Healthcare Technology Management (HTM) guide 3 How to Procure and Commission Free-Flow (SFF) Instructions for Use

‘HOW TO MANAGE’ SERIES

FOR HEALTHCARE TECHNOLOGY

Guide 3
How to Procure and

Commission Your
Healthcare Technology

Management Procedures for
Health Facilities and Health Authorities

TALCTALC

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Dedicated to baby Nathan and Trevor, for their patience and help.

Published by TALC, PO Box 49, St. Albans, Hertfordshire, AL1 5TX, UK
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website: www.talcuk.org

Copyright © 2005 Ziken International

Ziken International (Consultants) Ltd,
Causeway House, 46 Malling Street, Lewes, East Sussex, BN7 2RH, UK
Tel: [phone], fax: [phone], email: [e-mail],
website: www.ziken.co.uk

‘How to Manage’ Series for Healthcare Technology

Guide 1: How to Organize a System of Healthcare Technology Management

Guide 2: How to Plan and Budget for your Healthcare Technology

Guide 3:How to Procure and Commission your Healthcare Technology

Guide 4: How to Operate your Healthcare Technology Effectively and Safely

Guide 5: How to Organize the Maintenance of your Healthcare Technology

Guide 6: How to Manage the Finances of your Healthcare Technology

Management Teams

Keywords: healthcare technology, management procedures,

health service administration, district health services, developing countries,
purchasing, donations, installation, commissioning, logistics, equipment

Any parts of this publication, including the illustrations, may be copied, reproduced, or adapted to
meet local needs, without permission, provided that the parts reproduced are distributed free or at
cost – not for profit. For any reproduction with commercial ends, permission must first be obtained
from the publisher. The publisher would appreciate being sent a copy of materials in which text or
illustrations have been used.

This document is an output from a project funded by the UK government’s Department for
International Development (DFID) for the benefit of developing countries. The views expressed
are not necessarily those of DFID.

ISBN: 0-9549467-2-3

All rights reserved

A catalogue record is available from the British Library

Design and layout by Jules Stock (email: [e-mail]

Illustrations and charts by David Woodroffe (email: [e-mail])

Edited by Rebecca Lowe, Swan Media Services (email: [e-mail])

‘How to Manage’ Series for Healthcare Technology

Guide 3

How to Procure and Commission

your Healthcare Technology

by:

