Saturday, July 16, 2011

Innovation Procurement Offers a Compelling Opportunity for Canadian Health Care

OTTAWA, July 14, 2011 /Canada NewsWire/ - Governments are the largest purchasers of health care products and services in Canada. Procurement - what governments and public institutions buy and how they buy it - therefore offers huge potential to improve health system performance and value. But a
Conference Board of Canada
report finds that Canadians are still hesitating, while others, notably the United Kingdom, use new approaches to procurement to drive fundamental improvements in public health care.

The report, Innovation Procurement in Health Care: A Compelling Opportunity for Canada, calls for action on four fronts to seize these opportunities: federal leadership; targeted funding; regional implementation; and culture and attitudes.

"The sustainability of Canada's public health-care system will depend in large part on innovations that can enhance the efficiency, safety, quality, and productivity of health and health-care services," said Gabriela Prada, Director, Health, Innovation, Policy and Evaluation. "Innovation through procurement offers a compelling opportunity for Canada to generate better value for public health-care spending."

The experience of the U.K.'s National Health Service (NHS) shows the potential for innovation procurement to improve the quality of care, keep a lid on growing costs, and boost the economy in important industry sectors - such as the life sciences - in a relatively short time period. Key success factors include: a steady commitment to innovation from the central government, a regional mandate to advance the innovation agenda, targeted funding for health innovation, and the strategic development of talent at all levels. The end result has been a cultural transformation within the NHS.

In stark contrast to the U.K. experience, the concepts of innovation and procurement are still poorly connected in Canada's health-care system. A survey of Canadian health executives, conducted as part of this research, suggests that the driving force behind procurement practices in health care continues to be cost control - rather than increasing value.

Respondents were almost unanimous in agreeing that innovation is essential for improving organizational performance in the health sector and for the sustainability of Canada's health-care system. They were much less likely to say that innovation is a recognized priority within their organizations or to see procurement as a lever for innovation. Strikingly, although 60 per cent of respondents agreed that innovative products and services were very important or important in achieving their organizations' goals, over half said that procurement approaches in their organization do not support the development and uptake of innovative products and services.

Unlike the U.K., responsibilities in the Canadian federal system are divided. However, Canadian efforts to revamp primary health care demonstrate that it is possible for jurisdictions to work together.

In Canada, action can be taken on four fronts:

Federal leadership
- The expiry of the current federal-provincial/territorial health transfer agreement in 2014 provides an opportunity for the federal government to ensure that the next agreement is structured to encourage innovation.

Targeted funding - New approaches to procurement aimed at driving innovation in health care will require funding up front to: encourage greater risk taking, shift the focus of procurement to value generation, and invest in the development of the skills needed to manage a more innovative process. Governments also should consider the use of competitive funding mechanisms that would reward those who lead the way in achieving key health outcomes.

Regional implementation - While there is a need for a coordinated federal and provincial/territorial policy framework for innovation procurement, the U.K. experience suggests the need for a strong regional focus. Governments should give health regions an explicit mandate as health-care innovators and should support the development of regional innovation hubs.

Culture and attitudes - The survey responses in this study point to the need for a more fundamental shift in the culture of Canadian health care. A more innovative and entrepreneurial culture would drive a higher-quality and more cost-effective health-care system and could make the health-care sector a key factor in building a more competitive Canadian economy.

The report is published by the Centre for the Advancement of Health Innovations (CAHI), which is a joint initiative of The Conference Board of Canada and the Canadian Health Industries Partnership (CHIP). CAHI, which has the support of governments, academia, industry, and health care organizations, aims to identify strategies and options to develop a supportive policy, legislative, and regulatory environment in order to advance Canada's health innovation system.

The Canadian Health Industries Partnership (CHIP) is a voluntary collaboration between the federal, provincial and territorial governments and the leaders of Canada's industrial health innovation sector. The Chair of its Board, Mr. Mark Lievonen, President of Sanofi Pasteur Limited (the recipient of the 2009 Premier's Catalyst Award for Company with the Best Innovation) is also a Co-chair of CAHI.

The publication is available at

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