Public governance

Launch of the Second OECD Public Procurement Review of the Mexican Institute of Social Security (IMSS): Reshaping strategies for better healthcare

 

Remarks by Angel Gurría

OECD Secretary-General

Mexico City, Mexico, 10 January 2018

(As prepared for delivery)

 

 

Director General of the Mexican Institute of Social Security, Secretary of Health, Secretary of the Civil Service, Director General of the Institute for Social Security and Services for State Workers, Ambassador, Ladies and Gentlemen:


It is my pleasure to launch the Public Procurement Improvement Review of the Mexican Institute of Social Security (IMSS). This report follows up on the recommendations of the first public procurement review conducted by the OECD and the IMSS in 2013. It is a priority for us to be able to contribute to a sector such as health that is essential to the well-being of our citizens, as we have done for other institutions such as the national Institute for Social Security and Services for State Workers (ISSSTE) and the ISSSTE in Sonora State (ISSSTESON).

 

Improving public procurement by the IMSS: the key to better health

The IMSS is the largest social security institute in Latin America. It supplies health services to over 75 million eligible people. It is a key institution in the Mexican health system, an institution which is making progress but whose fragmented nature and inefficiencies continue to present challenges to which we must respond.

 

Mexico continues to face very significant health challenges. Although health expenditure has been rising, in Mexico it stood at barely US$1 080 per head in 2016 (adjusted for local standards of living), the lowest figure in the OECD, and the third lowest in the OECD as a percentage of GDP. Moreover, growth in health spending has fallen in recent years.

 

This is worrying because Mexicans still face serious health problems. The proportion of overweight people in Mexico is the highest of the OECD countries: 73% of the population are affected; one in every three children is overweight or obese; and 16% of the adult population has diabetes, more than double the OECD average figure of 6.9%.

 

In order to deal effectively with these and other diseases among our population and to help improve Mexicans’ health, it is essential that health sector resources are used in the best possible way. Efficient use of scarce public money is especially important. Greater efficiency in the use of these resources would increase the coverage and quality of health services, and would help to further improve the financial position of the IMSS. And public procurement processes are pivotal to efficiency gains.

 

The IMSS has made significant progress

The review we are launching today acknowledges significant progress in improving the public procurement processes of the IMSS. The Institute is noteworthy among institutions in Mexico for keeping public procurement procedures firmly on the radar and regarding them not as just another administrative task but as a strategic activity.

 

In line with this philosophy, the IMSS has made considerable progress in developing a specialist procurement workforce that is capable of delivering complex procurement strategies. The Institute now has centralised procurement information and dashboards that help to identify patterns and trends, and make for informed decision-making.

 

As the leader of the largest public-sector procurement consolidation scheme in Mexico, the IMSS also promotes market competition. Since their first appearance in 2011, consolidated tenders have demonstrated their efficiency and now attract an increasingly broad range of participants from various health institutions and tiers of government and cover an increasingly wide variety of inputs. Between 2013 and 2016, these institutions saved over MXN 14 billion, and 60% of those savings were down to the IMSS. Between 2012 and 2017, consolidated procurement led to an 18% increase in the numbers of medicines procured with the same amount of resources.

 

Although these are very important achievements, excellence should continue to be the aim.

 

Principal Challenges and Recommendations

The IMSS continues to face significant challenges. For instance, at close to 32%, the high turnover of procurement staff calls for an attractive, comprehensive professional training programme to develop and retain procurement professionals. Another problem damaging the effectiveness of IMSS services is breach of contract: in 2016, there were problems with 17% of orders, whether because of delayed delivery or partial or non-performance of contracts. Additionally, industry has voiced the need for a simplified post-bidding phase because, although the tendering process itself is consolidated, suppliers must establish and manage contracts across a number of institutions.

 

In order to tackle these and other challenges, our review proposes a number of recommendations. For instance, the IMSS could use data from previous procurement rounds to illustrate its future procurement strategies. The starting point should be the consistent and structured collation and analysis of data. Additionally, the technologies used by the IMSS need to be aligned and to support strategic procurement. Greater coordination between the IMSS Procurement Portal and the e-procurement system CompraNet would help in that respect.

 

Moreover, assessing the impact of the procurement strategies and comparing them with alternative approaches would bring sustained, long-term benefits to the Institute. The review identifies opportunities to maximise savings by conducting lifecycle assessments on the goods and services it procures and by examining the impact of procurement on the length of patients’ hospital stays. Recommendations are also made to prevent bid rigging, a risk that grows with the size, repetition and predictability of consolidated bidding.

 

The IMSS should also apply more innovative procurement strategies to support the aims of public policy on health. Lengthening the time allowed for potential suppliers to draw up their proposals and supply the products procured would make for greater participation by SMEs that produce generic medicines. The Mexican Competition Commission (COFECE) calculates that doubling the use of generic medicines could save Mexican households MXN 2.5 billion a year, while helping to achieve the aim of universal healthcare.

 

These remarks provide only an outline of the content of the review. I invite you to read it carefully.

 

Ladies and Gentlemen:


Health is a crucial factor in well-being and prosperity. By increasing cost-efficiency, the health sector will be able to provide more and better services to the public and, accordingly, improve Mexicans’ quality of life.

 

We acknowledge the progress made and the willingness to do better. The OECD will continue to stand ready to support the health sector in general, and the IMSS in particular, in this effort to provide better services in an increasingly efficient and transparent way. Let’s continue to work together to achieve better health policies for better lives.  Thank you very much.

 

 

See also

OECD work on Public Governance

OECD work with Mexico

 

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