Innovation Procurement: A Strategy to Achieve Value-Based Healthcare

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Innovation Procurement: A Strategy to Achieve Value-Based Healthcare Join the conversation!

@WIN_Health Dr. Anne Snowdon, Academic Chair World Health Innovation Network

Health System Trends Driving the Value Agenda Rising Global Healthcare Costs:

5.3% per year

17.4% 6.2%



10.7% 6.4% 6.6%

Highest global spending as a percentage of GDP is in North America

Deloitte, 2014

Trends in Health Systems: Personalization & Precision

- the 10 highest grossing drugs in the USA, number of people that improve (blue) vs. number that fail to improve (red) - Consider the value: 78,000 LTC beds in Ontario, > 60% of those residents are on 10 or more medications (OLTCA, 2016)

Personalized medicine: Time for one-person trials Nicholas J. Schork Nature 2015. Volume 520, Issue 7549


Meet Jim: COPD, Stroke, 24 medications, 8 providers visiting weekly, 8 admissions to hospital in last 14 weeks, multiple ED visits & wife struggling to cope

Complexity means that "One Size Fits All" (Clinical Pathways) is not effective, this population requires “One size fits one�

Value for Clinician Teams

“Clinicians become used to missing information (1:4 pts), equipment is missing or defective (1:3 pts), “cut corners” to get the work done. “Accept poor reliability as the norm, and stop reporting problems” “Reporting is voluntary – fear of being blamed, receive no feedback, view reporting as unl ikely to lead to change” (Baker, 2014)

Care Environments • OR Door Opened: Every 1.5 min • Total case open door time: 10.75 minutes • Percentage of supply related openings: 30% Dr. Randy Bradley, U. Tennessee. Orthopedic Procedures

Value-based Healthcare Value = (Porter, 2016)

Health outcomes that matter to patients Cost of delivering these outcomes

“Setting the goal as cost containment, rather than value improvement, has been devastating to healthcare reform efforts. Cost reduction, without regard to the outcomes achieved, is dangerous and self-defeating, leading to false “savings” and potentially limiting effective care.” (Porter, 2010)

Value From a Stakeholder Perspective Organization •Accountability for Quality and Safety •Evidence informed •Fiscally sustainable Clinicians •Efficient, productive work environments •Involvement in product decisions •Quality of patient care, safety

Physicians •Autonomy, Expertise •Quality care for Patients •Compensation •Work Environments

Procurement Team •Best Products at Best Price •Value Expert Knowledge, •Tools to do the job

Health System Senior Leadership •“Value” Population, community • Team Culture Patients/Citizens •Quality care •Health, Wellness & Quality of Life Vendors •Valued as Partners •Access to Provider Teams •Profit Industry Leaders •System Intelligence, New Opportunities •Advanced knowledge, Market Growth •Quality based business model 10 |

Traditional Approaches to Public Sector Procurement Goods and services are procured: right quality right source the right price delivered at the right time right place the right quantities right services KEY FOCUS: ENSURE FLOW OF PRODUCTS INTO HEALTH SYSTEMS, STRONG FOCUS ON COST


Value Agenda: Innovation Procurement solutions/innovations that achieve value,, not measurable outcomes

fair, open, transparent

co-design solutions share risk

Key Features of Innovation Procurement •

Attention to value, well beyond financial/lowest cost

Procures a solution, or innovation, with a defined set of outcomes o

Facilitates fair, accountable, transparent dialogue between vendors and health team o

Solution outcomes are defined and measurable, functional/technical solution specifics are not; allows for innovation and creativity

Purchasers learn about market solutions, vendors learn system needs

Value-focused, drives innovation o

Focuses on improving patient outcomes while controlling costs leveraging innovative solutions for healthcare system

Innovation Procurement Map

Define the Desired Solution Outcomes

Market Engagement (pre-procurement)

Innovation Procurement Process

Implementation of Procured Solution

Defining a Procurement Solution & Outcomes

Preprocurement Market Engagement

Innovation Procurement Process

Implementatio n of Procured Solution

Defining a procurement solution with defined, measurable outcomes • The health system procures a solution, that directly overcomes a priority challenge that requires an innovative solution (e.g. virtual care infrastructure, e-referral platform, program solution) • Key outcomes are defined, must be measurable • clinical or patient outcomes (i.e. shorter wait times), operational outcomes (i.e. increased efficiency productivity), cost savings.

