22 Jan 2018   |   News

New EU rules underpin move to value-based procurement in health

As procurement comes under the microscope at this week’s MedTech Forum in Brussels, Science|Business Healthy Measures looks at how the health service in Wales is planning to link what it pays for implantable lenses to good outcomes for cataract patients

The price paid for lenses implanted during cataract surgery could be linked to patient outcomes under a radical rethink of how hospitals procure medical technologies in Wales.

The Aneurin Bevan University Health Board, based in south east Wales, is working with the International Consortium for Healthcare Outcomes Measurement (Ichom) and several lens manufacturers to prepare a tender which could launch later in the year.

This will be the first of a new breed of procurement contracts designed to get better value for money while improving outcomes for patients, said Adele Cahill, director for value-based health care at the Aneurin Bevan Health Board. “Demand for services is rising steadily and while we have worked to improve productivity and reduce the number of unnecessary procedures, this will not be enough to close the gap,” she told Science|Business Healthy Measures. “We need to redesign procurement and find innovative approaches to getting better value.”

Companies recognise that the current approach to procurement is unsustainable, according to Cahill. Rewarding outcomes also fits with a push by industry to persuade purchasers to buy on quality rather than cost, saying this can help reduce complication rates and length of hospital stay, or may mean fewer clinic visits.

New European procurement rules promote value over penny-pinching

The move to value-based procurement in Wales is in line with EU legislation supporting public bodies in selecting the best value tender, rather than choosing the cheapest option. By the deadline of April 2017, the majority of member states had transposed three procurement-related directives, agreed in 2014, into national law, and the impact of the new rules is just beginning to play out.

The directives could have a major impact in healthcare once member states get to grips with them. One problem is that some hospitals mistakenly believe they cannot speak to suppliers before launching public procurement procedures. However, as long as companies are treated equally, prior market consultation is allowed, to help purchasers understand what technologies are on the market, or in development.

The EU rules encourage health services to write tenders that describe the problem they want to solve rather than detailing a specific product, giving companies more leeway to propose innovative products. The directives also provide more scope for factoring in life-cycle costs, including the environmental impact of products. Some technologies may have lower upfront costs but lead to higher overall costs if complications or relapse rates are higher, or if they are less energy efficient than alternative products.

However, the new rules are complex and require hospital staff to acquire new skills. To ease implementation, the Commission plans to publish a guide to innovation in healthcare procurement later this year.

Gathering momentum

Procurement will come under the microscope at this week’s MedTech Forum in Brussels (24-25 January). More than 70 per cent of medical technologies are purchased through procurement procedures, and with the new EU legislation encouraging purchasers to take a more holistic view of how technologies can impact overall costs, discussion of how to link outcomes to payment is gathering momentum.

The industry group MedTech Europe is working with the Boston Consulting Group (BCG) and hospitals around Europe to pilot a value-based approach to procurement, and has set out criteria to help frame purchasing negotiations.

“The old way was sometimes pennywise but pound foolish,” said Jennifer Clawson, associate director at BCG. “This approach helps buyers think through the different elements that go into care for a particular patient group,”

That is echoed by Thomas Kelley of Ichom, which to date has defined standard sets of outcomes in 23 disease areas. “The attractive thing about value-based healthcare is that it helps unite health systems, which are often siloed and fragmented,” he said. “With value-based procurement, we can build real world outcomes into the process and have everybody working to deliver the same outcomes.”

Cataracts an ideal testbed

Cataract surgery is the most common planned procedure in the UK, with demand rising as the population ages. That makes it an ideal testbed for assessing new approaches to improving outcomes and overall value.  There is a defined episode of care, and data on the number of steps in the patient pathway, which lens is implanted, and the number of complications, are easily collected and analysed.

A year ago, a group led by consultant ophthalmologist Chris Blyth began collecting patient and clinical outcomes data for cataract surgery at the Royal Gwent Hospital in Wales as part Ichom’s global health outcomes benchmarking (Globe) study. This underpinned a broader exercise, looking at the time spent preparing for and performing cataract operations, and the subsequent follow-up.

Most cataract patients have excellent outcomes but for some, cells in the eye accumulate on the newly-implanted lens, making it cloudy. It has been shown that cells are more likely to adhere to some lenses than others.

In future, payment for lenses and associated equipment could be linked to clarity of vision and complication rates. The Aneurin Bevan health board started talking to lens companies nine months ago to define criteria for reimbursement, ushering in a new era of risk-sharing between purchasers and manufacturers.

“Industry is ready,” said Cahill. “They are starting to devise models to support service redesign. Investing more in better outcomes is a common goal between the National Health Service and industry.”

While it is easy to assess outcomes in cataract surgery, for some products, such as diagnostic tests, determining the precise impact on overall patient outcome can be challenging. However, companies and health systems have strong incentives to develop models to assign value to each component of a complex system.

Kelly says that, in the long run, public payers might seek to include broad economic and social outcomes, such as how quickly people return to work after surgery, or the cost to family members of caring for them, rather than looking only at the impact on hospital budgets.

In the meantime, cataract surgery and other planned procedures will be among the first tests of whether procurement could accelerate the transition to a value-based health system fuelled by outcomes data.

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