1. Using Public Procurement to Stimulate Innovation and Address Demographic Change in Europe
Conference Board of Canada
Centre for the Advancement of Health Innovation
Ottawa, Canada
May 6th, 2014

2. If the need for innovation in healthcare is obvious…

3. … the role of purchasers in the innovation process is not!
Primary care doctors
Medical specialists
Nurses
Hospital administrators
Technology manufacturers
Para-professionals
Purchasers
Pharmaceutical
companies
Nutritionnists
Public Health
Commissioners

4. Summary of the presentation
Introduction
About RESAH
About Hospital procurement in Europe
Purchasing: new doorway for innovation in hospitals?
The HAPPI experience
Context and objectives
Our methodology: a market-oriented approach
Main outcomes and lessons learned
Conclusion
5 recommendations for a smart procurement of innovation

5. Summary of the presentation
Introduction
About RESAH
About Hospital procurement in Europe
Purchasing: new doorway for innovation in hospitals?
The HAPPI experience
Context and objectives
Our methodology: a market-oriented approach
Main outcomes and lessons learned
Conclusion
5 recommendations for a smart procurement of innovation

6. PART I: INTRODUCTION

7. Regional RESAH: Overview National
« Réseau des Acheteurs Hospitaliers », founded in 2007
Public, not-for profit
Staff :
30 people in central team
140 contact points in hospitals
A network of 1000 experts
A key player of healthcare procurement in France
3 levels of activity
International
National
Regional

8. RESAH: Regional Core Business
Funded by the Regional Health Authority of « Ile-de-France »
Groups the purchases of 140 member hospitals & nursing homes
42,000 beds
1,5 billion € procurement/y
Partnership with AP-HP (biggest teaching hospital in Europe)
Purchase both medial & non-medical products & services
11,7 M people
18,5 % total F
Mission of support to the RHA to set up an innovation policy at regional level

9. RESAH: National Activities
Provides consultancy and training services via a Resource and Expertise centre
Training
Consulting
Benchmark
Mandates
Drives an inter-regional coalition of joint hospital procurement
Support of the French Ministry of Health
8 B€

10. RESAH: International networks
European projects :
Coordinates HAPPI
Participates in INNOCAT, INSPIRE
International networks :
IHF “Group Purchasing Special interest Group”
EHPPA

11. About hospital procurement
Why does procurement matter?
2d expenditure category after staff
30% of the operationnal budget
Increasing proportion
Security
Cost-effectiveness
Impact
Procurement
Continuity of the service
Quality
Competitivity
Social aspects

12. About hospital procurement
Cost control
Legal security
Quality and efficiency
Innovation
Basic objectives
New!

13. Hospital Procurement in Europe: overview
Total 130B€ /y
Main volumes:
Allemagne
France  18B€ / y UK
Italy
Spain
Several organisation models:
Centralisation at National level vs. Regional level
Competition vs. Collaborative approach with several organizations that are complementary
Private operators vs. Public operators

14. Hospital procurement in Europe: trends
Concentration, reduction of the number of operators
In 2030: 100 strategic procurement organisations in EU
Cross-border cooperation
Strategic collaboration networks
Joint procurement

15. Hospital procurement in Europe: trends
The European Commission supports networks of public buyers in all sectors and promotes demand-driven innovation
Public procurement of innovation (PPI) when buyers act as « first customers » to purchase existing innovative solutions
Pre-commercial procurement (PCP) when buyers and suppliers share the costs and risks of R&D to address needs that are not covered by the market
NEW! PCP becomes Innovation Partnership (EU directive)

16. Why procuring innovation?
The purchasing department: perfect doorway for innovation
Interface between supply and demand
Transversal skills
New missions of the buyer:
Establish and develop a fruitful dialogue between internal users and external suppliers to express the « fair need »
Search for innovative solutions that might improve the quality of care
Implement an impartial methodology to guarantee cost-effectiveness

17. Assess innovation, question needs
Research the market
What are the existing solutions and how will they evolve? Is there a standard offer?
Are there alternative solutions and what are their distinctive features?
Main players, characteristics of their offer, marketing strategy?
Added-value of a solution compared to another?
Risk? Previous experiences, outcomes?
Innovation-related cost within the price?
Which innovation (product / economic model / services)?
Assess and question the need
What are the real needs considering priorities and resources?
Is this really necessary? What is its added-value? Esteem value or use value?
Which price can we afford to pay for it ?
Are we able to recoup the cost of the solution on the long run?
Should we encourage the suppliers to innovate in economic models (e.g. pay-as-you-go) rather than in warranty levels (e.g. commitment on a maximum consumption rate)?
Example of metholodology

18. The central purchasing body: ideal tool to disseminate innovation
Launches procurement procedure 2
Supplier 1
Suppliers
Expresses uncovered need 1
Resah-idf
Hospital A
Supplier 1
Commercializes the innovative offer
Hospital B
Other hospitals
Awards framework contract 3
Sign subsequent agreements 4
Executes contracts 5

