In 2017, healthcare expenditure in Germany amounted to €380 billion, or €4,544 per inhabitant, increasing by 4.7% compared to 2016 (Statistisches Bundesamt, 2019). Part of this expenditure comes from the procurement of medical supplies by hospitals. Having an efficient healthcare procurement system could thus improve efficiency and contain spending dynamics in this sector. The topic is of considerable importance for those jurisdictions that bear the budgetary responsibility for a significant number of hospitals (in Germany this is the case for the states and the municipalities).
In healthcare procurement, more efficiency could possibly be reached through the use of uniform pricing policies (Grennan, 2013). In this project we investigate whether the adoption of a particular uniform pricing policy, such as reference prices, has helped in reducing public expenditure. We apply the analysis to the procurement of medical devices in Italy by public hospitals.
This research project has direct policy implications. It could guide future policies aimed at reducing public expenditure in the health sector. The project team is already in contact with the Italian anti-corruption authority which has shown its interest in the project by complementing part of the data with information on the awarding mechanisms of the contracts. This project can guide them into giving more or less resources to future updates of the reference prices. If they find that the costs of updating these reference prices overcome the benefits of this policy, they could even consider to delete them.
A potential follow-up of this work would be to compare the binding reference prices policy adopted in 2016 with other uniform pricing policies, as the policy of procurement centralization into the hands of public bodies, such as a national procurement agency, that typically aggregate the demand of single hospitals. These public buyers can purchase goods and services at lower prices, exploiting their bargaining ability that is typically bigger than the one of a single hospital. Since little is known to the public opinion (at least in Germany) about the ways that are used by public buyers to procure goods and services, this follow-up could present additional policy implications. We can check the impact of procurement centralization in our data by using detailed data on prostheses and coronary stents. These goods were not subject to reference prices but they were hit by a rule that stated that, for contracts with values above a European threshold, prosthesis and stent had to be purchased through the national procurement agency and other precisely identified public bodies.