Manjit Kaur

Development Officer, ECHO International Health Services, Coulsdon, UK

Trond Fagerli

Senior Advisor, Haraldsplass Deaconal Hospital, Bergen, Norway

Caroline Temple-Bird

Healthcare Technology Management Consultant,

Ziken International Consultants Ltd, Lewes, UK

Andreas Lenel

Health Economist Consultant, FAKT, Stuttgart, Germany

Willi Kawohl

Financial Management Consultant, FAKT, Stuttgart, Germany

Series Editor

Caroline Temple-Bird

Healthcare Technology Management Consultant,

Ziken International Consultants Ltd, Lewes, UK

CONTENTS

Section Page

Foreword i

Preface i

Acknowledgements iii

Abbreviations v

List of Boxes and Figures vii

1. Introduction 1

1.1 Introduction to the Series of Guides 1

1.2 Introduction to This Specific Guide 9

2. Framework Requirements 21

2.1 Framework Requirements for Quality Health Services 22

2.2 Background Conditions Specific to This Guide 31

3. How to Decide When and What to Procure 45

3.1 Why You Need to Procure 45

3.2 Issues to Consider When Choosing Equipment 49

3.2.1 Appropriateness to Setting 50

3.2.2 Assured Quality and Safety 52

3.2.3 Affordability and Cost-Effectiveness 53

3.2.4 Ease of Use and Maintenance 59

3.2.5 Conformity to Existing Policies, Plans and Guidelines 60

3.3 A Review of Ways to Get Equipment 64

3.3.1 Equipment Purchases Using Nationally Available Funds 65

3.3.2 Equipment Purchases Using Funds from External
Support Agencies 67

3.3.3 Donations of Equipment 74

3.3.4 Leasing and Leasing Type Arrangements 76

3.3.5 Research and Demonstration Models 77

3.4 Whether to Obtain New or Secondhand Equipment 78

4. How to Decide on the Way to Purchase 83

4.1 Determining Your Model for Procurement 83

Contents

4.2 Choosing Your Purchasing Method 91

4.2.1 An Overview of Purchasing Methods 91

4.2.2 Tenders 99

4.2.3 Quotation-based Methods 103

4.2.4 Direct Ordering 104

4.2.5 Making the Best Use of Your Purchasing Method 105

4.3 Different Types of Supplier Available 107

4.4 Identifying Suitable Suppliers 114

5. How to Prepare for Procurement 119

5.1 Determining the Quantities Needed 119

5.2 Using Lots 129

5.3 Finalizing How to Procure 131

5.4 Timetabling Your Procurement 132

5.5 Preparing Your Procurement Paperwork 134

5.5.1 Invitation for Bids 135

5.5.2 Purchase Document – Summary 136

5.5.3 Purchase Document – Part One: Item Information 138

5.5.4 Purchase Document – Part Two: Order Information 144

6. How to Manage the Purchasing Process 163

6.1 Asking for Bids/Quotes and Issuing Documents 163

6.2 Receiving and Opening Tender Bids/Quotations 164

6.3 Evaluation and Comparison Process 166

6.4 Award of Contract and Placing the Order 182

6.5 Local Direct Purchasing and Ordering 189

7. How to Receive Goods and Distribute Them to Site 195

7.1 Preparing to Receive Equipment and Supplies 195

7.1.1 Monitoring Progress Using a Gantt Chart 195

7.1.2 Pre-installation work 199

7.1.3 Preparing for Customs Clearance 204

7.2 Safe Shipment, Customs Clearance, and Transport to
Distribution Centres 206

7.2.1 Safe Shipment and Customs Clearance 206

7.2.2 Delivering Goods from Customs to Initial Destination 212

7.3 Storage at Distribution Centres and Despatch 212

7.4 Delivery to Final Destination 214

Contents

Contents

8. How to Receive, Commission, and Store Goods On Site 219

8.1 An Overview of the Acceptance Process 220

8.2 Receipt and Checking of Goods 224

8.3 Assembly, Installation, Commissioning, and Initial Training 229

8.3.1 Assembly and Installation 230

8.3.2 Commissioning 232

8.3.3 Initial Training 235

8.4 Registration and Handover 239

8.4.1 Entering New Equipment Orders into Health Facility Records 239

8.4.2 Storing Manuals 241

8.4.3 Storage and Stock Control of Equipment-related Supplies 242

8.4.4 Handover 245

8.5 When and How to Make Payments 247

8.6 Damage to Goods, or Unsatisfactory Supply of Goods or Services 249

9. How to Undertake Action Planning and Monitoring
of Progress 255

9.1 Setting Goals (Annually) for Procurement and Commissioning 257

9.2 Monitoring Progress with Procurement and Commissioning 264

Annexes 271

1. Glossary 271

2. Reference Materials and Contacts 278

3. Policy Issues 305

4. Examples of Important Safety and Performance Standards 309

5. Evaluating Suppliers 311

6. Obtaining Appropriate Donations 316

7. Specification and Technical and Environmental Data 320

8. International Commercial Terms (Incoterms) for Transportation
of Trade Goods 327

9. Sample Acceptance Test Logsheet for Equipment 332

10. Equipment Data to Record 342

11. Stores Forms 343

12. Source Material/Bibliography 349

Foreword

i

Foreword

This Series of Guides is the output from a project funded by the UK government’s
Department for International Development (DFID) for the benefit of developing
countries. The output is the result of an international collaboration that
brought together:

◆ researchers from Ziken International and ECHO International Health Services in

the UK, and FAKT in Germany

◆ an advisory group from WHO, PAHO, GTZ, the Swiss Tropical Institute, and the

Medical Research Council of South Africa

◆ reviewers from many countries in the developing world

in order to identify best practice in the field of healthcare technology management.

The views expressed are not necessarily those of DFID or the other
organizations involved.

Garth Singleton

Manager, Ziken International Consultants Ltd, Lewes, UK

Preface

The provision of equitable, quality and efficient healthcare requires an extraordinary
array of properly balanced and managed resource inputs. Physical resources such as
fixed assets and consumables, often described as healthcare technology, are among
the principal types of those inputs. Technology is the platform on which the delivery
of healthcare rests, and the basis for provision of all health interventions. Technology
generation, acquisition and utilization require massive investment, and related
decisions must be made carefully to ensure the best match between the supply of
technology and health system needs, the appropriate balance between capital and
recurrent costs, and the capacity to manage technology throughout its life.

Healthcare technology has become an increasingly visible policy issue, and healthcare
technology management (HTM) strategies have repeatedly come under the spotlight
in recent years. While the need for improved HTM practice has long been recognized
and addressed at numerous international forums, health facilities in many countries
are still burdened with many problems, including non-functioning medical equipment
as a result of factors such as inadequate planning, inappropriate procurement, poorly
organized and managed healthcare technical services, and a shortage of skilled
personnel. The situation is similar for other health system physical assets such as
buildings, plant and machinery, furniture and fixtures, communication and information
systems, catering and laundry equipment, waste disposal, and vehicles.

Preface (continued)

The (mis-)management of physical assets impacts on the quality, efficiency and
sustainability of health services at all levels, be it in a tertiary hospital setting with
sophisticated life-support equipment, or at the primary healthcare level where simple
equipment is needed for effective diagnosis and safe treatment of patients. What is
vital – at all levels and at all times – is a critical mass of affordable, appropriate, and
properly functioning equipment used and applied correctly by competent personnel,
with minimal risk to their patients and to themselves. Clear policy, technical
guidance, and practical tools are needed for effective and efficient management of
healthcare technology for it to impact on priority health problems and the health
system's capacity to adequately respond to health needs and expectations.

This Series of Guides aims to promote better management of healthcare technology
and to provide practical advice on all aspects of its acquisition and utilization, as well
as on the organization and financing of healthcare technical services that can deliver
effective HTM.

The Guides – individually and collectively – have been written in a way that makes
them generally applicable, at all levels of health service delivery, for all types of
healthcare provider organizations and encompassing the roles of health workers and
all relevant support personnel.

It is hoped that these Guides will be widely used in collaboration with all appropriate
stakeholders and as part of broader HTM capacity-building initiatives being
developed, promoted and implemented by WHO and its partners, and will therefore
contribute to the growing body of evidence-based HTM best practice.

The sponsors, authors and reviewers of this Series of Guides are to be congratulated
for what is a comprehensive and timely addition to the global HTM toolkit.

