When it comes to public procurement, authorities, so far, have been mostly exposed to procedures applicable to traditionally required goods and services, software included. In the field of healthcare, ICT-related procurement has largely concentrated on medical instrumentation and general equipment, such as computers and basic management software, tackled via standard price-competition based tendering structures.
More recent needs, such as procurement of eHealth solutions, present different challenges. Addressing last January's ETNO Innovation Day in Brussels, Gabriele Galateri, chairman of Telecom Italia, noted that for electronic health records, the supply of goods and ICT services represents, on average, only 42% of the total costs the purchasing organisation must incur to start using the solution. The remaining cost is attributed to the reorganisation of the purchaser's business processes. In a traditional tendering structure, this cost is not considered at all.
It is rather obvious from the above that new models for public procurement in eHealth are required. The European Commission has long recognised that the eHealth market in Europe is subject to fragmented public demand, which, in turn, leads to a lack of exchangeability of products and services. To this end, the Lead Market Initiative's eHealth Task Force, in 2007, recommended that cooperation among public procurers was to be encouraged and that their input was to be sought in programmes such as the Competitiveness and Innovation Framework Programme (CIP) and 7th Framework Programme (FP7). On first reading, the suggestions of the Task Force appear to concentrate not on the problem itself, which is the acquisition of working eHealth solutions, but on the preparatory, precompetitive stage. Can this be the answer to a pressing problem? Indeed, convincing arguments are there to support such a view.
Procurement for a relatively young subject such as eHealth should be used to encourage innovation to enter the market so as to facilitate the development of lower priced products and services. Professional and technical standards and interoperability are key elements to this; therefore procurement should become their promoter and driver. Otherwise, as John Cruickshank observed in a recent policy paper, market-leading suppliers will become "content to exploit a proprietary trap which adds costs and prevents new innovations entering the market". He also recommended that, to serve this target, the procurement framework itself should be subjected to a process of continuous improvement, which should also ensure that technical standards for interoperability were built into the future procurement model.
That said, it is hard to imagine that the average public procurer in eHealth is in a position to pursue such goals entirely on its own. Not only does it have to be aware of the total cost of ownership of the solution, which, as mentioned before, can be more than twice the cost of purchasing, but it also has to be constantly aware of the evolving standards in a changing but fragmented market. It is very likely in this case that
traditional approaches, i.e. tender issuance, award of contract and implementation, result in less than optimal solutions, especially in the long term.
The alternative for a procurement authority is to become involved at the earlier stages of the product innovation lifecycle by steering industry developments to meet its mid-to-long term purchasing needs through the procurement of research and development. The outcome is prototype products and services which, after being successfully tested in a real life potential customer environment, prove to procurers that new technological
innovations have become mature enough for the next stage of wide market diffusion through fully competitive commercial public procurements. The process, code-named "pre-commercial procurement", was first introduced by a Communication of the European Commission end of 2007 as a means to enable public procurers to acquire the development of services and products that can help improve the quality and efficiency of public service provisioning. Cross-border cooperation on PCP can bring additional advantages. Pooling together procurement needs through cooperation between public purchasers would reduce the R&D cost and risk for the individual public purchasers, provide critical mass on the demand side, stimulate competition and exploit economies of scale and scope. Joint cross-border pre-commercial procurement could also contribute to solving common European issues, for example in sectors requiring interoperability and coherence of solutions across borders. . eHealth procurement represents a typical such case.
The PreCo Coordination Action, jointly financed by the European Commission under FP7, takes the view that pre-commercial procurement for eHealth is probably the "missing link" in the EU innovation cycle. Studies show that the commercialisation success rate (number of companies bringing newly developed solutions successfully on the market) in demand-driven R&D measures (public procurement of R&D) is larger than in supply side R&D measures (traditional public aid to industrial research and development). Using pre-commercial procurement or, in short, PCP, as an interactive collaborative learning process for buyers, vendors and end-users alike, interoperable solutions and open standards based projects can be employed to serve long term perspectives and foster innovation in fields such as eHealth.
Despite good policy intentions around Europe to increase the demand drive for innovation in the eHealth area, obstacles to PCP ranging from legal reservations to prevailing monopoly conditions, which prevent the entrance of new players in some national markets, are there. Perhaps most importantly, changes in the mindset of all stakeholders are needed; the expectation is that these will happen once the results of successful cases become apparent.
More concrete conclusions are expected at the end of this year, when a future roadmap and policy recommendations for the European Commission will be produced by the PreCO Action. This will be accompanied by a collection and analysis of best practices in Europe, where countries such as Denmark, Finland, Sweden and the UK have already taken steps in the use of demand and user-driven innovation practices in eHealth in connection with PCP type models.
Article sources:
ETNO Innovation Day: eHealth: an answer to EU healthcare and demographic challenges, Brussels, Keynote speech by Gabriele Galateri, Telecom Italia chairman, 25 January 2011 http://www.etno.eu/Default.aspx?tabid=2321
European Commission: "Encouraging innovation-friendly procurement in eHealth", 2008http://ec.europa.eu/information_society/activities/health/docs/policy/encouraging-innov-friendly-procurement200804.pdf
John Cruickshank: "Healthcare without walls:
delivering telehealth at scale", November 2010http://www.2020health.org/dms/2020health/downloads/reports/2020telehealthLOW.pdf
PreCo project http://preco.share2solve.org/main/
European
Commission Communication: "pre-commercial procurement", 2008http://ec.europa.eu/information_society/tl/research/priv_invest/pcp/documents/pcp_brochure_en.pdf
Nature of documentation: Article