Hospital procurement, also referred to as healthcare procurement, is procurement for the healthcare industry. In simple terms, it’s the process hospitals and healthcare facilities use to acquire the goods, services, and equipment that they need to run their day-to-day activities.
This includes things like:
- Medical supplies: Medications, disposables, surgical instruments, etc.
- Medical equipment: Diagnostic machines, monitoring devices, surgical equipment, etc.
- Non-medical supplies: Office supplies, cleaning products, linens, etc.
- Services: Maintenance, IT support, catering, laundry, etc.
And as we know, the procurement process encompasses everything from identifying needs and sourcing the product through to handling logistics. This video is a little old, but the healthcare procurement tips are still relevant today:
How is healthcare procurement different to other types of procurement?
One of the most common questions around healthcare procurement is how it differs from other areas of procurement. As strategic sourcing consultants, we’ve dealt with the many complexities found when working with healthcare providers.
Regulatory Compliance
Perhaps the toughest part of healthcare procurement is that it requires compliance with regulatory standards, documentation, and certifications like FDA approval and CE marking — and believe us, these can be very stringent.
For example, products like medical devices and pharmaceuticals have to meet complex licensing requirements, which in turn makes this a more demanding procurement environment than in other industries (although they all come with varying obstacles).
Clinical and Patient Impact
Another massive consideration that you don’t have with other procurement strategies is patient safety. When you consider that most of the products have to be clinically validated, as well as potentially being sterilised and going through infection control processes, these requirements add another layer of complexity to the mix.
Stakeholder Complexity
Speaking of complexity, healthcare procurement often has a wide range of people to deal with — from the stakeholders in the company to the clinicians, administrators, and procurement teams themselves. Clinical preferences will influence purchasing decisions, and it’s essential that you find a balance between clinical staff preferences and cost, which is easier said than done.
Supply Chain Criticality
Whilst running out of stock can happen regularly in other industries, there’s zero tolerance for stock-outs of critical items in the healthcare industry. Think about the specialised storage requirements in healthcare procurement (like cold chain management) that may be the difference between life and death. For example, insulin is a necessity for many diabetic patients.
Product Specificity
Healthcare products are often highly specialised, and whilst you may want to look for cost savings with other products, sometimes there’s limited substitutability in the healthcare sector. The products that you buy have to be compatible with existing equipment, so looking for cheaper alternative products may not be a possibility.
Cost Structure
Finally, healthcare procurement can have complex pricing models, like per-procedure pricing. When you also consider insurance and reimbursement, it can be harder to work out the total cost of ownership (including maintenance) of high-value capital equipment.
This just scratches the surface when it comes to healthcare procurement processes. If you would like any assistance with your own procurement challenges, feel free to contact us.
