By Tim Wilson

Recently-published research suggests that the Canadian healthcare system is making steady progress toward broader implementation of Value-Based Procurement (VBP), though more work needs to be done.

In August, the Conference Board of Canada published a briefing document, Setting the Stage: The Status of Value-Based Procurement in Canada, followed in October by a more in-depth paper titled Different Is Necessary: Approaches to Advance Value-Based Procurement in Canada. October also saw the publication of Improving Health Care Through Pro-competitive Procurement Policy, the second of three reports published as part of the Competition Bureau’s digital health care market study.

These studies highlight the important role that procurement plays in Value-Based Healthcare (VBHC), where value is measured as “the best patient-centred clinical and operational outcomes at the lowest total cost over the full care cycle.” In this context, Value-Based Procurement (VBP) supports VBHC by assessing the overall value of a product or solution in terms of its ability to improve patient outcomes and experiences. VBP interacts with VBHC, and is foundational to it.

“It would be interesting to look at the interplay between VBHC and VBP,” Dov Klein, Vice-President of Value-Based Care, Ontario Health, told the Conference Board. “They are distinct things.”

Klein’s comments speak to the central and unique roll played by VBP. Often, VBP can be what initiates a larger shift to VBCH, because at times the requirements for VBP, though challenging, can be more easily defined. The numerous practical changes required by VBP can support a cultural shift to VBHC, wherein an organization actively sees the benefit in moving the emphasis away from price, or volume, to the long-term value for patients and healthcare systems.

Canada’s success stories

In its research, the Conference Board provided four methodologies where VBP brought considerable financial and non-financial value to the contracting authority. Benefits were also realized for key stakeholder groups including patients, providers, hospitals, healthcare systems, and our broader society.

In the first, the MEAT (Most Economically Advantageous Tendering) VBP framework was applied to the procurement of bloodstream infection prevention solutions in an intensive care unit (ICU), with potential savings in the millions of dollars, as well as improved outcomes.

The second example came from the Southlake Regional Health Centre Cardiac Program, which saw program costs reduced by 35% in 2017 compared with the base year (2014–15). This is equivalent to approximately $10.5 million in 2021 dollars. Importantly, these savings can then be reinvested to improve both patient access and quality of care.

In the third, Eastern Health—Newfoundland’s largest health authority—implemented a VPB model that now has about 20 ongoing initiatives. These range from patient-focussed, evidence-based targets for diabetes mitigation, to addressing issues related to staff scheduling and patient flow. Here, fixed bundle payments, risk sharing, and competitive dialogue have generated positive results.

The final example is well-known to industry observers. In 2018, a collaboration among Ontario’s Ministry of Health and Long-Term Care, CorHealth Ontario, Plexxus, and the province’s 12 ICD-implanting centres, resulted in the first provincial value-based procurement of implantable cardioverter defibrillator (ICD) and cardiac resynchronization therapy (CRT). The VPB process analyzed the total cost of care over a patient’s lifetime, resulting in financial and non-financial value for patients, providers and hospitals, the healthcare system, and the supplier community.

VBP and a pro-competitive procurement policy

The Competition Bureau’s digital health care market study placed specific attention on several initiatives that are modernizing healthcare procurement.

At the national level, these include CAN Health Network’s “Edges,” which are groups of hospitals, home care organizations, health authorities, and private clinics that collaborate to procure innovative solutions. There is also the Canadian Collaborative Procurement Initiative (CCPI), which is led by Public Services and Procurement Canada. The CCPI brings together groups of buyers across Canada, making it easier for vendors to sell to multiple organizations, and thus avoid duplicative procurement processes.

There are also many compelling examples from coast-to-coast at the provincial level.

In Newfoundland and Labrador, the 2018 Public Procurement Act promotes increased transparency, consistency, and flexibility within procurement practices, thus helping the province move toward VBP in healthcare.

In Quebec, the provincial Ministry of Health and Social Services and the Treasury Board secretariat have laid the groundwork for innovation procurement in the province through the Quebec Life Sciences Strategy and the Public Markets Strategy.  These strategies, once fully deployed, will help facilitate the integration and adoption of innovative medical technologies into the health care system.

Ontario is also showing progress. The provincial government has launched its Innovation Procurement framework, which focuses on an outcome-based procurement model. As well, with the launch of Supply Ontario, which is expected to be fully operational by the end of 2023, Canada’s most populous province is moving toward a centralized, whole-of-government procurement approach. The Ontario government also has its BPS Primer on Innovation Procurement, an impressive document that can help with the planning and implementation of VBP.

There are examples in western Canada, too. Alberta has been learning from its well-integrated senior leadership structure, which supports effective decision making to operationalize VBP approaches and practices, and to generate value for patients and other stakeholders across the province. As well, British Columbia’s Procurement Concierge Program promotes innovative procurement approaches, ensuring that all suppliers can participate.

Identifying the barriers to VBP

In the Competition Bureau’s digital health care market study, six barriers were identified that can stop the best solutions from taking hold in Canada. These are: fragmentation; restrictive contracting requirements; emphasis on price; risk-averse contracting; lengthy procurement cycles; and prescriptive polices.

All of these, in their way, can act as barriers to VBP, but the focus on price rather than value is the most pertinent. As the report notes, exclusive emphasis on the short-term cost of a solution does not result on effective competition. Instead, the entire range of benefits must be taken into consideration, including both lower long-term costs and better patient outcomes.

In its research, The Conference Board also arrived at six barriers – though these are specific to VBP. They include health and hospital system finance models; provincial funding models; data and measurement; policy and legislation; and professional capacity.

For its part, the Competition Bureau’s study came up with three recommendations to address the barriers. First among these was to establish a national innovation procurement centre of expertise, followed by the removal of barriers to competition, and policies that support innovation-friendly procurement processes. These policies would promote innovation via demand-side policies that reward those who solve problems. This is, in effect, the government acting to “buy” innovation, with public procurement harnessed to achieve demand-side solutions.

This is an exciting time for VBP, but more work needs to be done. Initiatives that renew how funding is structured, and that encourage competition, are long overdue. The good news is that with timely, affordable access to actionable data – supported by the right policies – VBP will be playing an increasingly important role within VBHC. The result will be a more competitive and innovative healthcare system, with better outcomes for all Canadians.

Tim Wilson is a freelance writer.