Andrei Issakov, Coordinator, Health Technology and Facilities Planning and
Management, World Health Organization, Geneva, Switzerland

Mladen Poluta, Director, UCT/WHO HTM Programme, University of Cape
Town, South Africa

Preface

ii

Acknowledgements

iii

Acknowledgements

This Guide was written:

◆ with specialist support from:

Andy Barraclough, Healthcare Technology Management Consultant, GIC Ltd,
London, UK

Pieter de Ruijter, Consultant, HEART Consultancy, Renkum, The Netherlands

◆ with assistance from an Advisory Group of:

Hans Halbwachs, Healthcare Technology Management, Deutsche Gesellschaft für
Technische Zusammenarbeit (GTZ-GmbH), Eschborn, Germany

Peter Heimann, Director, WHO Collaborating Centre for Essential Health
Technologies, Medical Research Council of South Africa, Tygerberg, South Africa

Antonio Hernandez, Regional Advisor, Health Services Engineering and Maintenance,
PAHO/WHO, Washington DC, USA

Andrei Issakov, Coordinator, Health Technology and Facilities Planning and
Management, Department of Health System Policies and Operations, WHO,
Geneva, Switzerland

Yunkap Kwankam, Scientist, Department of Health Service Provision, WHO,
Geneva, Switzerland

Martin Raab, Biomedical Engineer, Swiss Centre for International Health of the
Swiss Tropical Institute, Basle, Switzerland

Gerald Verollet, WHO Technical Officer, Medical Devices, Blood Safety and Clinical
Technology (BCT) Department, WHO, Geneva, Switzerland

Reinhold Werlein, Biomedical Engineer, Swiss Centre for International Health of the
Swiss Tropical Institute, Basle, Switzerland

◆ and reviewed by:

Dr. P. Asman, Head of the Bio-engineering Unit, Ministry of Health, Accra, Ghana

Yolanda Bayugo, Provincial Health Advisor, GTZ/UNFPA Support Project,
Kampot Province, Cambodia

Tsibu J. Bbuku, Medical Equipment Specialist, Central Board of Health,
Lusaka, Zambia

Dr. Juliette Cook, Biomedical Engineer, Advisor to Ministries of Health of
Mozambique, and Vanuatu

Peter Cook, Biomedical Engineer, ECHO International Health Services, Coulsdon, UK

Freedom Dellosa, Chief of Hospital Equipment Maintenance Service Division,
Region 9 – Mindanao Peninsula, Department of Health, Zambonga City, Philippines

Roland Fritz, HCTS Coordinator, Christian Social Services Commission, Dar es
Salaam, Tanzania

Andrew Gammie, Project Director, International Nepal Fellowship, Pokhara, Nepal

Muditha Jayatilaka, Deputy Director General of Health Services
(Biomedical Engineering Services), Ministry of Health, Nutrition and Welfare,
Colombo, Sri Lanka

Francis Nalumpa, Senior Medical Equipment Technician, Ministry of Health,
Lusaka, Zambia

Mani Nath Paneru, Senior Biomedical Engineer, Biomedical Engineering Nepal Pvt.
Ltd, Kathmandu, Nepal

Sulaiman Shahabuddin, Director, Patient Services, Aga Khan Foundation Private
Hospital, Nairobi, Kenya

Birgit Thiede, Physical Assets Management (PAM) Advisor, Ministry of Health,
Phnom Penh, Cambodia

◆ using source material:

as described in Annex 12: Source Material/Bibliography

◆ with financial assistance from:

the Knowledge and Research Programme on Disability and Healthcare Technology,
DFID, government of the United Kingdom

◆ with administrative support from:

all the staff at Ziken International Consultants Ltd, Lewes, UK, especially
Garth Singleton, Rob Parsons, and Lou Korda, as well as Thomas Rebohle from
FAKT, Germany

Acknowledgements

iv

Abbreviations

v

Abbreviations

ACP African, Caribbean and Pacific countries

BP British pharmacopoeia

CD-Rom compact disc – read only memory

CFR cost and freight (to a named port of destination)

CIF cost, insurance and freight

CIP carriage and insurance paid

CMS central medical stores

CPT carriage paid to (a named place of destination)

CT computed tomography (scanner)

DDP delivered duty paid

DDU delivered duty unpaid

DVD digital versatile disc

ECG electrocardiograph

EDI electronic data interchange

EP European pharmacopoeia

EPI expanded programme for immunization

Euro currency of the European Union countries

EDF European Development Fund

EU European Union

ExW ex-works (ex-factory or off-the-shelf) price

FDA Food and Drug Administration (of the USA)

GMP good manufacturing practices

HMIS health management information system

HTM healthcare technology management

HTMS healthcare technology management service

HTMWG healthcare technology management working group

IEC International Electrotechnical Commission

Incoterms international commercial terms (for transportation of trade goods)

IP international pharmacopoeia (of the WHO)

ISO International Organization for Standardization

K Kwacha

LOC letter of credit

MOH Ministry of Health

MOW Ministry of Works

MRI magnetic resonance imaging (scanner)

NGO non-governmental organization

PPM planned preventive maintenance

PSI pre-shipment inspection

SDR Special Drawing Rights (international currency)

SMART specific, measurable, achievable, relevant, time-bound (targets)

TIN trader identification number (of importer)

UN United Nations

UNICEF United Nations Childrens’ Fund

UMDNS universal medical device nomenclature system

US $ United States dollars

USP United States pharmacopoeia

V Volts

VEN/VED vital, essential, not so essential/desirable (prioritizing categories)

