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News

Upcoming challenges in the healthcare sector: regulatory obstacles in public procurement

23.03.2017
Company: Grayling Czech Republic, s.r.o.

It is almost a tradition for health care to be a key topic of every parliamentary election campaign in the Czech Republic, and the forthcoming election in autumn 2017 is no exception. Securing sufficient funding for the sector will undoubtedly be one of the new government’s top priorities. Advancements in medical science and the ageing population will intensify the need for increased healthcare expenditure. Therefore, ensuring the stability of the system is closely tied to effective public procurement.

Although it might seem that the transparency and effectiveness of public procurement are among Czech legislators’ main priorities, sometimes their intentions and actions are no help in increasing the system’s effectiveness or in saving on public spending at all.

As far as the recently discussed Contracts Register Act is concerned, a majority of MPs voted for a version of the Act requiring public hospitals to publish contracts without undue delay. Although the Ministry of Health proposed an alternative solution – the publication of contracts ex-post, which would not have jeopardized supplies to hospitals – most legislators supported a stricter solution in the name of transparency. The main point is that the new provision will make it increasingly harder for public hospitals to secure medicine for patients on time and with much needed flexibility.  

This shows that most legislators are failing to tackle the nub of the problem and often find it difficult to grasp such complex healthcare issues. The key is to ensure that the recommendations of both the expert community and the industry are understood correctly, so that the proposed legislation does not deviate from its original purpose and does not damage a system that, as it stands, is not broken.  

The same applies to public procurement practices in the Czech Republic, a major issue not exclusive to the healthcare sector. The latest reform of the Public Procurement Act, taking effect in October 2016, promised to ensure the creation of a competitive environment and, in particular, to eliminate the selection of best bids based solely on the lowest price.

However, the true impact on public-hospital tendering procedure is virtually non-existent. Most public contracting authorities continue to apply the same principle and select most contracts on the strength of a single criterion – the price. The main reasons for this are that evaluation methods and the setting of qualitative standards are highly demanding and, in most cases, the contracting authorities are exposed to a high risk that other tenderers will lodge complaints with the Office for the Protection of Competition. It is easier, then, simply to go for the cheapest bid. This status quo affects not only public hospitals, but also companies.

My advice to the new Minister of Health would be to lend an ear to stakeholders and the pharmaceutical industry and to make sure that the proposed legislation is fully understood by legislators. Addressing procurement issues would make the tendering process and the healthcare system more cost-effective, which will benefit patients – giving them access to innovative medical devices and drugs. What we need is a truly patient-oriented healthcare system.

Jakub Hudec, Public Affairs Consultant and healthcare expert at Grayling Czech Republic looks at issues of the Czech healthcare sector.

Tags: Finance | Business Development | Health | Politics |

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