Devices savings to help hospitals manage budgets

Media release Hospital devices

New data from PHARMAC is predicting DHB hospital spending on surgical and medical devices will fall by about $25 million over coming years.

And this is set to grow with a consultation released today that, if implemented, would save a further $3.2 million over five years. This comes from using market share procurement for some categories of wound care devices – offering a guaranteed share of the market to suppliers in return for price reductions.

PHARMAC’s work in national contracting for hospital medical devices continues to grow, with six new contracts effective 1 July that take the number of devices on the Pharmaceutical Schedule to over 20,000.

These new agreements were for sutures, sterilisation products, interventional cardiology, and orthopaedic trauma products.

Overall PHARMAC has negotiated national contracts for products representing current spending of around $70 million per year. With price reductions negotiated by PHARMAC the hospitals making use of those contracts could collectively save $25 million over five years.

Director of Operations Sarah Fitt says PHARMAC has been pleased with the way DHBs have embraced the opportunity provided by national contracts, and in some cases changed their suppliers to those with national contracts.

“It’s been great to see DHBs implementing the contracts we have negotiated, which are a tangible way that PHARMAC can help DHB hospitals to find efficiencies on equipment they are using. For example Hawke’s Bay hospital successfully changed to the nationally contracted supplier of laparoscopic trocars and instruments.

“Savings come from reduced spending on products hospitals are already using, freeing up funds that DHBs then have available so they can purchase other equipment or provide other  health services for patients.”

PHARMAC’s first stage of work in hospital devices is reaching its conclusion.

“We initially identified 12 categories of medical devices, with feedback from health professionals and DHB staff, to conduct national contracting work in. We now have contracts or commercial processes underway in all these categories.”

Market share procurement for some wound care products is part of the next step, introducing mandatory contracts that DHBs must use. This signals the direction of travel for PHARMAC in future devices negotiations.

Sarah Fitt says PHARMAC took advice from health professionals on the choice of products to include in the market share consultation, PHARMAC will continue to rely heavily on feedback from health professionals and others in the sector as it proceeds.

“We’re really pleased with the feedback from people who have helped us along the way. This has been a really important part of the process to date. We’re also now investigating what other categories we could consider for national contracting, and will be seeking further input before we proceed.”