Predictions for Healthcare Procurement in 2023

The year 2023 has just begun and our new year’s resolutions are being put to the test. Although predicting the future of healthcare procurement is complex, here at Vamstar we have created an overview of what to look out for in 2023. Some points are built upon topics that were highly relevant in the last year, such as the ongoing Russian-Ukrainian war and the energy crisis, while other points focus on things that were different from the previous year, such as new legislation related to procurement and the re-opening of society in China.

Chinese economy

In the final days of 2022, the Chinese government announced the end of severe travel and national restrictions that were part of its almost three-year-old zero COVID policy. Although this is expected to soften the impact of high interest rates and easen many existing supply chain issues in the global economy, an initial shock wave on the Chinese healthcare system is predicted and unfolding at the time of writing. It is unclear how many people are infected with the virus or how many infected people require hospital treatment, but all the information available points to a high disease burden for the most vulnerable citizens. The WHO is providing a weekly update on cases and deaths, but the actual number could be much higher. As many people are traveling across the country for the Chinese New Year and Spring Festival celebrations, it is predicted that the spread of COVID-19 will increase substantially in the following weeks, both in urban and rural areas. 

An increase in the number of cases amongst workers may result in a temporary labor shortage and put extra pressure on the supply chain. The three-year-long zero COVID policy has shown what detrimental effects COVID cases can have on the supply chain. Therefore, some international companies have already started diversifying their supply chain within China, or moving large parts, or all, of their production elsewhere. 

We expect that this trend will continue, as many companies and countries alike have seen how important ensuring a steady supply chain of vital medical products is, in times of emergency. Whether that emergency has its roots in epidemics, natural disasters, or conflicts, these supplies are essential.

Russian-Ukrainian war

Less than a year ago, Russian troops invaded Ukraine and the ongoing war has not been off the newspapers’ frontpages since. Whether to report on the latest developments on the front lines and the appalling humanitarian situation, or highlight the effects on both the energy and food crises. Many countries have implemented trade restrictions that limit the import and export of goods to and from Russia. Although medical products were largely exempt from the sanctions, it is expected that companies will continue to find other product routes, as the war is not likely to end soon. As a result, the effects of the sanctions in other sectors might subsequently influence the medical sector. Furthermore, Ukraine is asking for more substantial sanctions to be placed on Russia, like including pharmaceutical companies in the sanctions list, but this prospect is currently not backed by the European Union. Already, Russia is experiencing shortages in some medicine and is changing its national supply chain for the healthcare sector. For instance, it is building a new medical isotope factory.

Legislation changes

Ensuring proper supply chain management is becoming increasingly important to various European countries. Per 2023, the German Supply Chain Due Diligence Act (called LkSG in Germany) requires companies of more than 3000 employees to be more responsible for ensuring human rights along the supply chain (per 2024, this act will also include companies of over 1000 employees). 

Additionally, with the European Supply Chain Directive, more focus is being placed on environmental protection in the whole supply chain. Based on the COP27 climate summit, more countries are also introducing environmental or carbon limits in procurement processes, in their healthcare sectors. Greener NHS is at the forefront of requiring concrete steps from companies towards net-zero healthcare. Climate change and the likely increase of climate-related emergencies are putting added pressure on global medical supply chains. Emergency and pandemic preparedness have become hot topics in politics, as the COVID-19 pandemic made it evident that many countries lacked proper management of supply chains. Consequently, legislation is being introduced for the procurement of medical products during emergencies and epidemics. The US, UK, EU and Netherlands are all taking steps to lighten national supply chain issues and increase pandemic preparedness.

Value-based procurement

A trend that continues from 2022 is the emphasis on value-based procurement in healthcare. Price is no longer the only relevant factor in the tendering process – environmental, societal, and potential long-term consequences are becoming increasingly important. This process is both driven by legislation (such as the net-zero policy of a Greener NHS) and the need to ensure more sustainability and future-preparedness within the healthcare sector. Additionally, Vamstar has seen an increased interest in receiving clear information regarding clinical evidence during the procurement process, as seen at last month’s Value-based Procurement Conference.

AI’s contribution to healthcare

The last month of 2022 was marked by the release of OpenAIs ChatGTP chatbot that is able to articulate detailed responses in various knowledge domains. ChatGTP is built upon the GTP-3 autoregressive language model and has shown incredible applications with regards to text analysis and knowledge reporting. It is expected that AI-based technologies will be incorporated into various domains within the healthcare sector, such as digital health, procurement, medical devices, health tech analysis and data extraction. 

Vamstar has incorporated AI into its platform since its founding in 2019. Artificial Intelligence is used on the Vamstar exchange platform, to connect the best matches of healthcare buyers and suppliers and thereby successfully fulfill tenders. Value-based procurement plays a central role on our platform and helps select for various non-price factors that are becoming increasingly essential in 2023. We strongly believe that we can help make the healthcare sector’s procurement processes future-proof.

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