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Presentation of the Review “Improving ISSSTE’s Public Procurement for Better Results”

 

Remarks by Angel Gurría,

Secretary-General, OECD

7 January 2016

Mexico City, Mexico

(As prepared for delivery)

 

 

Secretary of Health, General Director, ISSSTE, ladies and gentlemen:

 

It is an honour to be here today to present the report on Improving ISSSTE’s Public Procurement for Better Results. This report represents follow-up to the recommendations from the first Public Procurement Review conducted by the OECD and the ISSSTE in 2013.

 

I want to thank and congratulate the ISSSTE for its kind invitation and for its commitment to carrying out this second review and implementation exercise. Allow me to share with you some of its conclusions and recommendations.


 

Health systems in the OECD are facing financial pressures

 

Health systems in the OECD are faced with growing financial pressures. Health spending represents around 9% of GDP in OECD countries, and 6% in Mexico, of which the public sector contributes only slightly more than half. Yet with the ageing of the population, the increase in certain chronic diseases, and the public savings goals adopted, various OECD countries have felt compelled to cut costs significantly.

 

Since 2009, per capita health spending has declined in 11 of the 34 OECD countries. In the countries hardest hit by the economic crisis, such as Portugal, Ireland, Spain and Italy, health spending underwent continuous cuts of between 1.6% and 7.6% from 2009 to 2013. Given this situation, improving the efficiency of health services is a key factor for ensuring greater equality of access and  better quality of service.

 

A few months ago, in Guadalajara, we presented a report entitled Measuring Well-being in Mexican States, which identified access to health services as a critical factor for quality of life in Mexico. That study revealed a very uneven performance among Mexican states in terms of indicators such as life expectancy at birth, child mortality rates, and adult obesity, indicating that Mexico must continue its efforts to ensure that all citizens have access to quality health services.

 

 

The importance of public procurement in promoting savings and efficiency

 

In this context, public procurement is a key consideration, as it represents on average 29% of total government spending in OECD countries, and more than 20% in Mexico. In the health sector in particular, public procurement is an area of growing attention for OECD countries, as it can generate savings that will in turn make it possible to improve the quality and efficiency of health services.

 

The OECD has been working with Mexico for several years now to improve public procurement processes in the health sector, and the results have been highly positive. As a result of OECD recommendations, consolidated purchases of medicines in Mexico have yielded cumulative savings of 8.350 billion pesos in 2014 and 2015. The OECD has also made a number of recommendations to the ISSSTE concerning procurement processes, the management of procurement personnel, and levels of integrity and transparency, among other issues.

 

 

The ISSSTE: progress to date and recommendations for the future

 

The review we are presenting today analyses the implementation of many of the issues from the first public procurement study of the ISSSTE, and reveals progress on several fronts. For example, since publication of the first review in 2013, the Institute has strengthened the central administration of its procurement activities and resources, under the leadership of the Directorate of Administration.

 

There was also an increase in competition for comprehensive medical service contracts in 2013 and 2014, and this served to broaden the supplier base and reduce prices, thereby achieving savings of more than 260 million pesos in 2013.

 

The report also points to some measures that are still pending. In particular, the ISSSTE should pursue its efforts to: 1) develop a single and explicit strategy defining the long-term vision for procurement; 2) generate a comprehensive database that will provide accurate information on purchases; and 3) improve the planning and coordination of procurement, in particular with the regional delegations. The study also notes the need to train public servants in carrying out more effective market research, as an input into the design of procurement strategies.

 

In the study we present the experience of various countries in different aspects of public procurement and contracting, much of which is applicable to Mexico and to the ISSSTE in particular.

 

These are just a few of the recommendations in the review, which are mainly targeted at strengthening planning and coordination, improving market intelligence, optimising the procurement of comprehensive medical services, and placing limits on direct awards. I invite you to read it carefully.

 

The report goes into great detail on the steps, methods and systems of recruitment for establishing the procurement unit and other bodies and groups for improving procurement systems.

 

Lastly, the study analyses the complex issue of direct awards without competition, the uneven performance of the state delegations, and the reasons and excuses used to circumvent strict compliance with the rules, at both the central and state levels. It presents some recommendations on how to control, reduce and correct this phenomenon, which generates a lack of transparency and fosters corruption and inefficiency.

 

Ladies and gentlemen,

 

We are pleased that the ISSSTE has decided to conduct an assessment of the implementation of the recommendations in our first report. This is a sign of its commitment to complete the process of reforming the ISSSTE, as one of the key components of the Mexican health system.

 

The ISSSTE should, can and intends to become an example of best practices in the procurement and contracting of goods and services. It can count on the full support of the OECD in improving those public procurement policies and offering better health services for a better life. Thank you.