WB World Bank

WCC World Council of Churches

WHO World Health Organization

Abbreviations

vi

List of Boxes and Figures

Page

Box 1: Categories of items described as ‘healthcare technology’ 2

Box 2: Benefits of healthcare technology management (HTM) 4

Box 3: Savings derived from effective procurement and

commissioning of healthcare technology 10

Box 4: The collective responsibility for procurement and

commissioning activities 18

Box 5: Typical contents of a purchasing/supplies manual 34

Box 6: Summary of issues in Section 2 on framework requirements 43

Box 7: Planning tools which help you decide to procure 48

Box 8: Key factors determining the appropriateness of equipment

and supplies 51

Box 9: Key factors determining the quality of equipment and supplies 52

Box 10: Components of the overall cost to purchase equipment 56

Box 11: Different categories of external support 65

Box 12: How purchasing procedures relate to the type of organization

and funding source 66

Box 13: Advantages and disadvantages of leasing/leasing

type arrangements 77

Box 14: Advantages and disadvantages of second-hand equipment 79

Box 15: Summary of issues in Section 3 on how to decide when and

what to purchase 81

Box 16: Advantages and disadvantages of central and

group procurement 87

Box 17: Advantages and disadvantages of decentralized procurement 89

Box 18: Comparison of purchasing methods 92

Box 19: Advantages and disadvantages of tendering 101

Box 20: Advantages and disadvantages of quotation-based methods 104

Box 21: Advantages and disadvantages of direct ordering 105

Box 22: Advantages and disadvantages of local or

international purchasing 112

Box 23: Summary of issues in Section 4 on how to decide on the

way to purchase 118

Box 24: Quantifying the package of inputs for equipment purchases 122

Box 25: Quantifying the purchase requirements for

pre-installation work 123

Box 26: Quantifying the purchase requirements for in-house

support activities 124

List of boxes and figures

vii

Box 27: Quantifying the purchase requirements for major

rehabilitation work 125

Box 28: Quantifying ongoing requirements for recurrent supplies 127

Box 29: Common procurement timetables 133

Box 30: An example of planning time-critical procurement 134

Box 31: Contents of a typical equipment specification 139

Box 32: Standardization and specifications 142

Box 33: Pre-shipment inspection 152

Box 34: Summary of issues in Section 5 on how to prepare

for procurement 161

Box 35: Most commonly used procedures for tender bid and

quotation opening 165

Box 36: Evaluation information sheets 171

Box 37: Summary technical assessment 172

Box 38: Summary financial assessment 174

Box 39: Summary supplier assessment 180

Box 40: Final outcome of the purchasing process 181

Box 41: Documents and details to include with the notification of

award and the contract 185

Box 42: Summary of issues in Section 6 on managing the

purchasing process 193

Box 43: A checklist of customs clearance arrangements 205

Box 44: Range of documents possibly required for clearing customs 210

Box 45: Summary of issues in Section 7 on preparing to receive and

distributing goods 216

Box 46: Example of resources needed for the acceptance process 223

Box 47: Common types of documents needed when receiving goods 225

Box 48: Summary of issues in Section 8 on receipt, commissioning,

and storage on site 252

Box 49: Example of how to measure a goal 261

Box 50: Examples of statistics and feedback to gather and their use 267

Box 51: Summary of issues in Section 9 on action planning and

reviewing progress 269

Box 52: WHO’s definition of the technology management hierarchy

(Annex 1) 277

Box 53: Example of good selection criteria for purchases and

donations of equipment (Annex 3) 305

List of boxes and figures

viii

Box 54: Pre-purchase evaluation questionnaire

for suppliers (Annex 5) 311

Box 55: Suggested criteria for evaluating new suppliers (Annex 5) 312

Box 56: Suggested criteria for evaluating current and past suppliers

(Annex 5) 313

Box 57: Characteristics that make a good supplier (Annex 5) 315

Box 58: Sample form to use when requesting donations of equipment

(Annex 6) 319

Box 59: Sample technical and environmental data sheet for suppliers

(Annex 7) 325

Box 60: Guidance on the responsibilities of the seller/buyer for

Incoterms (Annex 8) 328

Box 61: Guidance on the division of costs between the seller/buyer

for Incoterms (Annex 8) 330

Figure 1: The place of healthcare technology management in the

health system 2

Figure 2: The relationship between the Guides in this Series 6

Figure 3: The structure of Guide 3 13

Figure 4: The healthcare technology management cycle 24

Figure 5: Sample organizational chart for the HTM Service 29

Figure 6: Procurement cycle within the HTM cycle 37

Figure 7: The hippopotamus syndrome of life-cycle costs for

healthcare technology 54

Figure 8: Strategies for sourcing information and knowledge about

equipment models 63

Figure 9: Strategies to reconcile external support agency rules and

your aims for equipment 73

Figure 10: Questions to ask if buying or receiving

second-hand equipment 80

Figure 11: Things to consider when sourcing equipment 113

Figure 12: Steps to take to pre-qualify suppliers 115

Figure 13: Steps to take when preparing lots 130

Figure 14: Sample quotation comparison form 175

Figure 15: Issues to consider which help you to make a decision 176

Figure 16: Suggestions for procedures to follow when awarding contracts 183

Figure 17: Summary of key points for a contract document 186

Figure 18: Tips on ordering supplies 192

List of boxes and figures

ix

Figure 19: Example of a Gantt Chart for monitoring progress with orders 196

Figure 20: How to set up a Gantt Chart 197

Figure 21: Common site preparation steps 201

Figure 22: Delivery and customs issues to be handled 209

Figure 23: Unpacking and inspecting equipment orders 226

Figure 24: Unpacking and inspecting recurrent orders of

equipment-related supplies 228

Figure 25: Common arrangements required for installation

and commissioning 231

Figure 26: Key steps in the commissioning process 233

Figure 27: Common arrangements required for initial training 238

Figure 28: Procedures for entering equipment-related supplies

into the stores system 244

