Procurement of new technologies in Canada’s health system is fragmented and outdated, and needs to shift from the lowest-bidder approach to optimizing economic value for the entire system, experts told Research Money’s 25^th annual conference.

The current procurement approach is failing patients, hospitals and Canadian entrepreneurs and startups, they said during the final panel session at the conference, “Acting on Health: Reimagining Canada’s Promise” in Ottawa.

“Procurement doesn't even happen at the same level of the health care system," because there are too many interactions between buyers and potential innovators to realize the value of technologies, said Dr. Lesley Soril (photo at right), managing principal, health technology innovation, at the not-for-profit Institute of Health Economics in Edmonton.

“This traditional procurement pathway was designed for an era that is not today. It is not matching the innovations that we are seeing coming down the pipeline,” she said.

“If we don't start to shift the conversation towards one of not just price, but instead to value and optimizing value for the system, we are in a place where the gap between what the health care system needs to provide and what it's able to do is going to significantly widen,” Soril said.

“We won’t see innovators wanting to stay in the Canadian market. And we’ll lose out on these domestic-born innovations,” she warned.

Procurement is a challenge because hospital administrators and their teams are tapped out delivering care, said Blake Daly (photo at right), director of innovation at Bruyère Health and director of the CAN Health Long-Term Care Innovation and Scaling Network.

Hospitals and their procurement teams also are designed to be risk-averse to protect patients, “and to adopt the cheapest option on the table,” he said. “So for us as a system to say, we expect you to be also adopting innovation . . . is not a reality in a fiscally tight environment.”

Clinical teams are hard-pressed for time to meet with product vendors, research the products and explore potential solutions, Daly said. “This is time spent not on the unit round, not on the units delivering care.”

Canada’s health care system needs to establish a community of practice so hospital managers can at least learn about what’s working at other hospitals, he said.

Armen Bakirtzian (photo at right), co-founder and CEO of Kitchener, Ont.-based Intellijoint Surgical, which offers 3D mini-optical navigation technologies for orthopedic surgeons, said shifting the health care procurement system from lowest-bidder to value-based procurement “is the right direction for us to go as a country or any health care system.”

The current system is a fee-for-service model, and whether that service is delivered well or poorly, the fee is the same, he noted. “So having fees tied to outcomes makes inherent sense. And I think we're in a world where clinical benefit is no longer enough.”

Along with measurable clinical outcomes, value-based procurement must also have measurable economic outcomes, including savings to the entire health care system, he said.

Provinces are responsible for delivering health care, “so the motivation for improvement in clinical and economics [outcomes] should lie at the provincial level,” Bakirtzian said.

Ontario Health took a leadership position in creating the Health Innovation Pathway, which is designed to accelerate the adoption of new technologies that can improve patient care. It is a model to create new financial reimbursement codes for innovations adopted in the health care system, Bakirtzian said.

“The objective of that program is to prove clinical and economic benefits and, depending on the amount of clinical and economic benefits, it will translate into a dollar value of a reimbursement code, which is great.”

Hospitals stumble in converting pilot projects into procurement

Martin Ducharme (photo at right), international development vice-president of Montreal-based AlayaCare, which provides a cloud-based platform for home-based care and community health agencies, said using the lowest-bidder approach in health care procurement doesn’t factor in myriad other variables that add value.

These variables include a greater return on technology investment, fewer hospital stays, lower patient readmission rates, reduced need for follow-up care and other benefits.

However, hospitals work on annual budgets and have to constantly look for funding for the coming year.

“Most health authorities right now, most CEOs, are unable to buy on the value that the system will create or innovation that it will create within their fiscal year,” Ducharme said.

Hospitals engage in numerous pilot projects with innovative technologies, but don’t have a way to convert these pilots into procurement at the end of the project, he said.

Staff may love the technology, but “you've got to rip it out of their hands, which is not great for them, and they may need to switch the system,” Ducharme said.

Annie-Kim Gilbert (photo at right), CEO of Montreal-based MEDTEQ+,  a not-for-profit research and innovation consortium, said pilot projects and test beds are valuable and important. “Where the whole value falls is that they stay there, and they kind of get stuck and they're not going any further.”

Hospital CEOs and hospital networks have numerous objectives to meet, but “there is absolutely nothing on teaching, research and innovation,” she said.