19. Summary Introduction The HAPPI experience Conclusion About RESAH
About Hospital procurement in Europe
Purchasing: new doorway for innovation in hospitals
The HAPPI experience
Context and objectives
Our methodology: a market-oriented approach
Main outcomes and lessons learned
Conclusion
5 recommendations for a smart procurement of innovation

20. PART II: THE HAPPI experience

21. Healthy Ageing: a priority for Europe
As life expectancy increases across Europe, causing healthcare costs to escalate, the European Commission has made the theme « ageing well » a strategic priority for 2020
 Healthcare providers must offer innovative solutions for enhanced care in the home, hospitals and nursing homes and improvements in working environments

22. A European project
The European Commission is embarking on a new initiative: supporting demand-driven innovation
Call for Proposal
2011: “Supporting Public Procurement of innovative solutions: networking and financing procurement” (CIP Programme)
HAPPI: snapshot
partners
Duration: 42 months
Start date: 2 October 2012
Budget: 2M€ prepa + 2,5M€ procurement

23. Objectives General Objectives Main outputs
Address the challenge of demographic change in Europe
Use public procurement to stimulate demand-driven innovation
Main outputs
Create a network of Public Procurers of innovation in healthy ageing
Set up a European collaborative platform where demand meets supply
Support the industrial ecosystem and a European market

24. Who are we? The HAPPI consortium is coordinated by Resah (FR)
7 Central Purchasing Bodies
3 procurement & innovation experts
2 Academics
NHS C.S. MH
SCR
FHL
BPI
BITECIC
ICLEI
EHESP
Univ.
Torino
RESAH
FPA
FIBICO
NHS Commercial Solutions (UK)
Mercur’Hosp (Be)
Società di Committenza Regionale Piemonte (It)
Fédération des Hôpitaux Luxembourgeois
Resah (Fr)
Federal Procurement Agency (Au)
FIBICO (Es)
BPI France (Fr)
BITECIC Ltd (UK)
ICLEI (Ge)
Univ. Torino (It)
Ecole des Hautes Etudes en santé publique (Fr)

25. Difficult need assessement
Methodology
Non-mature market
Many stakeholders
Difficult need assessement

26. Methodology Solution: a market-oriented approach 1 2 3
Using the HAPPI online platform, research and understand the market (products, solutions and stakeholders) 2
Analyse the market & develop specifications 3
Issue a joint European invitation to tender & award contracts to enable healthcare organisations to procure innovative products and services

27. What are we buying?
Products, services, systems which enable independent activity and optimise health for older people and those working in that environment - healthy outcomes

28. How to define innovation?
First application / commercialisation
New to the contracting authority and new to home markets
Including existing technologies used in an innovative way
Including non-technological innovation (e.g. design)

29. 4 infodays to engage the market
Vienna
London
Paris
Turin

30. The HAPPI Platform

31. The HAPPI Platform

32. The Innovation Showcase

33. Main outcomes Main figures Where do we stand now?
More than 500 people participating in the infodays
More than 200 suppliers registered on the platform
142 innovative solutions submitted on the platform
2 new buyers (associate members)
Where do we stand now?
Ongoing design of specifications on 4 topics of interest :
Fall detection & alerting system
Rehabilitation treadmill
Walking track
Cooling/warming mattress topper
Ongoing preparation of tendering documents
Call for tender to be published by next July.

34. Lessons learnt Challenges Opportunities Market engagement
Communication plan is strategic
Involve SMEs (SME helpdesk)
Language barrier!
Legal obstacles (joint call for tender)
1 EU directive, 27 application laws!
Need to find the « lowest common denominator »
Match market offering with needs (involve experts)
Opportunities
Online tool  enlarges your vision
Open mindness brings good ideas and address unknown needs
Monitoring the market prepares future procurements

35. One example

36. PART III: CONCLUSION

37. 1. Develop the lead of purchasers

38. 2. Give direction to your suppliers
Short-term
Mid-term
Long-term
Try to design a roadmap:
“Ask for a solution, do not prescribe it”. (Guide for Public Procurement of Innovation by the European Commission)
“The root cause of failures is not bad outcomes, it’s bad expectations” (Pr Ron Adner, Tuck School of Business)

39. 3. Build up a collaborative approach
Suppliers are more willing to invest in / share innovative ideas when they have close relationships with their customers
3 important collaborative activities :
Involve suppliers in your processes - especially the seek of performance
Demonstrate openness. Share information with suppliers in a timely manner.
Work with suppliers to help them improve their competitiveness both in terms of cost and quality.
Strong buyer – seller ties not only influence innovation outcomes but also affect inventory reduction, quality improvement and cost efficiency.

40. 4. Become a “preferred customer” of leading suppliers
Long history of collaboration
Possible adjustments of cost policies
Strategic importance (image, turn over)

41. 5. Identify the most innovative suppliers
Suppliers must have a certain level of know-how in order to become innovative contributors.
 Establish indicators.
Small is beautiful!
Go meet SMEs.
Think global and cooperate!

42. THANK YOU FOR YOUR ATTENTION!
QUESTIONS?
Contact:
Carole GANDON
Head of International Affairs
RESAH