Defining a Procurement Solution & Outcomes

Preprocurement Market Engagement

Innovation Procurement Process

Implementation of Procured Solution

Market engagement – Pre-Procurement • Market Sounding • Releasing a document to the vendor community • Describes procurement priority outcomes, proposed model and scope, what to expect • Market Scanning • Survey of the vendors market, uses trade shows or in-person sessions with vendors • Purpose: understand “what is possible, available, better understand the size and scope of the market

Defining a Procurement Solution & Outcomes

Preprocurement Market Engagement

Innovation Procurement Process

Implementation of Procured Solution

Innovation procurement process

Evaluates solutions and the potential for vendors to achieve outcomes in partnership with the health team/organization • Design Contest: vendors compete with design iterations of their proposed solutions • Competitive Dialogue models: vendors participate in a series of individual dialogue sessions to refine solution requirements and specifications • Innovation Partnership models: co-design relationship to build a solution together

Defining a Procurement Solution & Outcomes

Preprocurement Market Engagement

Innovation Procurement Process

Implementation of Procured Solution

Implementation of Procured Solution • A preferred vendor and solution is chosen, a pilot study evaluation of the solution is implemented • Outcome measures examine success of the solution in meeting the outcomes and accountability to ensure vendor promises and contractual obligations are met • Scalability of the solution follows: across organizations, or province, informed by the success and impact of the solution.

Innovation Procurement Cases Community: Coordinated e-referral platform






Hospital: Suite of cardiac solutions Community: Patient & caregiver support solution Hospital: Smart privacy solution University: Technology solution for library services platform

Case 1: A Community-based Healthcare Organization Looking to Procure a Coordinated E-Services Platform for the Region Procurement Strategy: Design Competition • “Market Sounding”: determined no solution existed on the market, outcomes informed by vendor expertise and dialogue • Design Competition: demonstrate proposed design strategy • Outcome: A consortium of vendors were selected to participate in a proof of concept stage to design and test the solution then scaled across health organizations and clinical teams across the province RFP RFP Decision


Market Sounding

Market Engagement

Understand market, available solutions

Scope and design solution outcomes

Vendor Submissions

Design Phase Assess and “test drive” partnership fit

Proof of Concept Stage real-world test of the design, scale across region

Case 2: A Hospital Looking to Procure Solution to Improve Quality, Safety & Cost of a Large Cardiac Program Procurement: Competitive Dialogue • Competitive Dialogue model was used to procure improved quality outcomes, value-added services, full range of products to meet quality, safety, cost outcomes • Phase 1: procured commodities with “value-adds” for subspecialty programs • Phase 2: procured value for the program focused on improved patient outcomes RFP Issued

RFP Decision

Design Procurement Outcomes

Pre-qualify Vendors

Phase I Competitive Dialogue

Program experts identified performance outcomes & measures of value

Shortlist vendors with capacity to meet outcome requirements

Vendors present submissions, gain clinician feedback to strengthen final solution

Phase II Competitive Dialogue Dialogue with vendors to fully evaluate proposed solution, negotiate added features

Contracts Generated significant cost savings, value for program

Case 3: A Community-based Healthcare Organization Procures a Patient & Caregiver Support Solution for the Home Procurement: Innovation Partnership • Designed RFP to partner with a vendor to design solution to meet patient and caregiver needs • Partnership to develop the solution, then trial in a lab and implement with patients in community settings RFP Decision

RFP Issued

Market Scanning

Design Solution Outcomes

Site Visits with shortlisted Vendors

Understand current market capacity

Engage patients, clinicians to scope desired outcomes

Evaluated solutions, for the potential for achieve outcomes

Lab Trial

Field Trial

Deploy Solution across system

Lab evaluation unsuccessful, unable to recruit seniors

Unable to recruit seniors to participate.

Project closed

Case 4: A Hospital Looking to Procure a Smart Privacy Solution for the Organization Procurement Model: • Competitive Dialogue model: dialogue with short listed vendors to determine which one can offer privacy solution to align with new legislation, reduce “false positive” alerts RFP Issued

Market Engagement

PreQualificat ion Survey

Engaged Vendors to understand market options, for AI based solutions

Surveyed vendors to assess solution capability

RFP Decision

Phase I: Outline Solution

Phase II: Detailed Solution

Feedback on Draft Solution from Health team

Evaluate submissions for detailed function and AI tools

Pilot testing Pilot test the for value potential in real-world


Contracted with hospital, RFP open for all hospitals to join

What is the Value in Value-Based Procurement?

The Value of Goals, Objectives & Solutions

Innovation Procurement requires a focus on goals and outcomes rather than products.