Figure 29: Procedures for entering equipment into the stores system 245

Figure 30: The planning and review cycle 255

Figure 31: Summary guidelines for recipients of donations to ensure

they are appropriate (Annex 6) 317

Figure 32: Summary guidelines for providers of donations to ensure

they are appropriate (Annex 6) 318

Figure 33: Example of a register of new stocks form (Annex 11) 345

Figure 34: Sample goods received note (Annex 11) 346

Figure 35: Sample stock card (bin card) (Annex 11) 343

Figure 36: Sample layouts for the stock control ledger (Annex 11) 344

Figure 37: Sample stores requisition and issue voucher (Annex 11) 347

Figure 38: Sample purchase order form (Annex 11) 348

List of boxes and figures

x

1 Introduction

1

1. INTRODUCTION

Why is This Important?

This introduction explains the importance of healthcare technology
management (HTM) and its place in the health system.

It also describes:

◆ the purpose of the Series of Guides and this Guide in particular

◆ the people the Guides are aimed at

◆ the names and labels commonly used in HTM, in this Series.

The Series of Guides is introduced in Section 1.1, and this particular Guide on
procurement and commissioning is introduced in Section 1.2.

1.1 INTRODUCTION TO THE SERIES OF GUIDES

Healthcare Technology Management’s Place in the Health System

All health service providers want to get the most out of their investments. To enable
them to do so, they need to actively manage health service assets, ensuring that they
are used efficiently and optimally. All management takes place in the context of your
health system’s policies and finances. If these are favourable, the management of
health service assets can be effective and efficient, and this will lead to improvements
in the quality and quantity of healthcare delivered, without an increase in costs.

The health service’s most valuable assets which must be managed are its human
resources, physical assets, and other resources such as supplies. Physical assets such
as facilities and healthcare technology are the greatest capital expenditure in any
health sector. Thus it makes financial sense to manage these valuable resources, and
to ensure that healthcare technology:

◆ is selected appropriately

◆ is used correctly and to maximum capacity

◆ lasts as long as possible.

Such effective and appropriate management of healthcare technology will contribute
to improved efficiency within the health sector. This will result in improved and
increased health outcomes, and a more sustainable health service. This is the goal of
healthcare technology management – the subject of this Series of Guides.

1.1 Introduction to this series of guides

2

What Do we Mean by Healthcare Technology?

The World Health Organization (WHO) uses the broader term ‘health technology’,
which it defines as including:

‘devices, drugs, medical and surgical procedures – and the knowledge associated
with these – used in the prevention, diagnosis and treatment of disease as well as
in rehabilitation, and the organizational and supportive systems within which care
is provided’

(Source: Kwankam, Y, et al, 2001, ‘Health care technology policy framework’, WHO Regional Publications,

Eastern Mediterranean Series 24: Health care technology management, No. 1)

However, the phrase ‘healthcare technology’ used in this Series of Guides only refers
to the physical pieces of hardware in the WHO definition, that need to be
maintained. Drugs and pharmaceuticals are usually covered by separate policy
initiatives, frameworks, and colleagues in another department.

Therefore, we use the term healthcare technology to refer to the various equipment
and technologies found within health facilities, as shown in Box 1.

BOX 1: Categories of Equipment and Technologies Described as ‘Healthcare Technology’

medical equipment walking aids health facility furniture

communications equipment training equipment office equipment

office furniture fixtures built into the building plant for cooling, heating, etc

service supply installations equipment-specific supplies fire-fighting equipment

workshop equipment fabric of the building vehicles

laundry and kitchen equipment waste treatment plant energy sources

For examples of these different categories, see the Glossary in Annex 1.

Figure 1: The Place of Healthcare Technology Management in the Health System

Health

System

Policies

Health Sector Organization

and Management

Human Resources

Funds

Healthcare Technology

Consumable Supplies

Facilities

Healthy

Population

Health

Service

Provision

1.1 Introduction to this series of guides

3

Often, different types of equipment and technologies are the responsibility of
different organizations. For example, in the government sector, different ministries
may be involved, such as Health, Works, and Supplies. In the non-government sector,
different agencies may be involved, such as Health, and Logistics.

The range of healthcare technology which falls under the responsibility of the health
service provider varies from country to country and organization to organization.
Therefore each country’s definition of healthcare technology will vary depending on
the range of equipment and technology types that they actually manage.

For simplicity, we often use the term ‘equipment’ in place of the longer
phrase ‘healthcare technology’ throughout this Series of Guides.

What is Healthcare Technology Management?

First of all, healthcare technology management (HTM) involves the organization and
coordination of all of the following activities, which ensure the successful
management of physical pieces of hardware:

◆ Gathering reliable information about your equipment.

◆ Planning your technology needs and allocating sufficient funds for them.

◆ Purchasing suitable models and installing them effectively.

◆ Providing sufficient resources for their use.

◆ Operating them effectively and safely.

◆ Maintaining and repairing the equipment.

◆ Decommissioning, disposing, and replacing unsafe and obsolete items.

◆ Ensuring staff have the right skills to get the best use out of your equipment.

This will require you to have broad skills in the management of a number of
areas, including:

◆ technical problems

◆ finances

◆ purchasing procedures

◆ stores supply and control

◆ workshops

◆ staff development.

