How Procurement Unlocks Value-Based Health Care — Part 2: Capitalizing on the Promise

Joaquim Cardoso @ BCG
11 min readMar 12, 2021


By Götz Gerecke, Jennifer Clawson, Christoph Pross, Yves Verboven, and Hans Bax

This publication is coauthored by BCG and MedTech Europe and describes our ongoing collaboration on value-based procurement in medtech.

Capitalizing on the Promise of VBP

As part of our research, we identified specific measures that procurers and medtech companies can take immediately to begin capitalizing on the promise of VBP, along with ways for the two groups to collaborate more directly.

Procurers can play a key role by making VBP a strategic priority and creating the organizational elements needed to overcome the challenges. Many of the procurer respondents said they lack a VBP strategy-a clear direction and willingness among leaders to make a bold leap into VBP and put the right organizational elements in place for success. In addition, many providers do not have the expertise required to measure the value proposition of a given product, service, or solution. Procurers often still focus on upfront price alone, making their purchasing decisions on the basis of financial incentives to hit short-term procurement budgets.

We also asked medtech respondents to cite the biggest challenges for procurers, and their answers largely aligned with those of procurers. Notable differences were that a higher percentage of medtech companies cited the lack of outcome measurement expertise as a key challenge, and fewer medtech companies recognized the challenges imposed by short procurement timelines, which are an important barrier. (See Exhibit 4.)

To address these challenges and deploy VBP successfully, three critical actions are necessary.

  • Make VBP a strategic priority and set up a multidisciplinary VBP team to drive the change
  • Prioritize and focus, through VBP pilots that build up internal expertise
  • Develop organizational capabilities.

1.Make VBP a strategic priority and set up a multidisciplinary VBP team to drive the change. Leadership teams at procuring organizations should make VBP a strategic priority. This entails building a team of people from multiple disciplines, including clinical and health economics expertise, to define the pain points that must be addressed in each VBP process and to broaden the evaluation criteria. They should also spread awareness throughout their organizations, not only among clinicians but also within administrative functions, and collaborate with peers to share best practices. Another critical aspect is devoting sufficient time to work on the initial tenders that apply VBP (contracting authorities often cite lack of time as a key obstacle).

2. Prioritize and focus, through VBP pilots that build up internal expertise. As part of the VBP strategy, procurers should prioritize projects in which the potential value from VBP is clear-defined by a limited set of criteria-and there are clinical champions within the organization who are willing to engage. Early and open communication with medtech companies is key, particularly on the specific pain points for which the organization is seeking a solution. Procurers can learn from these initial projects and broaden the application of VBP over time. Success often comes through a step-by-step progression, rather than a big bang.

3. Develop organizational capabilities. The procuring organizations need to build the appropriate expertise and infrastructure to measure patient-relevant outcomes and total cost of care-the core components of VBP. This will enable them to demonstrate the real-world quantitative and qualitative benefits over traditional procurement methods. Similarly, procurement incentives should align with long-term value, rather than with just the upfront purchase price or financial rewards for hitting short-term budget targets. “We need to be able to measure a baseline and then the improvement for VBP initiatives more easily,” said the deputy head of procurement at an academic medical center. “We can’t start anew with every project.” (See the sidebar “How Procurers Create the Right Operating Model to Support VBP.”)

Advancing from pilot projects to a broader and more ambitious VBP approach requires changes to the operating model. Here’s how two procurers accomplished that.


Advancing from pilot projects to a broader and more ambitious VBP approach requires changes to the operating model. Here’s how two procurers accomplished that.

NHS Wales realized that trying to reduce the price of medtech products was having limited impact on the overall cost of care.

Instead, it changed its strategy for procurement to a value-based approach. The organization established a team of three dedicated VBP managers, who serve as internal ambassadors for the concept.

Those managers are setting up multidisciplinary groups within NHS Wales to identify clinical pain points, develop value criteria, establish metrics, build institutional expertise, and support the overall VBP approach.

To date, NHS Wales has trained more than 100 procurers on VBP, and it is now expanding its focus to the finance function.

With the foundation in place, NHS Wales has now expanded the VBP approach to large medtech tenders, and it aims to include 100% of appropriate medtech tenders from 2020 onwards.

