Guatemala’s Ministry of Health and Social Security Institute Join Forces for Better Purchasing Power

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Date
April 4, 2019
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In many countries, balancing the need for investment to strengthen and sustain public health services with affordability is a major concern. Countries are constantly looking for ways to maximize budgets and generate cost savings that can be reinvested in the public health system. In Guatemala, the Ministry of Public Health and Social Assistance (MOH) and the Social Security Institute (IGSS) account for the vast majority of public health commodity purchases for the country. Their limited budgets must stretch to fund all aspects of healthcare from purchasing medical supplies such as voluntary family planning and reproductive health products, essential medicines for maternal, newborn and child health, and antiretrovirals to help control the HIV epidemic to service delivery. 

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GHSC-PSM Consultant, Luis Miguel Perez, interviews Amalia Azurdia of the MOH Logistics Management Unit for the regional procurement mechanism evaluation. Photo Credit: Patricia Villeda/GHSC-PSM
GHSC-PSM Consultant, Luis Miguel Perez, interviews Amalia Azurdia of the MOH Logistics Management Unit for the regional procurement mechanism evaluation. Photo Credit: Patricia Villeda/GHSC-PSM
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GHSC-PSM Consultant, Luis Miguel Perez, interviews Amalia Azurdia of the MOH Logistics Management Unit for the regional procurement mechanism evaluation. Photo Credit: Patricia Villeda/GHSC-PSM
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Historically, these institutions developed their product lists, sourced vendors, negotiated prices and procured these items separately. In February, with the help of the USAID Global Health Supply Chain Program-Procurement and Supply Management (GHSC-PSM) project, the MOH and IGSS officially committed to combining their purchasing power by using a joint procurement mechanism for the first time. As part of this collaboration, they are harmonizing their list of medicines, so that prices can be negotiated by the selected procurement agent at a higher volume, achieving greater economies of scale. 

On behalf of the MOH and IGSS, GHSC-PSM evaluated several procurement agents available within the region based on their ability to encourage market competition, lower prices and achieve best value for money.  

As a result of the assessment, the Council of Ministers of Health of Central America and the Dominican Republic (COMISCA) procurement agent was selected. The MOH and IGSS have used COMISCA's services individually in the past but will now combine procurements for larger volumes and more competitive prices. GHSC-PSM brought COMISCA together with the MOH and the IGSS for a workshop, further empowering these institutions to cooperate, harmonize lists, and work together to secure competitive rates. Additionally, the regional study of procurement options has potential to benefit other countries in Central America looking to follow Guatemala’s example.

With the MOH and IGSS procurement budgets already committed through 2020, the benefits of this new arrangement will truly be seen in 2021. For now, the combined purchasing power of these entities is bolstering their negotiating power. COMISCA is armed with harmonized product lists and combined forecasts, and therefore better able to identify vendors and source products. GHSC-PSM’s expertise in market dynamics played a critical role in bringing these entities to the table and highlighting the benefits of purchasing together to optimize future financial resources, thus putting them on the path to lasting self-reliance.

GHSC-PSM ensures the uninterrupted supply of health commodities to improve people’s lives worldwide. In Central America, the project provides technical assistance in forecasting and supply planning, procurement, and warehousing and inventory management. The project promotes use of procurement mechanisms that reliably deliver low cost, high caliber products that meet or exceed international quality standards to achieve the best value for money.

"The experience for the MOH using the joint purchase mechanism has been very successful, not only because of the potential savings but also because of the transparency in the whole process, and the guarantee of having quality medicines."

- Rosa González
Logistics Management Unit Coordinator 
Guatemala MOH