1.1 Introduction to this series of guides

4

However, you also need skills to manage the place of healthcare technology in the
health system. Therefore, HTM means managing how healthcare technology should
interact and balance with your:

◆ medical and surgical procedures

◆ support services

◆ consumable supplies, and

◆ facilities

so that the complex whole enables you to provide the health services required.

Thus HTM is a field that requires the involvement of staff from many disciplines
– technical, clinical, financial, administrative, etc. It is not just the job of managers, it
is the responsibility of all members of staff who deal with healthcare technology.

This Series of Guides provides advice on a wide range of management procedures,
which you can use as tools to help you in your daily work. For further clarification of
the range of activities involved in HTM and common terms used, refer to the
WHO’s definition of the technology management hierarchy in Annex 1.

Box 2 highlights some of the benefits of HTM.

BOX 2: Benefits of Healthcare Technology Management (HTM)

◆ Health facilities can deliver a full service, unimpeded by non-functioning healthcare technology.

◆ Equipment is properly utilized, maintained, and safeguarded.

◆ Staff make maximum use of equipment, by following written procedures and good practice.

◆ Health service providers are given comprehensive, timely, and reliable information on:

- the functional status of the equipment

- the performance of the maintenance services

- the operational skills and practice of equipment-user departments

- the skills and practice of staff responsible for various equipment-related activities in a range of
departments including finance, purchasing, stores, and human resources.

◆ Staff control the huge financial investment in equipment, and this can lead to a more effective and

efficient healthcare service.

1.1 Introduction to this series of guides

5

Purpose of the Series of Guides

The titles in this Series are designed to contribute to improved healthcare
technology management in the health sectors of developing countries, although they
may also be relevant to emerging economies, and other types of country. The Series
is designed for any health sector, whether it is run by:

◆ government (such as the Ministry of Health or Defence)

◆ a non-governmental organization (NGO) (such as a charitable or

not-for-profit agency)

◆ a faith organization (such as a mission)

◆ a corporation (for example, an employer such as a mine, who may subsidize

the healthcare)

◆ a private company (such as a health insurance company or for-profit agency).

This Series aims to improve healthcare technology at a daily operational level, as well
as to provide practical resource materials for equipment users, maintainers, health
service managers, and donor organizations.

To manage your technology effectively, you will need suitable and effective procedures
in place for all activities which impact on the technology. Your health service provider
organization should already have developed a Policy Document setting out the
principles for managing your stock of healthcare technology (Annex 2 provides a
number of resources available to help with this). The next step is to develop written
organizational procedures, in line with the strategies laid out in the policy, which staff
will follow on a daily basis.

The titles in this Series provide a straightforward and practical approach to healthcare
technology management procedures:

Guide 1 covers the framework in which healthcare technology management (HTM)
can take place. It also provides information on how to organize a network of HTM
Teams throughout your health service provider organization.

Guides 2 to 5 are resource materials which will help health staff with the daily
management of healthcare technology. They cover the chain of activities involved in
managing healthcare technology – from planning and budgeting to procurement,
daily operation and safety, and maintenance management.

Guide 6 looks at how to ensure your HTM Teams carry out their work in an
economical way, by giving advice on financial management.

How the Guides are coordinated is set out in Figure 2.

1.1 Introduction to this series of guides

6

Figure 2: The Relationship Between the Guides in This Series

Who are These Guides Aimed at?

These Guides are aimed at people who work for, or assist, health service provider
organizations in developing countries. Though targeted primarily at those working in
health facilities or within the decentralized health authorities, many of the principles
will also apply to staff in other organizations (for example, those managing health
equipment in the Ministry of Works, private maintenance workshops, and head offices).

Depending on the country and organization, some daily tasks will be undertaken by
end users while others may be carried out by higher level personnel, such as central
level managers. For this reason, the Guides cover a range of tasks for different types of
staff, including:

◆ equipment users (all types)

◆ maintenance staff

◆ managers

◆ administrative and support staff

◆ policy-makers

◆ external support agency personnel.

Framework/structure

Organizing a network of

HTM Teams (Guide 1)

Procurem

g and

Plannin

budgeting

(Guide 2)

Chain of activities

Maintenance

management

(Guide 5)

in the equipment

life cycle

commissionin

(Guide 3)

Daily operation

ent and

and safety

(Guide 4)

g

Ensuring efficiency

Financial management of HTM Teams (Guide 6)

1.1 Introduction to this series of guides

7

They also describe activities at different operational levels, including:

◆ the health facility level

◆ the zonal administration level (such as district, region, diocesan)

◆ the central/national level

◆ by external support agencies.

Many activities require a multi-disciplinary approach; therefore it is important to form
mixed teams which include representatives from the planning, financial, clinical,
technical, and logistical areas. Allocation of responsibilities will depend upon a
number of factors, including:

◆ your health service provider

◆ the size of the organization

◆ the number of decentralized levels of authority

◆ the size of your health facility

◆ your level of autonomy.

The names and titles given to the people and teams involved will vary depending on
the type of health service provider you work with.

For the sake of simplicity, we have used a variety of labels to describe
different types of staff and teams involved in HTM.

This Series describes how to introduce healthcare technology management into your
organization. The term Healthcare Technology Management Service (HTMS) is
used to describe the delivery structure required to manage equipment within the
health system. This encompasses all levels of the health service, from the central
level, through the districts/regions, to facility level.

There should be a referral network of workshops where maintenance staff with
technical skills are based. However, equipment management should also take place
where there are no workshops, by involving general health facility staff. We call these
groups of people the HTM Team, and we suggest that you have a team at every level
whether a workshop exists or not. Throughout this Series, we have called the person
who leads that team the HTM Manager.

