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30 July 2021

Stronger together – how DHBs can benefit from procurement aggregation

By Rod Treadwell, GM National Procurement

Last October, I took up my role as GM National Procurement at NZ Health Partnerships (NZHP), having moved back to New Zealand after working in the Australian market for 10 years.

Rod Treadwell, GM National Procurement, NZHP
Rod Treadwell, GM National Procurement, NZHP

What has struck me over this short period of time is the tremendous opportunities for *aggregation of procurement in the New Zealand health sector. This realisation drove me to issue a call in a letter to procurement leaders across all DHBs for us to start leveraging more opportunities around aggregation here.

Of course, aggregation is already happening with several DHBs regularly working together on joint procurement contracts. However, these instances tend to be on a regional level, as collaborations between neighbouring DHBs and there’s significant potential to do a lot more.

The real opportunity lies in scaling up such regional arrangements to the national level, which is where the greatest benefits by DHBs, working together on procurement can be achieved for our health system.

The benefits delivered through regional engagements certainly show what can be achieved on a national scale through aggregation. For instance, earlier this year, NZHP negotiated a joint procurement and maintenance contract for the Whanganui and Taranaki DHBs that secured more than $400,000.

While cost savings is one of the most quantifiable outcomes of aggregated procurement, it is certainly not the only benefit.

Responding faster to the medical needs and demands of patients in our care across the country can deliver better health outcomes for communities throughout New Zealand. That’s something we cannot put a price tag on.

NZHP can help DHBs manage this process. Our team has the skills and expertise to find and secure opportunities where purchasing can be consolidated across DHBs delivering cost savings and greater value to all.

In light of the recent reform announcements by the Minister of Health, I believe it is now incumbent on all procurement professionals to collaborate on what is purchased, and the associated contracts and operations, as these will ultimately fall under a single entity (in some way) from mid-2022.

That’s why my team and I are keen to engage with our customers on this in the coming months and I look forward to helping drive this conversation forward. Let’s get started!

*Aggregation requires the total amount of any procurement (excl. GST) to be carefully and objectively estimated. In certain cases, the value of contracts must be added together, and the procurement regulations set out “aggregation rules” for this purpose.