“Even though a research centre is often within the walls of the hospital, they still don't have any KPI (key performance indicators) to get something out of those brilliant minds to get their service and care better. So as long as there are no objectives, it's just this other thing to do.”

Hospital CEOs are “all ‘A students’ and they all want to succeed,” Gilbert added, but “they don’t have any imputability [or accountability] for innovation.”

Daly pointed out that he probably engages in 50 different ideas for innovation before whittling them down to two or three that are feasible. “So think about the effort that goes into finding the one [with] procurement in mind.”

“We kill entrepreneurs with hugs” by being unable to commit to procurement at the end of pilot projects, he said. “So don’t do that in your organizations if you have a chance. Tell them up front this is why this [innovation] won’t work there.”

Soril said all the players in the health care system aren’t working in true partnership, as a collective, from the outset when it comes to procurement.

The provincial responsibility of delivering health care results in provincial conversations where often nobody is talking about the health of all Canadians.

“We have to have a huge, bold shift in the way we think about the health of Canadians. And opportunity looks like a lot of hard work,” she said.

“We have to be able to make these – not just policy shifts – we have to have an ethnographic understanding that we are all going to change the society, and feel that we are losing out on the health and wellbeing of our individuals unless we are brave enough to make these changes.”

Procurement should tie together clinical and economic outcomes

The many different jurisdictions responsible for public health care “operate in a way where learning is not portable,” Soril said.

The federal government could play a leadership role in ensuring there are opportunities, including through consortiums, for creating programs of excellence for learning portability to become standard practice in procurement, she said. “How can we learn from other jurisdictions, set the bar, set frameworks and tools that we can translate and work together for procurement?”

For example, programs such as EnvisAGE Beachheads, MEDTEQ+ Beachhead Network, the CAN Health Network, and the Ontario Bioscience Innovation Organization’s OBIO Early Adopter Health Network connect technology companies with centres of excellence, research institutes, clinical sites and community labs to test and validate their technologies.

“It’s not just realizing a clinical end point from a randomized control trial,” Soril noted. Procurement is also about looking at the return on investment, operational efficiencies, improved productivity and the savings in patients not having to return to the hospital, she said.

Bakirtzian, who co-founded the Medical Innovation Xchange to help scaling medtech companies, agreed that pilot programs and clinical studies need to focus not only on clinical efficiency, but on economic outcomes and benefits. The challenge for the health care system’s incentive structure is, “How can we make health care and clinical benefit and economic benefit go hand-in-hand in today’s world?”

“I think when finance is tied to clinical outcomes, you have a lot more reception to adoption of innovation,” he said.

In the U.S., for example, clinical and economic outcomes are inherently tied together, he noted. “If somebody has a good experience at a hospital, they have good outcomes, they're going to tell everybody they know, ‘Hey, go to this hospital.’ That means that hospital is going to get new customers. So they're financially rewarded for delivering a good outcome.”

“We just don't have any incentive, financial incentive structure like that in Canada for outcomes,” Bakirtzian said.

He said when he tries to persuade surgeons in Canada to adopt IntelliJoint’s technology, they tell him they’re being told to use cheaper sutures in their operations. “We’ve done over 85,000 surgeries across eight countries. Canada is where we struggle.”

“So it’s just such a difficult uphill battle. Hospitals are constrained, but budgets are constrained. And to get new funding envelopes without reimbursement, I think is super tough, unless we're in a value-based world where those two things inherently work together,” Bakirtzian said.

Daly agreed that “it’s hard work to take any idea, even if it's a validated pilot, and drive it through the hospital to the point of procurement.”

“People pushing the ball over the one yard line to get the touchdown takes a lot of effort. It takes multiple downs, and sometimes you don't get it, but we have to keep doing that,” he said.

Ducharme said another problem is that there are gaps in the ability of Canada’s health care system to define or measure the metrics for reimbursement for procuring innovative technologies.

The system is unable to track the entire patient trajectory and the costs associated with that, which is necessary for implementing new models of care, he added.

Other countries, such as Australia, the U.K. or the U.S., have far fewer barriers around these new models of care, Ducharme said. “There's oftentimes an accountability on organizations to adopt these models quite rapidly.”

