of purchasing the goods and services necessary
to carry out its functions. It involves the process of deciding what to buy, selecting a contracting partner,
and administering the contract for effective performance. Public procurement is regulated by legal rules
and other measures to ensure transparency, competition, and value for money.
Public procurement differs from private procurement in several ways:
Public Private
Objectives Often prioritize goals such as transparency, May focus more on efficiency and
accountability, and promoting social profitability.
objectives.
In addition to obtaining value for money.
Regulatory Subject to specific legal and regulatory May have more flexibility in
framework requirements to ensure fairness, decision-making. Such that there is
competition, and integrity in the process. room for negotiation and
“partnering”".
Stakeholders Involves government entities, which have a Is driven by the needs and goals of
duty to act in the public interest. individual businesses or
organizations.
Funding Funded by taxpayers money and must Is funded by private resources and
adhere to budgetary constraints and public aims to maximize profits.
scrutiny.
Social and May incorporate social and environmental May focus primarily on commercial
Environmental objectives into the process, reflecting considerations.
considerations broader public policy goals.
While there are similarities in the goal of obtaining value for money between public and private
procurement, the context, objectives, stakeholders, and regulatory frameworks differ significantly
between the two sectors.
3
, 2023-2024, Block 5 GW4009MV. Healthcare Procurement & Value Chain Management
2) What do you see as possible challenges of public procurement of
innovation?
ChatPDF:
Public procurement of innovation can face several challenges, including:
1. Risk Aversion: Public procurement processes are often risk-averse, preferring proven solutions over
innovative ones due to concerns about failure or budget constraints.
2. Lack of Expertise: Procurement officers may lack the knowledge or expertise to assess innovative
solutions effectively, leading to a preference for traditional options.
3. Legal and Regulatory Barriers: Complex procurement rules and regulations may hinder the ability
to engage with innovative suppliers or technologies, creating barriers to innovation.
4. Budget Constraints: Limited budgets and the need to demonstrate value for money can discourage
public entities from investing in innovative solutions that may have higher upfront costs.
5. Procurement Procedures: Lengthy and bureaucratic procurement procedures may not be conducive
to the fast-paced nature of innovation, leading to delays and missed opportunities.
6. Supplier Ecosystem: Limited competition or a lack of innovative suppliers in the market can restrict
the options available for public procurement of innovation.
7. Intellectual Property Rights: Issues related to intellectual property rights and ownership of
innovations developed through public procurement processes can be challenging to navigate.
8. Performance Measurement: Evaluating the performance and impact of innovative solutions in the
public sector can be complex, requiring new metrics and assessment frameworks.
Addressing these challenges requires a strategic approach to public procurement that encourages
innovation, fosters collaboration between public and private sectors, provides training for procurement
professionals, streamlines processes, and promotes a culture of experimentation and learning.
4
