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Standardization versus compatibility in health care

When it comes to the procurement of goods for the health sector, it’s critical that hospital administrators educate their staff about the difference between compatibility and standardization to avoid confusion, says Toronto health lawyer Michael Gleeson.

Gleeson, a partner with DDO Health Law, says broader public sector (BPS) organizations such as hospitals and health-service providers are subject to the Broader Public Sector Accountability Act and the procurement directive that was issued under that legislation.

“Broader public sector organizations have to abide by these rules in order to ensure fairness, transparency and to try to increase or maximize value for money,” he tells AdvocateDaily.com

Organizations can be exempt from the directive if they have a purchase within one of a number of exceptions.

One of those relates to compatibility with existing equipment or systems, Gleeson explains.

“So if you are trying to ensure compatibility with an existing product that you already have and there's only one vendor out there who can provide a product that it's compatible with — such as computer hardware or software — then you can make the argument that compatibility requirements allow you an exception from the BPS rules,” he says. 

It means that an organization doesn’t have to go through the competitive procurement process and can go directly to the vendor and make a deal, Gleeson says. 

But sometimes there is confusion around differentiating between standardization and compatibility. 

“I think it would be useful to train staff on what compatibility really means and to have a policy or process in place to determine whether the compatibility exemption is really what is being used or if staff members are confusing it with standardization,” he says.

“If staff members are going to use the compatibility exemption then they should document it in a way that really emphasizes that it is a compatibility issue rather than a standardization issue — I think that would help to avoid some of the confusion within an organization.”

The exemption for compatibility is “fairly narrow,” Gleeson says.

Standardization, simply put, is the process of ensuring that one type of a particular product is used throughout your organization. 

An example would be something like a piece of equipment that monitors the amount of oxygen in a patient’s blood and an organization decided it would use the same type/brand of oxygen monitor throughout its organization so they only have to teach staff on one particular product, which can save time and money, Gleeson explains. 

Even though sometimes it may make sense for organizations to standardize equipment, there is no exemption for those purchases under the procurement rules, he says. 

While standardization isn’t exempt, health administrators can take it into consideration when going through the procurement process, Gleeson says.

“Maybe standardization becomes something that you give more points for in terms of the evaluation of a procurement but it can't be the excuse for not doing a competitive procurement,” he says. 

“When looking at the actual cost of bringing in a new piece of equipment or product, health administrators should include not only the price of the product in the analysis but also the cost that it will mean to the organization in terms of new training, installation and implementation, so that these costs are factored into the overall financial analysis in the comparison of bids.”

The danger in not following the procurement process properly is that an organization would be non-compliant with the directive, Gleeson says. 

“Health organizations have to file documents with the ministry at the end of every year and highlight all the situations where they were offside the directive,” he says.

If the ministry identified a problem, a hospital could become the subject of greater ministry scrutiny and possibly even be found to be in breach of its accountability agreement with the government, he adds.

But Gleeson says a health organization may face more serious problems if a vendor files a lawsuit.

“If you're using standardization as an excuse to avoid competitive procurement, then those vendors who didn't get a chance to bid in such a process could bring a suit against the organization for the value of the procurement,” he says. 

“What would really hit home is if a hospital lost valuable health-care dollars because the organization was paying out a suit that was brought against it for something that could have been easily avoided by just following the procurement rules.”

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