A significant part of tenders in local medical procurement have been for the amount between UAH 195,000 and UAH 200,000. In 2018, healthcare departments and institutions have carried out procurement in this scope with the expected total cost of UAH 400 mln*

Transparency International Ukraine has presented the report Medical Procurement in ProZorro: Express Examination 2.0. This is already a second report dedicated to public procurement in healthcare. It illustrates tendencies in the expenditure of public funds on healthcare since 2017.

“With this report, we can show how to control procurement in healthcare, illustrate problematic issues, make the transformation of healthcare more effective,” says TI Ukraine’s Executive Director Yaroslav Yurchyshyn.

“We have analyzed medical procurement at the local level during the first three quarters of 2018 and 2017. The positive fact is that the expenditures of hospitals and healthcare departments have grown to UAH 16.7 billion from UAH 15.6 billion in 2017. The funds spent on pre-threshold procurement has reduced. Overall, healthcare departments and institutions spend twice as little money on pre-threshold procurement as other procuring entities in Ukraine on average. At the same time, the share of competitive procedures in pre-threshold procurement reduced instead of decreasing in 2018 in all oblasts,” said analytics manager of the innovation projects program of Transparency International Ukraine Artem Davydenko.

Report authors have pointed out a high level of monopolization on the medication and medical equipment market. At the local level, 1% of suppliers made agreements for 50% of the total value of all agreements in these categories.

“The research clearly demonstrates growth areas for effectiveness of medical procurement. For a few years now, we have been implementing open auctions in ProZorro, in healthcare, too. But we have to take a new step and make regional procurement more professional thanks to centralization. It does not mean that we step away from ProZorro – we develop the reform instead.

“Today, we already have a real example of how this works – centralized procurement of medication by international organizations. In this procurement, over 70% of suppliers are direct manufacturers, which allows to save almost 40% of the funding. Since 2019, SE Ukraine’s Medical Procurement will start working as a centralized procurement organization for the regions. Our main goal is to buy medication faster and cheaper,” says Viktor Nestulia of SE Ukraine’s Medical Procurement under Ministry of Healthcare.

Procurement of medication and medical equipment constitutes only a third (32.2%) of all the expenditures of healthcare departments and institutions through ProZorro. A little less – 29.1% – is spent on energy. 14.2% goes to construction and maintenance of facilities.

It is the energy supplies that more than half of all non-competitive procurement of healthcare departments and institutions goes to. This is reflective of the tendencies in Ukraine in general due to low competition in the sector of utilities.

 Interestingly, healthcare expenditures per capita differ vastly depending on the region. For instance, in Lviv oblast, the expenditures were the highest, with UAH 563 per person, while in Luhansk oblast, the figure was only UAH 111.

* If the procurement cost exceeds UAH 200,000, procuring entities have to go through the competitive bidding procedure. That is why some of them purposefully decrease the expected cost to the maximum allowed amount to enter into a direct agreement with the supplier they are interested in.