Health and Public Procurement

FAST FACTS

Existing estimates suggest that one-fifth of health spending could be channelled towards better use.

Operational and governance-related waste in the health sector can be decreased by transparent and efficient public procurement of pharmaceuticals and other medical supplies.

IN FIGURES

  • Governments spend 29% of total general government spending on public procurement and health is the second largest spending area (over 9% of GDP).
  • Since 2009 per capita expenditure in the health sector has decreased in 11 out of the 35 OECD member countries.
  • On average, the loss to fraud and error is more than 6% of health expenditure and one third of OECD citizens consider the health sector to be corrupt or extremely corrupt. 

BETTER PROCUREMENT FOR BETTER HEALTH SERVICES AT LOWER COST

  • Given the share of health in Government expenditures and the decrease of per capita expenditure in the health sector, Governments aim at generating savings and ensuring high-quality and efficient goods and services for a competitive price.
  • Public procurement is prone to corruption and risks are exacerbated in the health sector. Corruption in the health sector can be reduced by more transparency of the price of medicine, more consolidated requirements at central level or joint procurement initiatives.

OECD SUPPORT

  • The OECD is working with health institutions to improve their public procurement processes and to ensure proper integrity and corruption risk management throughout their procurement cycle.
  • The OECD has undertaken Public Procurement Reviews of the Mexican Institute of Social Security and the State’s Employees’ Social Security (ISSSTE) and the Social Services Institute in Mexico (IMSS).
  • OECD’s recommendations included the streamlining of public purchasing, the consolidation of therapeutic goods and the use of reverse auction to IMSS. Reforms generated savings of Euros 700 million a year.