Cluster sourcing activities continue to benefit health services

At Northeast Health Wangaratta, Chief Procurement Officer Kim Bennetts is about to commence a cluster sourcing activity for printing services.

Cluster sourcing is a strategic procurement process involving health services grouping together to procure goods or services.

The Northeast Health Wangaratta (NHW) activity is expected to include around 5 local health services, delivering financial savings and reducing health services’ administrative burden, a particular benefit for hospitals that don’t have the individual resources to run large tenders.

Kim says NHW reaches out to health services in the Hume region with an invitation to join when a procurement activity is identified.

“There are financial savings. However, it’s also an opportunity that supports connection and builds capability within teams. Knowing we can reach out to one another and support processes as a group is an important benefit,” says Kim.

HealthShare Victoria’s (HSV) role in providing procurement and supply chain functions for Victoria’s public health system includes negotiating collective agreements with suppliers on behalf of public health services to help them realise savings. Our work to support health services via cluster sourcing is contributing to successful outcomes across regional Victoria.  

“Working with HSV is invaluable. They’re a source of information and guidance for us. HSV’s involvement is integral in the success of cluster sourcing,” Kim says.

It’s not the first group tender led by NHW. Two collaborative sourcing activities were completed in Hume late last year for laundry and linen services and fresh fruit and vegetables. Both were led by NHW and resulted in significant cost savings.

Earlier this year, health services in Gippsland saved up to 50 per cent in costs when Latrobe Regional Health led the first clinical cluster tender in the region for single-use patient air transfer mattresses.

In cluster sourcing, health services pool resources to achieve better cost outcomes and service delivery through economies of scale and collective purchasing power, resulting in a range of benefits.

Through cluster sourcing at the Local Health Service Network (LHSN) level, health services can expect:

1. Cost efficiency by being able to negotiate better prices due to bulk purchasing power and reduced transportation costs.
2. Reduced duplication by working together to purchase products and services.
3. Improved service delivery by working together to purchase products and services.
4. Market access by improving market reach through leveraging the collective reputation and marketing power of the LHSN.

HSV Customer Relationship Manager for Hume Matthew Erickson is supporting the cluster activities at NHW. He says HSV can provide support and information to health services or LHSNs that would like to participate in cluster sourcing opportunities.

HSV’s support for these activities ensures cluster sourcing participants will not be in breach of the Competition and Consumer Act 2010, which covers anti-competitive conduct.

Above image: Staff from Northeast Health Wangaratta (NHW). NHW led a group procurement activity for fresh fruit and vegetables in the region.