‘Health care providers could professionalize purchasing processes by joining forces in purchasing combinations, and by opting for public tenders. Such steps would force manufacturers and suppliers of medical equipment to submit their best offers possible, and could lead to cost savings,’ says Henk Don, member of the Board of the Netherlands Competition Authority (NMa), after analyzing the results of the sector study on medical equipment (such as artificial hips, x-ray machines, stoma devices, and surgical masks). This study was commissioned by the NMa and the Dutch Ministry of Health, Welfare and Sport, and was carried out by research agency Ecorys.
Although comparisons between medical-equiptment prices in the Netherlands and Germany are somewhat tricky, health care providers can learn from how the purchasing process is organized in Germany. Large purchasing combinations are active in the German market, some even representing up to 100 hospitals. Subsequently, their bargaining positions vis-à-vis suppliers are much stronger. Furthermore, independent commercial purchasing organizations are active in Germany, which handle the negotiations on behalf of hospitals.
Another finding of the report is that information on prices and quality of various equipment is seriously inadequate. Professional buyers, but also medical specialists, nurses, and management, will thus find it difficult making an informed purchase decision. They are heavily dependent on the manufacturers’ knowledge, expertise, and information on, for example, how to operate certain instruments and other devices for specialist operations.
Role of health insurers
Health insurers play a very limited role in the purchasing process of medical equipment. Their attention is predominantly focused on the final price and quality levels of health care services, whereas cost reductions can also be achieved on the purchasing side of the market. One of Ecorys’ recommendations to health insurers therefore is to look into possibilities for expanding their role on the purchasing side, including on the market for medical equipment.
The NMa and the Ministry of Health, Welfare and Sport commissioned Ecorys to carry out this study in order to gain more insight into the structure of these markets and how they operate. Should hospitals and health care providers have indications that the Dutch Competition Act may be violated in purchasing processes, they can submit them to the NMa. Such indications are highly appreciated, as they help the NMa carry out its duty of making sure that markets work better. One example of potentially illegal conduct is collusion among suppliers when submitting offers, so-called bid-rigging. The NMa’s brochure on bid-rigging can be found here. Hospitals that wish to receive more information or wish to submit a tip-off are invited to contact the NMa Information and Tip-Off Line by calling +31-70-330-1306.
An English summary of Ecorys’ study ‘Sector study on medical equipment, a study into the structure and operation of the market for medical equipment’ can be downloaded here.