Similarly, the health system for the Capital Region of Denmark set up a dedicated, four-person function for VBP, innovation, and strategic partnerships.

It also created multidisciplinary steering committees for specific medtech categories, each staffed by eight to ten specialists.

The organization built standard approaches and templates for commercial, legal, IP, IT, and data components across disease areas by partnering with a software provider.

Part of the IT effort is a proprietary database that allows the organization to track VBP execution and innovation.

The first two implementation waves led to seven VBP projects, about 30% of the total, comprising €10 million in spending.
The system plans to expand with additional projects.

Medtech companies should focus on solution-based offerings, evidence of value, and capabilities. For medtech companies, our research points to specific challenges as well. (See Exhibit 5.)

They often do not have sufficient specific evidence that their products and solutions create value in real-world settings. And they often lack a holistic understanding of VBP and the tools and capabilities needed to execute it. Typically, their commercial models still emphasize products rather than comprehensive solutions.

Procurer respondents to our survey saw similar challenges for medtech and highlighted, in particular, a lack of understanding and insufficient focus on solutions. Regarding the latter, procurers told us that they are dependent on suppliers to educate them on what is possible. They typically do not have the capacity to work with medtech companies in conceiving new solutions from scratch; rather, they prefer that suppliers come with “productized” solution packages that can be easily adapted and deployed.

To address these challenges, we recommend that medtech companies take five specific steps to establish a virtuous cycle of continuous improvement and expansion of their VBP offerings.

  • Prioritize where to play based on existing solution capabilities and value proofs
  • Create multidisciplinary teams to develop value propositions that align with the VBP framework
  • Enable the commercial teams
  • Rigorously execute, starting with prioritized tenders
  • Capitalize on the first-mover advantage

1.Prioritize where to play based on existing solution capabilities and value proofs. First, medtech companies should identify the parts of their offering that are most conducive to a VBP approach. A systematic assessment will determine where they can capitalize on existing solution capabilities and related evidence to help providers address their biggest outcome variations, cost of care inefficiencies, and other pain points. From early successes, they can broaden their focus into new capabilities over time.

2. Create multidisciplinary teams to develop value propositions that align with the VBP framework. Medtech companies should also identify the personnel-typically from marketing, sales, market access, and medical, among other areas- who should come together on multidisciplinary teams to craft new value propositions in the prioritized areas. Rather than highlighting the features of a given product or service, companies should work from the VBP framework, starting with customer needs. This entails creating a deep understanding of the variations in outcomes, the inefficiencies that lead to higher total costs of care, and the other pain points for the main stakeholders; identifying the underlying levers that can be used to address these points; and, lastly, mapping the related existing and potential solutions the company can offer. On the basis of this deep exploration, the teams can then craft a competitively differentiated, needs-based value proposition.

In our experience, such new value propositions can be so impactful that companies use them broadly in their go-to-market approach and roll them out to regions beyond Europe as well.

3. Enable the commercial teams. In addition, medtech companies should determine which roles in the commercial organization are needed to identify and realize VBP opportunities, and then enable those teams accordingly. Traditional sales reps will find it hard to realize a full VBP tender on their own, without the appropriate expert support. But they will play a crucial role in creating awareness among their customers, identifying opportunities, and bringing the right experts to the table. This step can also be a good occasion to strengthen tender methodologies and tool kits and align incentives to foster collaboration in the field.

4. Rigorously execute, starting with prioritized tenders. Medtech companies should establish task forces on a regional or country level, to coordinate the implementation of the new VBP approach. They should prioritize the tenders that are coming up in the next 12 to 18 months, focusing on those with the greatest potential for a VBP approach. From that point, companies should rigorously drive execution, actively support the frontline teams, and track the progress of each opportunity.

“The single biggest driver of success was our new VBP SWAT team,” said an executive at a medical device company. “We invested in know-how, capabilities, and boots on the ground. Our teams then focused on selected VBP tenders in our key markets. This cross-geography, cross-functional approach helped us win the vast majority of the prioritized VBP tenders and demonstrate-to our clients and also internally-the value of this new way of collaborating.” (See the sidebar “How Medtech Companies Create the Right Operating Model to Support VBP.”)


Some winning medtech companies are taking the steps necessary to adopt VBP more broadly.

For example, one company wanted to become more competitive against strong rivals.

