MEDICAL EQUIPMENT IN PUBLIC PROCUREMENT OF HEALTH PROTECTION SECTOR

SUBJECTS,

 

Hanna Lewandowska, (SWPW, Płock, Poland)

 

The present case study is a continuation of the publication[1] on Polish procurement market and its influence on  public financial means management in the health protection sector subjects.

 

Key words: public procurement market, deliveries, medical equipment, offer valuation criteria

Abstract: The public procurement market is an area in which, as a result of market gambling (demand and supply), optimal prices are established. As a result, any purchase done by the subjects of public sectors using the public financial means is made on this market. The instrument that supports the effective spending of the public financial means is, among others, the criteria of tender offer quality valuation. The appropriate usage of such instruments, while buying the medical equipment, correlates directly with any future service of this equipment.

 

Introduction

Health protection sector is a public sector, which by means of its subjects, namely self-dependent health care centers (SPZOZ), directly affects the whole society health conditionings. The increasing costs of an individual subject functioning (health care center), which results from the introduction of modern technologies and innovative treatment methods, facing lack of sufficient financial means in the system results in equipment being the most crucial part of each medical service. This assortment is of the essence of the functioning of each subject that offers medical service. Medical equipment is also an indirect tool for gaining public financial means from the main customer of the service, e.g. the National Health Fund, which in the Polish health care system is their main beneficiary. The amount of the gained financial means affects their spending, and directly correlates with the purpose the means were given for. One of the instruments that allows for optimal determination of future intentions of managing the financial means are, among others, signals from the public procurement market, which, when read appropriately, give information about the prices and competition[2] and other factors which directly affect costs (expenses) of each respective health care subject. 

 

The public procurement market, on which as the result of market gambling (demand, supply), the price created constitutes a tool that supports optimal spending of the held financial resources, whereas the amount of the coming offers in response to one bid advertised (open tender) allows to choose the best (the cheapest) contractor/supplier. Instruments which support this choice are the offer valuation criteria used by the ordering party. In compliance with the adequate legal provisions (Community Procurement Directives)[3] the basis for choosing an appropriate bid is the price, while its calculable effect is the optimal managing the public financial means held by the subject. 

The aim of the present study case is to present formation of valuation criteria of tender offers for the medical equipment for the years 2004 – 2006, and, the cause and effect connection between these criteria and the orders for service, modernization and repair of equipment.

The established assumptions about the mutual interaction between the indicated situations allowed to form a hypothesis stating that: increase in medical equipment purchase depends directly on the amount of  orders for this medical equipment service, its  modernization and repair.

In order to prove this hypothesis the quantification of data regarding the amount of orders for medical equipment and its service was made. The given orders were issued on the public procurement market by the self-dependent health care centers and published in the Public Procurement bulletins in the years 2004 – 2006. Methods used to analyze the tabulated data were the commonly used statistical methods.

 

1.  Medical equipment as the basis of operational activity.

The medical equipment is the main tool of any operational (statutory) activity done and of the medical service made by every self-dependent health care center. Making the given subject fully equipped with the medical equipment results in increased financial resources of public financial means which come from the contracts concluded with the National Health Fund e.g. highly-specialized service[4]. When a given subject is not sufficiently equipped with the medical equipment or when the equipment is of poor quality, despite the quality requirements determined by adequate regulations[5], this subject rendering that type of services, may be eliminated from the medical service market. The increase of the competitiveness resulting from developing area of private health care sectors (hospitals) also influences these conditionings. The indicated conditionings cause the fact that medical equipment purchase made by public health care centers is one of the main activities of these subjects. However, the insufficient financial resources being in use of the management cause the fact, that the main parameter which decides about the purchase is the price, although in some cases the price is not justified, especially when purchasing specialist equipment of which the quality guarantee is the company/producer and, connected with it, the high price.

