Decision-Makers and Procurement Process for Medical Products in the Czech Republic

The Czech Republic, located in Eastern-Central Europe, has a nominal GDP of €160 bn, of which it spends 7.75% on healthcare. This is equal to around €12.3 bn in total, or €1,177 per capita.
When procuring medical supplies for its healthcare services it relies on clinical and non-clinical decision-makers, where tendering processes are a common method of selecting the desirable supplier. Following in this article, is a brief explanation of the procurement process: the different steps, the tenders and the contracting authorities, and the decision criteria.

Public procurement steps

Steps in the procurement process, for general medical products, is as follows:

  1. Heads of departments establish the technical requirements for the devices needed in their department, and can propose a particular supplier/brand, within budgetary guidelines from the hospital management and according to minimal operation-volume requirements from the government
  2. The legal department processes the departmental requests and writes tenders (when applicable).
  3. The hospital management and or the procurement department evaluates the cheapest options that satisfy the minimal requirements from the surgeon/head of department, and make the final decision.
    – In 80% of the cases the surgeon will get what he requested
    – Tenders are used for most procured products
  4. After finalizing a contract, the product will be included in the central purchasing system of the facility

Deviations and irregularities in this standard procurement approach is possible, especially in provincial towns.

The decision-makers

Procurement for the needs of the various hospital departments in the Czech Republic is centralized in each hospital. The hospital management and the procurement team have the most decision-making power regarding procurement in Czech hospitals. A procurement team or commission most likely includes:

  • Surgeons
  • Pharmacy representative
  • Economist
  • Department representative who uses the product

Physicians initiate the procurement process and establish quality parameters. Accordingly they can assert a degree of influence over the procurement process. Particularly senior and more experienced physicians, such as heads of department, have a lot of influence over the product selection.

The insurance funds cannot choose the supplier and cannot directly influence the price. They can only influence total budgets, as agreed in the contract with the hospital.

Public procurement legislation and tenders

The Public Procurement legislation in the Czech Republic obligates contracting authorities to use public tendering processes when procuring medical supplies.

These contracting authorities include all groups and facilities financed with public funds:

  • The Ministry of Health
  • State-managed hospitals, such as University hospitals and regional hospitals
  • Medical emergency services
  • Public elderly homes
  • Spas and other therapeutic centers
  • Health insurance companies
 Public hospitals are mandated by law to commence tenders at procurement plans above €80,000; yet the amount varies depending on the hospital. Since 2012, larger public investments and their tenders must be published on-line.

The EU tender threshold for central contracting authorities starts at €207,000 for supply and service contracts.

Award criteria in such tenders most commonly prioritize price factors and technical parameters. 25% of all tenders are geared towards the lowest bid, and the weight of price factors is at least 70% of the bid evaluation rational.

Specific and bulk product procurement

Surgeons have a higher say for very specific, niche products needed for complicated operations, such as orthopedic operations on young patients or in polytrauma patients.

For particular investments, an investment committee will most likely be assembled.

When procuring products in bulk quantities, the procurement departments generally do not require a lot of input from surgeons, as the price will be the decisive factor.

Private procurement

Private entities are at liberty to follow public tender processes or negotiate their own suppliers directly. Similarly to the public supplier-selection process, those suppliers offering the best price-quality ratios are often preferred.

Decision drivers

Product quality and price are the highest ranked drivers for Czech procurers when choosing a particular product supplier. Following in third place, and lagging much further behind on the scale of importance, is fast delivery.

When the minimal quality terms have been met, then price can be used to determine the final decision. American and German suppliers are associated with quality products.

Service provision is also valued highly, including fast delivery time, consignment stock, education and further training, etc. It is highly valued to have reliable communications and a positive relationship with the sales representative.

There is no innate preference to choose a national supplier, there is however, a preference for local suppliers. These are considered more accessible, more flexible and easier to communicate with.

Capital equipment procurement

The procurement of capital equipment is mainly the responsibility and choice of the healthcare providers. The providing facility is free to choose how to reinvest the reimbursements they receive from the public insurance funds, and which equipment they wish to acquire, and how they wish to strengthen their facility.

Nonetheless, most capital investment plans from public entities will first be presented to the owning authority (whether it is a local or regional government, etc.) in order to prevent unnecessary duplication of particular purchases within a given region or hospital network.

For further quantitative and qualitative information on the Czech Republic healthcare system and the macroeconomic climate, please look into our Business intelligence platform or order the TforG Deep Dive report for the Czech Republic containing volumes of 984 surgical procedures in 13 specialisms.