Engaging Vendors as Partners “starting these dialogues way back at the beginning, this partnership starts there, and they’re actually

building a partnership together with the submission and with everything, so I think that’s really what the dialogue does. It brings the two parties together to build that and start the partnership way, way earlier than just the paper

exercise… So I think that’s the major, major difference that dialogue brings to the table for sure.” (Procurement Lead) “I mean how many have we seen provincially or regionally it doesn’t work because they’ve picked the wrong partner. And I think you are repaid tenfold anything you invest in getting the right people to work with.” (Health Organization Senior Manager )

Creating Solutions with Vendors

“And really the process is to build a submission with the vendors, that’s the objective of the process. And I find this process really, really perfect because there is no surprises on the vendor side. They can ask all the questions they want, so as we move along they perfectly know what we are expecting. They can even guide us by saying, ‘well you are saying this; what about this? Did you think about that?’ And also we can ask questions in return so we know exactly what their solution [is all about], ask for a demo so we know exactly what they can do and cannot do.” (Member of Evaluation Team)

Clinician Engagement: Key Condition for Success Clinician engagement: • draws on deep knowledge and experience in delivery patient care to define outcomes that are relevant to value • provides vendor access to clinician expertise for vendor community • accounts for clinician needs, expertise and feasibility of the solution right questions can be asked • creates sense of clinician “ownership” “At the end of the day, working with the product to actually understand all the differences between them, so that the right questions get asked before you get to the you know, contract negotiation phase.” (Case 2)

Cost Savings are Substantial

Identifying Best Practices for Innovation Procurement What we still don’t know

What we know matters

• Impact on innovation & value

• Early market engagement

• Impact on vendors & health organizations, or health systems

• Flexibility, collaboration • Organizational culture & leadership

• (long term) return on investment

Innovation Procurement: A Series of Trade-Offs

Single Phase or Multi-Phase? 1. Single phase = “winner take all� , more holistic program level outcome. 2. Two or more phases = divide the awarded procurement (80/20%) to reduce risk of supply failure 3. Variation in what product/solutions in each phase: each phase offers different focus (ex. type of product is different in each phase) 4. Multi-phase reduces risk of single vendor but time intensive

Program Procurement vs. Product Procurement Program Value

Specialized Value

Evaluators e required to defin outcomes at the program level, define “Value” Overall program e value may overrid sub-specialty product preferences

Potential perceived diminished access to best products within each unit

Case: Cardiac Program - Program level spend offers greater value potential - Program requires products are procured for the entire program - Product Procurement - select best product, achieve agreement on how “best is defined”, less value add - Cardiologist view: product procurement across provinces

Shared Risk Built into the Procurement Outcomes Health Organization on Allowed for focus mes patients and outco

Outcomes focus enables vendor accountabilities m Shifts dialogue fro “sales” approach to negotiating value


Hesitancy amongst vendors of the ability of their products alone to meet these outcomes and accept responsibility beyond product performance

Sharing Risk Holds vendors accountable for achieving outcomes

Vendor shares in risk of outcomes - 25% improvement in efficiency, productivity – DI, Cath. Lab, OR

- Key patient or utilization outcomes for new medications introduced (realworld evidence, pharma)

Contract Timelines: Length drives Value VENDORS


Highly motivated to secure lengthy contracts

Leverage contract length to achieve greater value (pricing, value add services)

Enables vendors greater flexibility to offer value

Need to consider strategies for access to innovative technologies that may emerge over contract period

ex. Cardiac program contract 5 – 10 years

Outcomes: “Can’t Manage What You Don’t Measure” GOAL: Fair and transparent evaluation of diverse vendor submissions a. Need to consider ways to measure highly varied solutions from vendor • Ex. value-added components translated into a dollar value using a common cost structure model. Submissions evaluated in terms of currency to quantify and equalize value; evaluated only in terms of dollar value b. Value measured over the life of the contract – value for patients, providers, quality, safety • Long term value not yet evident, need measurement frameworks that captures outcomes for patients, clinician teams, programs, health systems

Challenges of Innovation Procurement Expertise Capacity: “There’s (often) no road map” Procurement teams embarking on Innovation Procurement processes often have limited knowledge on how to execute an Innovation Procurement project

Flexibility and openness of process: “It’s making that leap” Innovation Procurement processes need to be negotiated, there is a need to be flexible in creating the processes, open to a different mindset

Resource Intensiveness: “It’s High Effort” Innovation Procurement is resource intensive and requires teams to implement it, highlighting the importance of teamwork and collaboration Engaging clinicians can be difficult from a practical perspective, as they need to balance time commitments


Health System

Understand health system priorities and challenges – may drive innovation Shifts vendors from “sales” to solutions that achieve value Requires “skin in the game” - accountability to achieve outcomes with health systems through risk sharing

Provincial leadership builds collaboration to find solutions all health systems are facing May overcome challenge of small markets Builds capacity for measurement frameworks that demonstrate outcomes, builds accountability in system with vendors

System Capacity Building Procurement Teams Shifts focus from products and pricing to value and outcomes Build provincial capacity for broader stakeholder engagement, focused on solutions May incentivize innovation capacity, tools and frameworks

Clinician Engagement Brings needed expertise to defining value and outcomes for patients, evaluating solutions Brings strengths and credibility to negotiation with vendors (can’t play one against the other) Collaboration across jurisdictions – potential for standardization

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