At every level, there should also be a committee which regularly considers all
equipment-related matters, and ensures decisions are made that are appropriate to
the health system as a whole. We have used the term HTM Working Group
(HTMWG) for this committee, which will advise the Health Management Teams on
all equipment issues.

1.1 Introduction to this series of guides

8

Due to its role, the HTMWG must be multi-disciplinary. Depending on the
operational level of the HTMWG, its members could include the following:

◆ Head of medical/clinical services.

◆ Head of support services.

◆ Purchasing and supplies officer.

◆ Finance officer.

◆ Representatives from both medical equipment and plant maintenance.

◆ Representatives of equipment users from a variety of areas (medical/clinical,

nursing, paramedical, support services, etc).

◆ Co-opted members (if specific equipment areas are discussed or specific interest

or need is shown).

The HTM Working Group prepares the annual plans for equipment purchases,
rehabilitation and funding, and prioritizes expenditure across the facility/district as a
whole (see Guide 2 on planning and budgeting). It may have various sub-groups to
help consider specific aspects of equipment management, such as pricing,
commissioning, safety, etc.

How to Use These Guides

Each Guide has been designed to stand alone, and has been aimed at different types
of readers depending on its content (Section 1.2). However, since some elements
are shared between them, you may need to refer to the other Guides from time to
time. Also, if you own the full Series (a set of six Guides) you will find that some
sections of the text are repeated.

We appreciate that different countries use different terms. For example, a purchasing
officer in one country may be a supplies manager in another; some countries use
working groups, while others call them standing committees; and essential service
packages may be called basic healthcare packages elsewhere. For the purpose of
these Guides it has been necessary to pick one set of terms and define them. You can
then modify them for your own situation.

The terms used throughout the text are outlined, with examples, in the
Glossary in Annex 1.

We appreciate that you may find it hard to pursue the ideas introduced in these
Guides. Depending on your socio-economic circumstances, you may face many
frustrations on the road to achieving effective healthcare technology management.
We recognize that not all of the suggested procedures can be undertaken in all
environments. Therefore we recommend that you take a step-by-step approach,
rather than trying to achieve everything at once (Section 2).

1.2 Introduction to this specific guide

9

These Guides have been developed to offer advice and recommendations only,
therefore you may wish to adapt them to meet the needs of your particular situation.
For example, you can choose to focus on those management procedures which best
suit your position, the size of your organization, and your level of autonomy.

For more information about reference materials and contacts for healthcare
technology management, see Annex 2.

1.2 INTRODUCTION TO THIS SPECIFIC GUIDE

The Importance of Procurement and Commissioning Activities

Healthcare and patient management have changed dramatically in recent years and
continue to do so, mainly as a result of the advances in healthcare technology.

Healthcare technology plays an extremely important role in everyday clinical and
public health work. Used properly, it can:

◆ contribute to increased life expectancy

◆ enable greater precision for diagnosis

◆ reduce the time needed for investigations, treatment, and rehabilitation.

For these reasons, it is important to take great care when planning and acquiring new
equipment. Any new equipment you acquire must be suitable for your purposes and
improve access to quality healthcare. You also need to ensure that you have the
ability and capacity to absorb, support, and use any technologies procured.

Did you know?

The equipment market is extremely diverse. A bewildering range of equipment technology is
already available, and new makes and models of equipment are coming out continually.

Current estimates show that there are around 6,000 distinct device types and entities and
750,000 brands and models on the market, available from over 12,000 manufacturers worldwide.
The spectrum of equipment ranges from simple items (for example, mechanical apparatus such
as a hand-operated table-top centrifuge) to the more sophisticated ones (such as CT scanners).

Health facilities have to cope with this wide range of products. It has become difficult for
developing countries to select and obtain the technologies appropriate to their needs.

Successful procurement and commissioning processes give you several benefits:

◆ The most economically advantageous terms for the equipment you acquire (not

necessarily the cheapest price, but the best deal for your needs).

◆ Delivery and handover on time.

◆ Satisfactory and well-defined terms for delivery, installation, commissioning,

training, payment, and warranty.

◆ Satisfactory aftersales service.

◆ Greater interest from the suppliers and manufacturers in submitting offers in

the future.

Provided you fully describe and discuss the terms for the delivery, installation,
commissioning, and training, and follow them up, there should be no arguments with
the supplier. All being well, the equipment should work properly at handover, your
staff will have obtained the necessary new skills to operate and handle it, and you
will be able to authorize payment without hesitation.

Box 2 (Section 1.1) shows that HTM provides a wide range of benefits. It is
difficult to express this in financial terms, but Box 3 gives an idea of the sort of
savings that can be made if procurement and commissioning of equipment is
effectively carried out.

BOX 3: Savings Derived from Effective Procurement and Commissioning of

Healthcare Technology

Problems that could be avoided Resulting waste you could save

◆ lack of standardization

◆ purchase of sophisticated equipment for which

operating and maintenance staff have no skills

◆ impact on equipment and buildings during

installation, unforeseen at the initial tender stage

◆ inability to correctly specify and foresee total

needs when ordering equipment

◆ improper use of equipment by operating and

maintenance staff who lack the necessary training

◆ excessive equipment down-time due to absence

of preventive maintenance, inability to repair, and
lack of spare parts

Adapted from: Mallouppas A, 1986, ‘WHO: Strategy and proposed action concerning maintenance

of hospital and medical equipment’, WHO, Geneva, unpublished document

1.2 Introduction to this specific guide

10

◆ 30–50% additional cost for extra spare parts

and extra maintenance workload

◆ 20–40% of equipment remains under-utilized

or unused

◆ extra modifications or additions required for

10–30% of equipment

◆ 10–30% additional unplanned costs

◆ loss of 30–80% of the potential lifetime of

equipment

◆ 25–35% of equipment out of service

Who is This Guide Aimed at?

