Why is it so hard to find commercial growth opportunities in healthcare?

In healthcare, governments and its associated institutions (such as the NHS in the UK) are the largest buyers for products and services. With COVID-19 impacting all economic and social activity, once again, all governments are stepping in to manage the economic and social fallout. The overall trend in government purchasing has increased significantly in the last quarter. Indeed, according to our latest analysis of public contracts or tenders being rolled out, in the first quarter alone there has been a 48.9% jump in overall healthcare purchasing compared to the same period last year (NB: we have excluded the public contracts for essential items such as PPE to draw a fairer comparison).

We already see strong market signals in healthcare with investments in re-stocking pharmaceuticals, medical devices and diagnostics, and ramping up of the digital healthcare infrastructure. Moreover, the exposure of the fragility of our healthcare supply chains is making procurers think about newer solutions as they navigate the healthcare crisis. This all procurement is happening via a public contracting set-up. However, from a supplier standpoint, it is still incredibly hard, especially for healthcare SMEs and new market entrants, to find all the opportunities in one place and even more so to quickly identify the ones that make the most sense to the business right now. It is for this dynamic that the participation rates for tenders remain low.

“In healthcare, 44% of public contracts last year had only one bidder, and 15% had no bidders at all”

Below we highlight five reasons for why is that the case:

1. There are too many sources that issue lots of public contracts in the market – In Europe, more than 50,000 buyers (hospitals, procurement organisations, insurance funds, clinics etc.) issue tender notices for purchasing various goods and services in healthcare. Just in the UK alone, there are more than 10,000 live public contracts in healthcare at any given moment. This is huge amounts of data for any supplier team to process without proper search tools and resources at hand. Many supplier companies use data providers (or consulting firms) to help them continuously scan the market for new opportunities.
2. Data is spread across hundreds of websites, and quality of this data is poor – In some countries, aggregator portals such as the Contracts Finder in the UK have made efforts to bring all contracts together. However, an only limited number of contracts in healthcare are listed on the Contracts Finder as of now, and the rest is spread across 300+ different websites of CCGs, trusts, and other healthcare buyers in the market. Outside of the UK, the condition is even worse with data spread across thousands of web sources and countries such as Poland doing millions of tender contract lots each year with smaller purchasing values. Additionally, almost all of these aggregator sites have secondary links for contracting documents. The supplier teams have to manually navigate these individual links to extract out documents to analyse the requirements and qualifications for each bidding opportunity.
3. Tender classification is incomplete and often misleading – Public contracts use the Common Procurement Vocabulary (CPV) classification system. This high-level classification schema doesn’t allow for nuances at a product level. It is especially challenging for suppliers in healthcare when they know that a buyer is inevitably going to draw comparisons at a segment or an indication level to allow access. Moreover, buyers frequently publish incorrect codes or choose a very high-level code for issuing the notices. This makes searching for tenders painful and time-consuming. For example, a buyer can issue a tender with a classification code at a medical device level, thereby referring it to the whole category and not choosing the ones that apply to that particular device-disease combination.
4. Tender language is poorly written, and most information is stashed in tender documents – It is a legal requirement for every buyer to issue tender notices, and they publish this information only to meet this requirement. However, suppliers have to make decisions on whether to bid or not, so their information needs are more nuanced towards refined data and contextualised information. Less than 10% of tenders in 2019 had fully detailed descriptions of products or services with price and quantities defined. A lot of this information is embedded in the document links (in the local language) for each tender. It requires a lot of manual research to fully validate the scope and size of the public contracting notice.
5. The data is not linked across buyers – It is incredibly challenging for supplier teams to make sense of how individual tender links back to the overall budget allotment at an institutional level. The lifecycle view of spend allows supplier teams to plan ahead of the budget cycle and engage early on with the buyers in the market. However, such a view is very complex to generate due to the poor quality of data with missing values.

Vamstar is using the latest data technologies to collate public (and private) contracts from millions of sources, auto-classify them using industry-specific standard terms (ICD-10, ATC Code etc.), index all documents and outcomes, and make them discoverable for the healthcare suppliers. We have developed an analytics engine that allows the supplier to look at the whole lifecycle of the tender and forecast well ahead in advance.