 

2. Valuation of the tender offers for medical equipment.

According to regulations of public procurement the tender offers valuation criteria should be parameters which guarantee optimal spending of the public financial means. In parameters proposed by the legislator only the price is the basic and obligatory criterion, whereas using other parameters depends on requirements which a subject should fulfill. Establishing the price at the level of 51% (or points) causes the fact, that the price is the basic criterion in choosing an offer/offerer[6]. Thus, the choice of other criteria which may be used are at the ordering parties discretion. However, on the basis of the carried out researches the most frequently used criteria, except for the price, are the quality, payment date and price stability. In the criteria used by the self-dependent health care centers we can see the lack of one criterion i.e. influence of the purchased equipment on the nuisance of its functioning, the environment and energy saving.

Source: own calculations on the basis of data from Public Procurement Bulletin [2004 – 2006]

Diagram  1 -  The basic criteria of tender offers valuation in the years 2004 – 2006 (percentage points)

 

In the years 2004 – 2006, the main criterion used by the ordering parties was the price criterion (respectively 83,8; 87,7 and 80 percentage points – p.p.). The second criterion used by the ordering parties, in the respect of importance, was the quality of the ordered equipment which reached the level of about 26 p.p. during the analyzed years. The prices stability criterion reaching the level of respectively 12,0 p.p. in 2004, 11,51 p.p. in 2005 and 10,62 p.p. in 2006 may indicate that the ordering parties held of adequate financial resources which allowed for term liability regulation connected with the ordered equipment or it also shows the short terms of delivery contracts. In the offer valuation criteria the payment date criterion also did not seem to matter that much. The guarantee and service terms criterion, in turn, reaching the level from 11,5 p.p. in 2004, 11,8 p.p. in 2005 and 12,5 p.p. in 2006 shows that the ordering parties did not seem to foresee the future activities connected with the necessity of maintaining the equipment appropriately in line with standards of medical service. The low value of this criterion brings about future increased costs of the purchased equipment service and repair of medical equipment.

 

3. Medical equipment purchase and orders for servicing 

Decision about purchasing any medical equipment of an appropriate class depends on the public health centers’ financial means and this correlates directly with the possibility of entering contracts for specialist service, which means that it correlates with the financial support. This dependence may be described as a feedback expressed in the following formula: equipment                             financial support. The necessity of keeping the medical infrastructure at constant efficiency causes the fact that purchase of new equipment results in decrease in orders for its service because it is done under guarantee (compare Diagram 2).

 

Source: own calculations on the basis of data from Public Procurement Bulletin [2004 – 2006]

Diagram 2 - Dynamism in the medical equipment purchase and orders for its servicing in the years 2004 – 2006 (previous year = 100)

 

In 2005 the increased dynamism in purchasing the medical equipment[7] (57,46% on the previous year) was accompanied by decreased dynamism in service orders (10,87%). In 2006, in turn, the lower increase of dynamism in purchasing the medical equipment (40,68% on the previous year) caused lower decrease in orders for service (4,88% on year 2005). Analysis of the provided values shows that the purchase of new medical equipment is inversely proportional to the amount of the orders for service of this equipment.

 

Summary

On the basis of the analysis carried out, it can be stated that the price criterion for tender offers valuation while purchasing medical equipment used by self-dependent health care centers is not the optimal criterion that leads to effective spending of public financial means. The fact that the ordering parties do not stress the criterion for offers valuation regarding the quality and guarantee of the ordered equipment results in the future increased spending of the financial means connected with equipment service and repair. This conclusion supports the hypothesis that there is a direct cause and effect connection between the criteria used and the amount of orders for the equipment service.

References

1. Lewandowska H., Public Procurement Market – Competitive Environment [в:] Экономика и эффективность организации производства, БГИТА, Брянск, 7/2007.

2. Lewandowska H., Zamówienia publiczne w ochronie zdrowia, [Public Procurement in Health Care Sectir]: Difin, Warszawa 2007.

3. Lewandowska H., Public procurement market – information determinant for management accountancy of self-dependent health care centers, XII All-Poland Science Conference Academy of Economy, Wrocław 2007.

4. Journal of Laws No. 126, item 1381 from 2001 with later changes, Pharmaceutical Law.

5. Journal of Laws No. 210, item 2135 from 2004 with later changes, Law of health care service financed by public financial means.

6. European Parliament and European Council Directive (93/42/EEC regarding medical articles).

7. Journal of Laws No. 79, item 551 from 2004 with later amendments.