Value Based Procurement

Assessing the value and measuring what matters, using outcome divided by cost, placing clinical and patient-reported outcomes at the heart of the procurement decision making process.

Value-Based Health Care is an emerging paradigm that has the power to change health care as we know it, but in order to achieve real impact, it must be applied to the key decisions that make up care delivery. Achieving high value for patients must become the overarching goal of healthcare delivery, with value defined as the health outcomes achieved per pound spent. This goal is what matters to ‘the person’ and unites the interests of everyone within the system.

Why is change necessary?

Procurement in NHS Wales has, for many years, been successful in driving a quality agenda as well as delivering significant savings year on year. However, because of the breadth and depth of contractual savings achieved on products and services across a vast range of category areas, the opportunities for extensive traditional price savings are now fewer. This situation, together with a national focus on Value, led Procurement Services to review its strategy and introduce a Value-Based Procurement approach across Wales. There is still a place for a traditional model of procuring goods and services, but now more than ever a requirement to focus on the total cost of care and patient outcomes is paramount i.e. a systems approach. To embed Value-Based Procurement requires a culture change within NHS Wales, as well as systems to underpin the infrastructure of data collection. However, the challenge is fully aligned to the National Value-Based Health Care Programme and the recommendations of transforming the system of care throughout Wales

The Value-Based Procurement Programme has developed an Implementation Framework to ensure a systematic approach to support Value-Based Procurement activity for all of NHS Wales.

The Framework has 3 areas of focus:

Product - Quality and price focus
Process - Efficiency Focus
Patient - Effectiveness and Outcomes Focus

Product– Traditionally the quality-driven standardisation ‘Once for Wales’ approach has allowed procurement to work with stakeholders and set quality standards for product selection. This allows contracts to be awarded based upon the best price above the quality threshold. The approach is well proven and remains entirely appropriate for many areas of spend.

Process – There is an acceptance that the total costs of care need to be considered and not just the purchase price of goods. A number of models are being introduced that allow for greater transparency and assessment of cost beyond the product. Time-Driven Activity-Based Costing (TDABC) is now utilised across NHS Wales, as is Patient Level Costing (PLCs). These models allow an activity to be focused on leaner processes to avoid unnecessary costs and increase efficiency.

Patient – The greatest degree of influence of a Value-Based Procurement system in healthcare is to ensure that the patient is the focus. This means that both clinical and patient-reported outcomes are informing the requirements and that the measurement is allowing for better contract management that is to the benefit of the patient and the healthcare system.

Value-Based Procurement in practice

There are an increasing number of products and services from NHS suppliers that have been selected based on their ability to reduce costs and improve outcomes that matter to patients (for example improved quality of life). 

The arrangements are such that if the desired improvement is not achieved for the patient then the supplier is not recompensed.

This approach can help align NHS Wales and suppliers around a common goal of improving outcomes that matter to patients.

For more information please email the VBP team: VBP@wales.nhs.uk