Rethinking Procurement Strategy of Healthcare Institutions

BW Healthcare World on Monday organised a roundtable conference on the issue of procurement of medical equipment and devices, where industry leaders from across the healthcare space took part, leaders from the medical technology sector, diagnostics sector, the hospital sector and a dignitary from the Niti Aayog engaged in an active dialogue to paint an effective and efficient procurement strategy that will benefit the healthcare landscape to evolve into its next phase of growth.

Industry leaders at the conference contended that the Indian medical technology industry is moving in the right direction with exciting times ahead although the sector needs improvements in many aspects and still has a long way to go to reduce the 80 to 85 per cent import dependency of the Indian healthcare system when it comes to using medical devices in hospitals and diagnostic labs. 

Hospital’s Procurement

On building a good procurement strategy, Sojwal Vora, Chief Supply Chain Officer, Manipal Hospital, said that his hospital gives preference to what the clinicians actually need, adding to that he said, organisations cannot only look at the purchase price but give the clinicians what they can use for best clinical outcomes. He says the clinical experts can also provide the purchase managers with a set of product options to choose from and then the managers can leverage choices from the multiple players suggested by the clinicians. 

Patient centricity is also high on scale for the healthcare providers, Upasana Arora, MD, Yashoda Super Speciality Hospital stated that she recently upgraded a GE’s X Ray machine with a Fuji’s X Ray machine due to better and early TB detection in the latter’s product. “We purchase our equipment keeping in mind the patients and then we also involve all our clinicians who are the end users as they ought to be satisfied with what we buy,” she said. 

From the doctor's perspective of choosing the best technology, Dr Ashok Seth, Chairman, Fortis Escorts Heart Institute, stated that clinical governance is the modus operandi at his hospital and its an integral part of the decision-making process. Heading the Fortis Healthcare Medical Council, Dr Seth says his hospital has divided the procurement into two parts one is the consumables and the other is the high-end electronic medical devices and implants. 

“For consumables, the procurement officer can assess the quality, and certifications and go for the cheapest option certainly and then we can have internal audits around them as we are never sure of the quality control and assurances of these products, many of which are made in our own country,” Dr Seth said.

He further stated that on the other hand, there are implants which make a serious impact on clinical outcomes and products like these he says should be bought on the advice of clinicians. “In Fortis Healthcare the standardisation for stents, for instance, comes through a speciality council, which has 51 cardiologists from across the fortis hospitals deciding on the cost-effective value-based product for the patients”.

He said that these standardisation measures are necessary as the country has not really established a good quality matrix and the focus till now has been on increasing manufacturing, availability and affordability of these products adding that now is the right time to have robust quality control metrics which the healthcare providers should follow. 

“Today the manufacturers know how much the equipment is being utilised and the preventive maintenance that can reduce the cost for the hospitals, so it's no more about increasing the capex but about increasing the performance of the equipment, or the training attached and given to the clinicians or simply identifying the parts which can give it a longer life. The cost optimization typically comes from what value-addition manufacturers can bring in for a particular institution,” stated Madan Sampath, Chief Supply Chain Officer, HCG Hospitals.

Diagnostics Procurement

Dr Harsh Mahajan, Founder & Chief Radiologists, Mahajan Imaging said that procurement in the diagnostics industry depends on the applications that most of the clinicians require out of certain equipment be it an MRI, be it a Cath Lab. “In the metros, especially since there is drainage from the surrounding geographies one needs to have merely the highest end equipment in the hospital even if it is a small specialty hospital. Similar is the case for diagnostic centres in the metros.”

Adding to that he said that the technology keeps advancing of these high end devices and that the manufacturers should provide a upgradation path, explaining that some manufacturers do provide a modular upgrade path and with this the old models can sustain for up to 15 years or more. “Next thing is getting assistance in repairing these costly machines, so the service backup and stability of the company are very important and after that one has to look at the cost aspect holistically by subsuming the service contract, the lifetime cost of the equipment, rather than just looking at the price,” stated Dr Mahajan.

The Make-In-India Push

Speaking on the policy front, Urvashi Prasad, Director, Office of Vice Chairman, Niti Aayog stated that given the indigenous push by the government not only in the lower-end products like consumables but also in the high-end products which is where import dependency is perhaps the highest, that is where we need to catalyze indigenous innovation to build the acceptance. And yes at the lower end, we need to address issues of quality and standardisation without a doubt but we must continuously focus on the higher-end innovation and innovation at scale.

Referring to the PPO (Public Procurement Order), she said the government in the order clearly said that preference will be given to indigenously manufactured devices. Adding to that she said that “The government’s policy in the MedTech space has made several strides over the last few years but more is definitely needed going forward, at the central and state levels.”

The Medtech Industry

The country’s DNA was never in the R&D space, stated Sunil Khurana, CEO & MD, BPL Medical Technologies adding that only in the last 7-8 years the shift towards R&D has taken place. “This change is now happening at large and we are seeing a great response as far as the reactive approach is concerned. India being 16-17 per cent of the global population contributes only 2 per cent of medical devices. We are talking about a USD 10-11 billion industry against a USD 600 billion market globally,” Khurana said. 

In this scenario without incentivising it was not attractive for the players to make products and only in the last few years private players have sincerely started making it, he explained. Consumables and low-tech products are easy to make but when it comes to electronic products, it's a long lifecycle, with R&D, development, trials, and approvals, and in this, if you have ten projects only six may succeed. 

Speaking for BPL Technologies, he said ‘We have not gone for high-end products but we are producing the mid-range ones and we are very successful in that with hospitals like Fortis, Manipal and HCG accepting our products, so now the acceptance I believe is very high. He added that today India is exporting around USD 1.5-2 billion worth of products, and if we have to become really successful in times to come then each company has to develop products which are of global standards.