Why hospital procurement must shift to value

A hospital has to choose between two medical technologies.

The first is cheaper.

The second costs a little more… but reduces complications and allows patients to go home sooner.

Which option should it choose?

In many health systems today, the answer is still the same: the cheaper one.

And yet, if we look at the patient journey as a whole, this choice may turn out to be the most expensive.

More complications.

More days in hospital.

More readmissions.

In other words: cheaper to buy, but more expensive for the system.

This situation is far from anecdotal. It reveals a deeper problem in the way health systems make their decisions.

For years, healthcare spending has been rising. Reforms follow one after another, budgets are under strain and hospitals are under constant pressure to control their costs. But despite these efforts, one finding persists: outcomes for patients remain highly variable, and a significant share of the resources deployed produces no real benefit.

According to the OECD, between 10% and 34% of healthcare spending could be wasteful or ineffective.

This figure is striking, but above all it tells us something essential.

The problem is not only how much we spend.

The problem is what we get in return.

This is precisely the question that Value-Based Healthcare asks.

The idea is simple. The performance of a health system should not be measured solely by the number of procedures carried out or the volume of activity, but by the outcomes achieved for patients.

Michael Porter summed up this logic in an equation that has become famous: value is the health outcomes achieved for patients relative to the resources used to achieve them.

In other words, the central question becomes: what outcomes are we really achieving, and at what cost?

Once we adopt this point of view, one thing quickly becomes obvious.

If we want to create more value in healthcare, it is not enough to transform the way care is organised. We also need to transform the way health systems buy the technologies, services and solutions that underpin that care.

Because hospital procurement is not neutral. It directly influences the way care is delivered, patient journeys and the overall costs of the system.

And yet, in many organisations, purchasing decisions are still largely driven by one dominant criterion: price.

This approach may seem rational when budgets are tight. But it becomes problematic as soon as technologies influence clinical outcomes, the organisation of teams or length of stay.

This is where Value-Based Procurement comes in.

The principle is simple: instead of choosing solely on the basis of price, purchasing decisions take into account the overall value that a solution brings to the care pathway.

This value can take several forms. Better outcomes for patients. Fewer complications. A smoother pathway. A shorter length of stay. Sometimes even better working conditions for care teams.

From this perspective, the purchase is no longer simply about a product.

It is about the impact that product will have on the entire care pathway.

An example helps to make this difference concrete.

Imagine a hospital that decides to invest in a higher-performing molecular biology analyser. The equipment is more expensive than the existing machines. But test results come back much faster.

Doctors can make a diagnosis more quickly. Treatment starts earlier. And some patients can leave hospital sooner.

In this case, value is no longer limited to the price of the machine. It is measured by the impact on length of stay, on the efficiency of the care pathway and on the overall cost of care.

When purchasing decisions are made in this way, the nature of the procurement function changes.

It is no longer limited to negotiating prices or rationalising product catalogues. It becomes a strategic lever for improving patient outcomes and strengthening the efficiency of the health system.

But this transformation is not straightforward.

Buying on the basis of value means being able to measure clinical outcomes. It also means understanding costs across the entire care pathway and sharing data between stakeholders.

It also requires much closer collaboration between buyers, clinicians, health economists and industry.

In other words, it is not just a matter of changing tenders. It is a matter of changing the way organisations make their decisions.

And that is also why Value-Based Procurement cannot exist without Value-Based Healthcare.

Buying on the basis of value means knowing which outcomes we are trying to improve, how to measure them and what costs are really incurred to achieve those outcomes.

Without this overall view of the care pathway, the notion of value remains abstract.

But when these elements come together, purchasing decisions become a powerful lever for transforming the system.

Because ultimately, the challenge is not just to spend less.

The challenge is to spend better to achieve better outcomes for patients.

And that is precisely what Value-Based Procurement sets out to achieve.

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Sources and references**

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(a selection of publications on Value-Based Procurement and the transformation of health systems)**

1. Boston Consulting Group & MedTech Europe. How Procurement Unlocks Value-Based Health Care. 2020.
2. Organisation for Economic Co-operation and Development (OECD). Tackling Wasteful Spending on Health. OECD Publishing, 2017.
3. Rahmani K., Karimi S., Rezayatmand R., Raeisi A.R. Value-Based Procurement for Medical Devices: A Scoping Review, 2021.
4. French Ministry of Health and Prevention (DGOS). Guide opérationnel des achats complexes à destination des acheteurs hospitaliers. Programme PHARE. (Operational guide to complex procurement for hospital buyers. PHARE programme.) 2023.
5. NAMSA. Hospital Purchasing Behavior and Procurement Trends of 2025. 2025.
6. Value-Based Procurement Community of Practice.Driving Value in Healthcare: Scaling Up Value-Based Procurement across Europe. Conference Report. 2025.