Effective procurement: The key to growing public sector healthcare

The coronavirus pandemic has created an impetus for politicians in low- and middle-income countries to pledge much needed investment in public sector healthcare. As a result, a surge of hospitals and medical facilities are being developed across Latin America and Sub-Saharan Africa.

In this article, Mace’s Regional Manager for Latin America, Oliver Conde, explains how a clear and simple structure of procurement, based on international best practice, can support growth in public health infrastructure in developing nations.

It’s been more than seven months since Covid-19 was declared a global health emergency. After a period of eased lockdown in many parts of the world, an August media briefing by the World Health Organisation’s Director General served a stark reminder that we are not out of the woods.

At the time of writing there were over 27 million cases of Covid-19 worldwide with more than 890,000 deaths and counting. Across the globe, health systems are under intense pressure to accommodate the high number of patients who need hospitalisation and advanced care, which in turn has a ripple effect of reducing the provision of services for other medical needs.

In developing nations, the under-provision of public sector healthcare clearly predates Covid-19. However, the pandemic has prompted important government investment in countries such as Perú, South Africa and Kenya, not just to serve the outbreak, but to create vital, permanent infrastructure for the next 20-25 years.

Earlier this year, for example, Peru pledged S/. 67,199 million (US$19 bn) to mitigate against the social and economic impact of Covid-19, around 8.8% of its GDP; built 25 temporary hospital facilities across the country; and earmarked a separate S/. 20bn (US$6bn) for investment in health infrastructure in 2021. In South Africa, where adequate healthcare systems exist, the Government had to scale-up intensive care units and provide more resources for hospitals and healthcare systems to control the outbreak.

To providers of the physical facilities that will serve the public health needs in these nations, coronavirus has created a new sense of urgency around project delivery. Whether it is a matter of quickly building temporary hospitals or permanent facilities that will house a range of healthcare provision within them, delivering to a tight timescale carries more weight than ever before.

Effective procurement

Various parts come into play in the delivery of any public sector project. In developing markets, ineffective procurement is a common reason why large construction projects are delayed. Contractors have an appreciation of the importance of an efficient purchasing system, but there is often an overly prescriptive and rigid regime in place where building works are adapted to procurement processes and contracts rather than the other way around. This is where international best practice makes a difference.

To ensure that these vital social infrastructure projects are completed on-time, there needs to be a shift toward a procurement process that is fast, simple and collaborative. The approach must be aligned to the delivery strategy, and it’s not a one-size fits all. Key project objectives and priorities must be understood, and constraints assessed, from the outset. Clear scope and evaluation criteria are required, aligned to objectives and challenges. When contracts are adapted to the scope of work, the supply chain is engaged in a way that keeps programme disruptions to a minimum – delivering to time, cost and quality for the benefit of all parties, particularly citizens.

Developing standardised specifications and performance outputs and incorporating these in the tender process, across building, equipment and operational aspects of the project, can ensure consistency and speed at all stages of the project. To put it bluntly: ordering the wrong thing causes delays. With a clear and simple structure for procurement in place, contractors can buy what they need and get the best value for money in the marketplace. Critical path items that could delay delivery need to be identified early.

The simplicity of this approach will break down silos and reveal the impact of each purchasing decision and ensure integration during construction. Furthermore, early contractor involvement and transparency creates trust across the supply chain and encourages contractor innovation. Use of incentives rather than penalties helps foster this relationship throughout the project lifecycle and throughout the supply chain, particularly for small and medium-sized companies.

Long-term benefits

The long-term benefits of good procurement practice in public sector healthcare are not to be underestimated. Clarity and transparency boosts confidence in the sector and supports a competitive procurement process. In developing markets these projects stand a chance to genuinely help transform the local construction industry for the better and to support positive behaviour across the public sector. All of this helps deliver value for money and the right infrastructure for the public.

Turnaround times for hospitals have never been more important. The coronavirus crisis is highlighting that the world’s health systems are not able to cope in normal times, let alone during a pandemic. Now there’s a window of opportunity for our industry to help bridge this gap and support vital infrastructure projects to help rebuild the economy and improve health and social outcomes in the developing parts of the world.