Let's be bold - bold goal 2
Generate $1 billion of savings from medical device management to reinvest in health outcomes for New Zealanders
This area of our work has high potential to free up funding for other health and government services while still meeting patient needs. Reaching $1 billion of savings is a bold target, but well worth pursuing given the importance of ensuring government funding is spent as effectively as possible.
Hospital medical devices savings – the PHARMAC story
Andrew Davies manages PHARMAC’s hospital medical devices procurement team.
We’re really pleased with the progress we’ve made in national contracting for hospital medical devices. Since announcing our first national contract in 2014, we now have more than $100 million of DHB devices spending under PHARMAC-negotiated national contracts.
There’s still a long way to go, but we are committed to completing national contracting across all device categories over the next two years.
Nationally-consistent access to hospital medical devices is the core aim. National contracting means consistent prices and terms negotiated for the same devices and device categories across all DHBs.
We’re also seeing savings emerging from this work not just in DHB staff time and effort, but in better pricing overall, while still allowing all existing suppliers to be used. This is even before we look at applying more competitive commercial processes across device categories as we have done in wound care. In return for a share of the wound care market and offers of more competitive pricing, we have awarded contracts to a limited group of suppliers. This approach has been implemented successfully this year. We are looking for more opportunities to leverage competitive pressure in this way, thus freeing up even more savings for Vote Health.
To date, the pattern of savings is similar to what we’ve seen in our early work on community medicines and hospital medicines. This is encouraging in light of PHARMAC’s bold goal of achieving $1 billion in savings by 2025.
The savings in themselves are only part of the goal. Because these savings are in the form of price reductions on existing products, they release funding for DHBs to reinvest in other healthcare. In other words, we help DHBs achieve more with their hospital funding.
Our ability to do this requires a lot of engagement across DHBs, including with clinical and product assessment staff, DHB executives, and the medical devices industry. We’ve been heartened by the feedback we received in our devices forums over the past year. We’ll continue to seek feedback as we progress, using those views to inform decisions that can be implemented by DHB hospitals.
Devices - the first three years
Savings from medical devices are on a similar track to our work in community medicines and hospital medicines, over the first three years.
A DHB view
Carolyn Gullery was an early member of the PHARMAC Board.
DHBs are 100 percent behind efforts to increase efficiencies in hospitals, including the work being led by PHARMAC, says Canterbury and West Coast DHBs' General Manager Funding, Planning and Decision Support Carolyn Gullery.
PHARMAC’s work in hospitals – both in medicines and medical devices – provides savings for hospitals that can be reinvested into other therapies or hospital services.
“The reality of any health system is constrained resources,” says Carolyn. “It’s up to all of us to use those as wisely as we can.”
PHARMAC’s track record in medicines gives DHBs confidence that PHARMAC can bring the same discipline and value to the hospital sector.
“PHARMAC has been very successful in the community pharmaceuticals world, and has made significant savings there.
“Saving money by making better purchasing decisions is great because it means you can fund something else. Demand is infinite and resources are finite, so we have to get better value.
“There’s two parts to that. Firstly, there’s better value for money through getting better prices. The second part is knowing we’re getting better value evidence-based tools and interventions to get the best possible health outcomes.”
Carolyn Gullery says PHARMAC’s continued engagement with DHBs, and particularly clinical staff, will be important to ensure success, although this will be helped by the on-going shift in thinking around value.
“I know how challenging it was in the early days of PHARMAC, when many clinicians didn’t see their role in the value for money argument, as it was often seen as being more about cost than value. That’s changed a lot. I think clinicians now see it as part of their role to think about using resources wisely.
“That’s why the Choosing Wisely campaign led by clinicians, which promotes good treatment choices by clinicians, has gained such support. That wouldn’t have happened so easily in the 1990s, so that’s quite a change.”
“DHBS are confident in PHARMAC’s ability to make progress in this area and appreciate PHARMAC’s willingness to work with clinicians, so that the broader impact on hospital workload and flow can appropriately be taken into account in its decisions.”
Last updated: 13 December 2018