But in trying to create new models of care in Canada, “ the technology's not there, the funding's not there and the training's not there,” he said. “There is no cohesion around all of these different [hospital] units and departments to make a new model of care happen.”

Other countries’ health care systems encourage procurement of innovative technologies

Ducharme pointed out that Belgium’s health care system encourages innovation adoption in its hospitals by offering rapid clinical trial approvals, early-access programs for life-threatening diseases and aggressive tax incentives for R&D.

Belgium’s federal government and the National Institute for Health and Disability Insurance constantly update funding and reimbursement structures to ensure new health technologies reach patients quickly.

Institutions like the Flemish Institute for Biotechnology and university hospitals are deeply integrated with the industry, spinning off dozens of biotech companies and creating a fast pipeline from research to clinical testing.

Belgium was one of the first countries in Europe to introduce joint procedures for the reimbursement of both a precision medicine and its companion diagnostic in a single step.

Hospitals in Belgium also often have two CEOs – an administrative CEO who manages the hospital and a CEO who represents all the doctors – which helps accelerate the adoption of new technologies, Ducharme said.

So Belgian hospitals have the incentives to ensure that their patients “tell all their friends in the city that we don't nickel and dime them so that they come and work for us. And that creates interesting benefits,” he said.

However, Dr. Valerie Grdisa, CEO of the Canadian Nurses Association, cautioned during a question-and-answer session about “creating this massive, two-tiered system, which is what the U.S. is struggling with. And if that’s where we want to go, that’s a really bad choice.”

European health care models have completely different funding and compensation models for health care providers, especially salary-based models for physicians rather than a fee-for-service, volume-based activity funding model, she noted.

“So if we're going to cite these models around the globe, then we actually have to level the playing field, because right now . . . in my mind, Canada is the worst because we're trying to be public and private at the same time, and there's no accountability in that system,” Grdisa said.

On the positive side in Canada, Daly said some of the most exciting work in health data is happening at the fringes of health care.

A program called onSPARK (Ontario Supporting Partnerships to Advance Care and Knowledge), supported by Ontario’s Ministry of Long-term Care, is Canada’s largest data-sharing network and learning health system platform for long-term care. It integrates electronic records and staffing data from about 250 Ontario nursing homes caring for about 20,000 residents, providing data on care in a research capacity.

OnSPARK was developed in partnership with McMaster University, PointClickCare and long-term care organizations.

“Long-term care is some of the most standardized, clean data in the health system. So this is a great place to start when you think about how can we improve the aging experience,” Daley said.

Bakirtzian said Canada also needs to clearly define what a Canadian company is and provide incentives to these companies to innovate and have their technologies procured by the country’s health system.

“I think there's a lot of value that they can deliver, and skewing things towards the domestic company benefits has a lot of gains to be made in our country,” he said.

Panel moderator Laurent Carbonneau (photo at right), vice-president, policy and advocacy at the Council of Canadian Innovators (CCI), pointed people toward CCI’s policy report, Care at Scale, on public buying, data and better health care for Canadians – released in March this year.

The report sets out a practical blueprint to modernize health care delivery by using public buying power more effectively and strengthening how health data supports care.

Its six recommendations include: ensure successful digital health innovations can scale by establishing clear and predictable pathways from pilot projects to procurement contracts; and ensure procurement decisions reflect the system-wide benefits and efficacy gains delivered by digital health investments by better accounting for value in procurement bids.”

“Is the lowest-bidder system actually delivering what it’s supposed to be? I think the answer is ‘No,’” Carbonneau said.

As a tool of economic development for Canada, he said, “if we aren’t controlling the assets that are coming out of our health care system, then other people will, and will monetize them.”

Editor’s note: You can read Research Money’s complete coverage of our 25^th annual conference in these stories:

Canada has the research “spark” – now it needs to create the life sciences economic engine

Canada’s risk-adverse regulatory system and unpredictable drug access stifle novel drugs and clinical trials

Canada’s fragmented, disconnected public health care system faces barriers in building a multidisciplinary workforce

Canada needs a life sciences sector as strategic infrastructure and a regulatory system incentivizing commercialization

Leveraging Canada’s rich health data to benefit Canadians and the economy requires sharing that data  

Building Canada’s life sciences sector requires shift in research focus by making the sector a priority for the economy

Canada fails to meet Canada Health Act principles for patients, including access to innovative medicines  

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