To do so, it developed a central team that coordinates VBP strategy, capabilities, tools, and training across Europe.
Country-based teams implement the concept locally, but they benefit from central support, particularly on large tenders.

The company also revamped its marketing to emphasize real-world evidence of value from its products.
Key account managers and sales reps are trained on value-based selling.

As a result of this organizational approach, the company won 70% of the tenders in which VBP was used, a substantial step up from its overall market share of 40%.

Another medtech company set up fully dedicated VBP functions at the global, regional, and local levels, which coordinate among the sales, marketing, government affairs, and legal departments.

The company also has a VBP academy for more than 20 VBP projects in the EU, to serve as a central repository of topic expertise and to share best practices among teams.

As a result, the firm’s value-based solutions and integrated care offerings are growing faster-in terms of the number of tender projects and revenue-than its traditional portfolio, and the company is recognized as a leader in value-based solutions and contracting.

5. Capitalize on the first-mover advantage. Finally, medtech companies should apply the lessons from initial pilots to generate real-world evidence and leverage the experience from implementing new solutions. In this way, companies can create a virtuous circle of improved value generation that expands into other parts of the portfolio and geographic markets.

Procurers and medtech companies should forge a true partnership. VBP calls for a collaborative partnership, including a willingness to engage on clinical and organizational pain points and to measure jointly-and share-data regarding outcomes. Clearly, that kind of partnership requires significant trust. (See the sidebar “The VBP Community of Practice.”)


Together, procurers and medtech companies are starting to link with their peers to share lessons learned and best practices in value-based procurement.

One platform is the VBP Community of Practice (CoP).

Initially established by MedTech Europe and BCG, in cooperation with leading procurement organizations, the CoP aims to engage stakeholders to share knowledge, experience, and insights about the existing VBP frameworks and to collaborate in overcoming common hurdles and in spurring further adoption.

Currently, VBP CoP members include approximately 20 contracting authorities (covering more than 1,000 health care organizations from 13 EU countries), 17 medtech companies, and 15 national medtech associations.

The group meets several times a year to discuss the latest developments in VBP. Interested organizations can request additional information at

An early dialogue between procurers and suppliers, in advance of the formal tender process, is a crucial prerequisite for success.
Through such dialogue, both sides get greater clarity on objectives and potential solutions, and they can jointly define outcome criteria and how best to generate real-world evidence.

For procurers to lead the way in these pre-tender dialogues, we’ve identified three key imperatives:

  • Identify the pain points in care that are in scope, and ask suppliers to provide insights and early-stage guidance on how the partnership can address those pain points, considering available solution packages and the status of related value proofs.
  • Clearly define all elements required for an effective VBP tender process-criteria, units of measurement, types of acceptable evidence, and so forth.
  • Ensure that senior leaders on both sides engage in and deliver excellent project management, including clarity on all timelines and milestones.

Value-based procurement holds tremendous potential to transform health care, leading to better patient outcomes while helping to control ever-escalating costs.
Strong momentum is building, and the experience of early VBP adopters so far has been very promising.

To seize this opportunity fully, the health care industry needs to strengthen the foundation for value-based procurement, by acting now. Those that do so will realize a significant first-mover advantage in a world of patient-centric and sustainable health care.

About the authors

Götz Gerecke, Managing Director & Senior Partner, Zurich

Jennifer Clawson, Partner & Associate Director, Health Systems & Value Based Health, Madrid

Yves Verboven, Director, Market Access and Economic Policies, MedTech Europe,

Hans Bax, Senior Advisor on Value-Based Procurement to MedTech Europe

About Boston Consulting Group

Boston Consulting Group partners with leaders in business and society to tackle their most important challenges and capture their greatest opportunities. BCG was the pioneer in business strategy when it was founded in 1963. Today, we help clients with total transformation-inspiring complex change, enabling organizations to grow, building competitive advantage, and driving bottom-line impact.

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© Boston Consulting Group 2020. All rights reserved.

Originally published at on January 8, 2021.

Edited for Brazil by

Joaquim Cardoso (JC)
Senior Advisor for Health Care Strategy to BCG — Boston Consulting Group



Joaquim Cardoso @ BCG

Senior Advisor for Health Care Strategy to BCG — Boston Consulting Group