In May of 2017, the Healthcare Sector Supply Chain Strategy Expert Panel (the “Panel“) released its report titled “Advancing Healthcare in Ontario: Optimizing the Healthcare Supply Chain – A New Model“. The Panel was established by the Government of Ontario in 2016 to review Ontario’s current healthcare procurement strategies and to recommend strategic changes.

The Panel envisions a new supply chain strategy being implemented in Ontario over a 3-year period and provides 12 recommendation for its creation and implementation. These are categorized using the five overarching themes below:

  1. Ontario should have an integrated healthcare supply chain.
  2. Buying decisions should be made with a focus on patients and clinical requirements.
  3. The new procurement strategy should enable value-based procurement and innovation.
  4. The strategy should include means of monitoring and improving on performance, value, quality and safety.
  5. How to transition to the new supply chain strategy.

We list below the recommendations that the Panel made to further these 5 overarching themes.

Moving to an Integrated Ontario Healthcare Supply Chain

  1. A Single Integrated Structure: Organization Consolidation. The Panel recommends that Ontario create a single consolidated organization (“ServiceCo“) to manage Ontario’s healthcare supply chain. The Panel believes that “one crown agency or not-for-profit model is best positioned to deliver the opportunities outlined in this report”. The Panel envisions the assets of Ontario’s existing healthcare shared services organizations (“SSOs“) could be leveraged to support ServiceCo. The Panel imagines that the existing SSOs could be integrated, or their assets used, to create ServiceCo.
  2. ServiceCo’s Mandate, Scope & Scale.¬†The Panel recommends that ServiceCo take responsibility for essentially all steps in the supply chain process for all non-payroll categories of healthcare spending.
  3. Toward Fuller Healthcare Participation. The Panel recommends that the following healthcare providers be mandated to participate in ServiceCo: (i) publicly-funded hospitals; (ii) LHINs and the home and community care services they manage; and (iii) LHIN-funded community agencies. The Panel also recommends that other healthcare partners be encouraged to seek the services of ServiceCo (such as non-profit and for-profit long-term care homes and Crown agencies.
  4. A Robust Financial and Business Model. The Panel recommends that ServiceCo’s revenues should¬† come from, amongst other sources, a mix of (i) the existing in-house budget of participating healthcare providers; (ii) the budgets of existing SSOs; and (iii) fees that will be established based on the total operating budgets of the publicly funded healthcare organizations to whom ServiceCo provides services.

Encouraging Patient and Clinical Focused Buying Decisions

  1. Strengthening Clinical Engagement. The Panel recommends that clinical and medical expert “advisory panels” be established to provide advice and recommendations to ServiceCo with respect to procurement approaches and evaluations so that consideration of innovative technologies, clinical approaches and patient outcomes become a more significant consideration in procurement processes.

Taking a New Approach to Procurement

  1. Building Capacity to Undertake Value-Based Procurement. The Panel has recommended that “value-based procurement” be a central principle for ServiceCo. The Panel believes a focus on value-based procurement will allow ServiceCo to carry on supply chain activities in a manner that will improve patient outcomes across the full continuum of care.
  2. Procuring Innovative Products and Solutions. The Panel believes that continuous innovation is critical for the improvement of Ontario’s healthcare system. Based on this belief, the Panel recommends that ServiceCo be provided with the expertise, infrastructure, and market relationships to identify and procure “new products and solutions rapidly and proactively”.
  3. Addressing the Regulatory Environment. To facilitate value-based procurement and the continuous implementation of innovative technologies, the Panel recommends that Ontario’s current procurement policy framework – including the Broader Public Sector Procurement Directive – be reviewed and updated as necessary. The Panel proposed that clear and consistent instructions on the application of the Directive could help avoid the “overly cautious behaviour” that was consistently reported to the Panel during its review of Ontario’s current supply chain model.

Performance, Value, Quality & Improved Safety

  1. Data Integration and Analysis, Performance, and Reporting Framework. The Panel recommends the development of a robust data collection and analysis capability for ServiceCo. It is hoped that such data collection and analyses will create business intelligence that would allow for accurate evaluation of key performance metrics and the development of value-based procurement.
  2. Mechanisms for Feedback, Engagement, and Inclusion. The Panel recommends the creation of feedback mechanisms for healthcare providers, patients, and vendors to provide feedback on the performance of ServiceCo, as well as the products, services and solutions that it procures.
  3. A Framework for Full Product Traceability. To improve both patient safety and business analytics, the Panel recommends that ServiceCo adopt a bar-coding standard that can provide full traceability of products to patients.

Moving Forward

  1. Transition to a New Model. The Panel recommends the appointment of a Transition Board with a mandate not to exceed 12 months. The Transition Board will, among other things, be asked to: establish ServiceCo; transition assets to ServiceCo; and develop a strategic business plan for ServiceCo. The Panel recommends that the assets and services of existing SSOs be managed by the Transition Board during the term of its mandate.

The Ministry of Health and Long-Term Care has stated on its website that:

Over the coming months, the government will review the panel’s recommendations, and engage section partners in a dialogue that considers building and modernizing our supply chain model in healthcare, leveraging the investments and advances already made.

Our Take on the Report

We work on a daily basis with many of the healthcare procurement SSOs across the Province. They have revolutionized procurement in Ontario healthcare, introducing rigour, specialization, and expertise to a back-office activity that was often poorly performed by hospitals less than a decade ago.

Yes, the pendulum has been swinging back and forth over the last decade. From sloppy and decentralized practices, the Supply Chain Guidelines and the replacement BPS Procurement Directive introduced rules – and rigidity – to the procurement process. Now that we have lived with the BPS Directive for several years, SSOs and hospitals are becoming more comfortable with the rules and are innovating to work within them.

There can always be more improvements in healthcare procurement. But the changes should be made in a way that hospitals can buy into and own the changes – and the resulting ServiceCo. SSOs are now governed by the hospitals that use their services. Stepping away from hands-on governance will be a challenge for hospitals. Any governance changes should be gradual, so that hospitals can build trust in ServiceCo, its board and its leaders.

We anticipate that change will come, but slower (and steadier) than the Panel recommends.