DHB health Procurement programme

Background

DHBs are significant purchasers of goods and services with annual non-payroll expenditure for Provider arms of approximately $2 billion. DHBs have signalled the importance of reviewing current procurement practices to identify the potential for generating cost savings and better health outcomes, and have established Procurement as one of the six priority areas in the DHBNZ Strategic plan. The Minister of Health is also seeking visible progress on DHB health procurement activity.

In November 2006 DHB CEOs agreed to the principles, structure and key activities for the DHB Health Procurement Programme. This programme is managed by DHBNZ and is governed by the CEO Group via the lead CEO and Procurement Steering Group.

The philosophy behind the approach to the programme is based on a network of DHB health procurement activity.

The objectives of the programme are to:

• maintain quality and high clinical practice
• reduce variation
• ensure the best price possible for the tax payer
• achieve the best possible outcome for the total cost of ownership.

Scope

Provider Arm purchasing
While ‘procurement’ entails much more than the purchasing function, the scope of the DHB health procurement activity is currently restricted to provider arm purchasing, excluding contracts for health services (Planning & Funding activities). The intention is to include a ‘funder’ perspective in the programme, and Planning & Funding teams will be included for communications and sector development aspects.

Principles

The principles for DHB health procurement activity are:

1. Collective behaviour. DHBs to work collectively to reach an agreed, tenable national position.
2. Gain exceeding inconvenience. DHBs may experience some inconvenience if the overall gain from the collective activity is agreed to be of greater significance than their own initiatives or supply deals.
3. Recognition of local DHB responsibilities. The approach will ensure no ‘surprises’ to local DHB accountability under the Act, with decision making placed at the appropriate level.
4. Building on existing structures, activities and best practice. There are already strong, well established regional procurement groups and agency roles and activity. The strategy and programme will build on these existing structures.
5. Realising the benefits of competitive markets. Procurement initiatives will ensure competitive prices and quality for funders and/or consumers, and incentives for innovation.

Areas of activity

Projects in progress are:

• Insurance
• Oral health
• Equipment
• Mobile Dental Units
• Fixed Facility Designs
• Vehicle Fleet Management
• Orthopaedic Prostheses
• Wound Care
• Cardiac Stents & related devices
• Syringe Drivers
• Diabetes Management Products
• Print Supply
• Energy and Utilities
• Office Equipment including PC's, laptops and peripherals