European healthcare institutions show a growing willingness to embrace electronic procurement of supplies but there will be a rocky road to universal acceptance of the technology, according to a new study by market consultants, Frost & Sullivan.
The study’s findings show that just £276 million worth of hospital supplies were bought electronically in Europe in 2002, but this figuree is forecast to rise to £23.25 billion in 2008 representing around 23% of total hospital expenditure.
By 2010 the prediction is that a third of goods will be bought through electronic channels with the UK and Germany leading the way and some interest from new EU members, especially Poland.
Getting to that position, however, promises to be difficult. The study notes that vendors of hospital products have tried to encourage e-procurement but have been held back by purchasers’ worries about data security, healthcare professionals’ inherent conservatism, organisational inertia and a reticence about changing existing practice. The proscriptive manner in which health authorities and governments require purchasing to take place is also pinpointed as a major barrier to progress.
Frost & Sullivan industry analyst, Chris Cherrington, says that competitive sealed tenders are commonplace and the transition of this method to the Internet is not simple. Despite these reservations, most major vendors appreciate the advantages of e-procurement.
He portrays the transition to e-procurement as being vendor driven. "Firstly they have the technical and financial strength to build e-procurement platforms which can ultimately exclude smaller vendors from the market altogether. Secondly, they are capable of drastically reducing the cost of sales for their low margin items. As a result, the onward march of e-procurement in healthcare continues apace."
Challenges remain in hospitals, however. The report notes that e-procurement is neither difficult nor complex in its enactment; however, it presupposes a certain level of automation which does not necessarily exist in European hospitals.
Mr Cherrington explains, “For most hospitals this ‘industrial’ approach to procurement is unusual. Hospitals are driven by clinical need, not profit and are unable to predict demand. Generally their best managers are concerned with clinical outcomes, rather than procurement. Inefficient funding has further entrenched the attitudes of those people dealing with procurement and a ‘buy while you have the budget’ attitude is ubiquitous.”
The study predicts however that the advantages of e-procurement will overcome the barriers with the greatest rewards for vendors lying in the area of surgical disposables and pharmaceuticals. Capital expenditure on premium priced equipment is not expected to feature prominently in the development of e-procurement.