Value-based healthcare is a framework for achieving better outcomes that matter to patients, optimizing the cost of care delivery to the health system. This concept is driving a focus on “value-based procurement”, which enables evaluation of a broader range of value through an emphasis on outcomes. One means to achieve value through procurement is to utilize innovation procurement models and early market engagement strategies.
Innovation procurement is typically used for “the purchase of solutions that do not exist in the market or need to be adapted or improved to meet specified needs and create value for users and the procuring organization”1 . This requires new methodologies and approaches to procurement, and the development of new skills to manage the complexity. Innovation procurement often requires a nimble process. This arises because of the need to work with potential bidders to understand market capabilities, and to inform outcome-based specifications (OBS) and value-based evaluation criteria.
To this end, HSCN has developed an Innovation Procurement Toolkit (IPT), that includes tools, templates and guidance documents to assist in the development and management of innovation procurement initiatives. Based on extensive research, the IPT incorporates leading practice in innovation procurement from multiple international jurisdictions. Specific to Canada, the IPT builds on the Ontario Ministry of Government and Consumer Services’ BPS Primer on Innovation Procurement (Interim) (the Primer), which provides overall guidance on innovation procurement strategies and models.
The IPT is a compendium of resource tools designed to assist Health Service Providers (HSP) in developing competitive procurement processes for innovative solutions. It is intended as a general reference, with commentary on issues and options with various innovation procurement models and features. The IPT (and the accompanying templates) does not replace your organization’s own procurement policies and processes. Organizations should seek legal advice on the application or modification of any template to meet their individual circumstances (the IPT has been designed to be compliant with the BPS Procurement Directive).
Sources used in developing the documents in the IPT can be found in the compendium of resources. The IPT is a dynamic set of documents and will be updated over time.
The IPT has been structured to facilitate the flow of an innovation procurement process from needs assessment (development of the problem statement) through early market engagement to procurement of the solution and contract award. The IPT Navigation Guide follows this flow and provides an overview of the tools, templates and guides relevant for each stage of the process. The IPT Decision Tree provides a sample decision making process that may be useful in guiding the development of a procurement plan.
An initial understanding of needs or requirements is a precursor to developing any procurement strategy. While specific requirements may be fine-tuned throughout the process, it is critical to have a clear problem statement before initiating any strategy. Guidance to support development of the problem statement can be found in the Early Market Engagement Strategies Guide.
The Early Market Engagement (EME) Guide details strategies that will help organizations gather intelligence. This informs the procurement process, and will ideally guide organizations to the identification of the optimal solution to achieve the desired outcomes. The EME strategy informs the way forward and may lead to a traditional procurement or no procurement at all, depending on what is learned from the exercise. This is illustrated in the sample IPT Decision Tree.
The Primer lists seven EME strategies:
1) Market Sounding
2) Market Creation
3) Reverse Trade Show
4) Trade Show
5) Request for Expression of Interest
6) Forward Procurement Plan
7) Unsolicited Proposal
The EME Strategies Guide provides commentary and insight on how to execute these strategies, identifying tools and templates to support associated activities such as market consultation.
The Innovation Procurement Models Guide provides insight into the six innovation procurement models detailed in the Primer, and provides advice on when and how to use each of these models:
1) R&D Procurement
2) Innovation Partnership
3) Design Contest
4) Competitive Dialogue
6) Innovation Friendly
The guide discusses considerations, risks and risk mitigation measures in selecting and executing an innovation procurement. This guide continues the guidance contained in the EME Strategies Guide, by providing guidance about the competitive procurement process that occurs after the market has been sufficiently engaged. It is to be read in conjunction with the following guides (which speak to critical elements of the competitive process):
1) Outcome-Based Specifications Guide
2) Value-Based Evaluation Criteria Guide
3) Total Cost of Ownership Guide
The IPT includes a Request for Solutions (RFS) Template that can support any of the innovation procurement models. The template incorporates colour-coded guidance for each of the procurement models listed above (shaded in the colour corresponding to the Navigation Guide).
The IPT also includes a Request for Pre-Qualification (RFPQ) Template. The RFPQ Template can be used to qualify proponents to participate in any innovation procurement process where pre-qualification is necessary.
It is important to choose an appropriate form of agreement to document the arrangement arising from the procurement. Some innovation procurement processes may lead directly to the purchase of a solution (using a traditional purchase contract); others may involve research and development activities leading up to a possible purchase of a solution (once it is developed, tested, etc.). The IPT includes two agreement templates specific to innovation procurement, and provides guidance on appropriate use:
1) R&D Services Agreement: to be used when the intended outcome is research and development of a solution, with no production or deployment of the solution
2) Innovation Agreement: to be used when the intended outcome includes production or deployment of the solution
HSCN hopes HSP’s will find the toolkit useful in managing innovation procurement opportunities and delivering value for money. If you have any questions about the IPT documents, please contact HSCN.
HSCN is unable to provide advice about the application of the templates in specific procurements.
1Ontario Ministry of Government and Consumer Services’ BPS Primer on Innovation Procurement (interim)