Atin Kumar Rastogi

Procurement Specialist, Solutions and Innovations in Procurement, Governance Global Practice


The World Bank's new Procurement Framework (PF) was effective as of July 1, 2016. This new PF was informed by 3 years of extensive global consultations. Prior to its launch, the World Bank in India initiated a detailed study to analyse and understand the practices of three MSCs Tamil Nadu (1994), Kerala (2007), and Rajasthan (2011). This research provided a framework that captured the significance of ITC driven, holistic supply chain driven procurement management systems - a model that can easily be emulated globally. With the new PF there is increased flexibility, efficiency and transparency of the procurement process to better meet the needs of client countries.

5 Benefits of a Holistic Approach to Procurement and Supply Management in the Health SectorHealthcare Services are highly dependent on three Ds; doctors, drugs and diagnostic tests. In India, 499-649 million of 998 million people (50% - 65%) do not have access to essential medicines. According to the WHO 'Access to Essential Medicines' report, healthcare systems in several developing countries suffer from constrained budgetary allocations, unavailability of skilled healthcare professionals, and limited access to essential medicines and diagnostic services. Effective and efficient procurement of essential medicines substantially improves the quality of healthcare services. To achieve this objective and to overcome various challenges in the existing procurement of medicines, few state governments have adopted supply chain driven procurement models and are yet to create administrative and financially autonomous Medical Service Corporation (MSC)s with mandate to procure essential medicines which will increase accessibility at all levels.

The supply chain driven procurement model features (i) centralized management of standard lists of essential medicines across all levels of healthcare, (ii) better forecasting of aggregate demand based on the historic consumption data, (iii) efficient and transparent procurement processes which enable the establishment of better pricing and framework contracts, (iv) stringent quality assurance mechanisms, (v) integrated management of logistics and decentralized warehouses to ensure availability of required quantities without shortage or surplus by observing prescribed storage conditions, and (vi) leveraging the advantages of Information Communication Technology (ICT) to seamlessly integrate all subsystems and processes to ensure robust monitoring and decision support systems.

Here are 5 findings that demonstrate the advantages of a centralized MSC based approach:

Decreasing levels of Out of Pocket (OOP) for Patients under MSC states: The National Sample Survey Organization (NSSO) captured Out of Pocket (OOP) expenditure data of patients in public hospitals which demonstrated that efficient public procurement systems will lead to low levels of expenditure on medicines.

Manifold increase in Bidders Participation: Statistics over a 3-year period (2012-2015) show substantial increases in bidder participation with more than 100 bidders participating in tenders aimed at establishing framework agreements for various categories of medicines, vaccines and other health products

Speed in Settling Tenders: Centralized procurement resulted in expedited processes across all MSCs. Also, efficient management of various stages in the procurement process resulted in better value for money through increased transparent processes.

Increasing Volume of Procurement: The study confirms that consolidating the planning, procurement and stock management to MSCs leads to increased availability of essential drugs and surgical goods to public health facilities in their states in timely manner and more efficient arrangement which benefits millions of patients. To this extent, the growth in value of procurement is a reflection of the performance of the three states.

Efficient Health Management Information Systems (HMIS) in place: All three corporations, utilize IT systems for management of logistics and distribution. They also generate Management Information System (MIS) reports for decision making and monitoring which has significantly improved efficiency and effectiveness of overall warehouse and stock keeping processes.

Before the World Bank's New Procurement Framework (PF) was launched, these findings demonstrated the forecasted benefits of a reformed procurement and supply management system in India's health sector. The new PF serves as a roadmap to achieving increased flexibility, efficiency and transparency of the procurement processes to better meet the needs of client countries.

For additional information on India's Medical Services Corporations and Procurement Processes contact Atin Kumar Rastogin