This Guide is primarily aimed at managers involved in procurement and
commissioning activities. It is designed to help staff:

◆ procure the right equipment, of the right quality, in the right quantities, at the

right time, in the right place, and at the right cost

◆ ensure delivery, installation, and commissioning procedures are carried out so that

equipment is ready for use.

This Guide is intended as a practical tool to assist in the procurement of both
equipment and equipment-related supplies (in other words, consumables,
accessories, spare parts and maintenance materials). The activities in this Guide are
aimed at anyone involved in the procurement of healthcare technology. This includes:

◆ staff directly responsible for, or involved with, procuring and commissioning

equipment (whichever agency they belong to – your health service provider, a
government agency, an external support agency, a partner)

◆ health service decision makers

◆ external support agency decision makers

◆ decision makers of partners such as NGOs, faith organizations, and the

private sector.

What Topics are Covered?

This Guide aims to outline the wide variety of procurement and commissioning
activities in a practical way. This will help you to acquire, deploy, and use the right
equipment and equipment-related supplies. The activities involved are equally
relevant whether you buy, hire or loan your equipment, or receive it as a donation.

Tip

•

Procurement and commissioning activities cover a wide range of subjects – the
objective of this Guide is only to highlight the key issues.

In this Guide, the phrase ‘procurement and commissioning activities’ is often used.
It should be understood to imply the long chain of logistics activities, including
selection, supply, delivery, storage, installation, commissioning, initial training, and
so on.

Procurement and commissioning activities are part of the broader acquisition phase
of healthcare technology management, which also includes technology assessment
and research and development. These later topics are covered in less detail.

1.2 Introduction to this specific guide

11

This Guide aims to explain:

◆ the options open to you for obtaining and sourcing equipment and supplies

◆ the activities you need to carry out before purchasing

◆ the steps you need to take when purchasing goods

◆ how to prepare for and receive, store, and distribute goods in-country

◆ the process of receiving goods on site, and installing, commissioning, and

accepting them

◆ how to monitor your activities so you can improve future procurement and

commissioning exercises.

It is important to understand where Guides 2 and 3 overlap. Procurement should
not take place until planning and budgeting have occurred. Guide 2 covers planning
and budgeting activities, and describes how you can establish the many management
‘tools’ that are needed for procurement (such as the Equipment Development Plan,
Model Equipment Lists, and Purchasing Policy). In Guide 3, we go on to explain
how you can use these tools to procure and commission effectively, in order to get
the equipment you want. For example, in Guide 2 we explained how to write
equipment specifications. Guide 3 goes on to tell you how you can use these
specifications to purchase the equipment you require. Similarly, selection activities
are split between the two Guides. Guide 2 details the policies that ensure you select
equipment suited to your plans and circumstances, whereas Guide 3 uses those
selection criteria to choose the final product to buy.

In this Guide the following terminology is used:

Purchasing refers simply to the acquisition of goods or services

in return for money or equivalent payment.

Procurement is a wider term and refers to the process of obtaining

goods and services in any way, such as through
purchase, donation, loan or hire.

However, the use of the terms ‘procurement’ and ‘purchasing’ interchangeably to
mean ‘procurement’ is a common and accepted practice.

Procurement of equipment is an area where it is common to receive assistance from
external support agencies.

External support agency a body responsible for providing money, equipment,

or technical support to developing countries on
various terms, such as international donors, technical
agencies of foreign governments, non-governmental
organizations, private institutions, financial
institutions, faith organizations.

1.2 Introduction to this specific guide

12

The system introduced in this Guide provides a solid approach to managing
equipment procurement and commissioning activities. However, we recognize that
there are other ways of organizing these issues which may be more appropriate for
your administrative system. The most important thing is to implement a well­functioning system.

As you read through the recommendations in this Guide, you may find it useful to
refer to advice in other Guides in the Series, as indicated in the text. Additional
useful materials and contacts are given in Annex 2.

How is This Guide Structured?

Procurement and commissioning of equipment is a complex process, involving many
different activities. The structure of Guide 3 is shown in Figure 3 and highlights the
different steps you must take in order to obtain functioning equipment for your
health facility.

Figure 3: The Structure of Guide 3

1.2 Introduction to this specific guide

13

Introducing the Series, and this particular GuideSection 1

Section 2

Section 3

Section 4

Section 5

Understanding the central framework for HTM, and
background conditions specific to this Guide

Understanding why you need to procure, which goods
are appropriate for your needs, and how to obtain them

Understanding the partnerships for procurement, the different
purchasing methods, and how to identify suitable suppliers

Getting ready by quantifying needs, finalizing your
procurement options, and preparing documents

Managing the purchasing processSection 6

Section 8

Section 9

Preparing for and receiving goods in-country Section 7

Receiving goods on site, commissioning, handover,
and payment

Monitoring the progress made on all these fronts, in
order to improve future procurement and commissioning

Who Does What in Procurement and Commissioning?

Depending on how many staff you have with the necessary skills, procurement and
commissioning may take place at any level. However, it is often more economic to
procure in bulk, and at a level where the necessary skills are concentrated. Thus, it is
often more cost-effective to procure equipment centrally. Guide 2 and Section 2.2
provide further discussion on the appropriateness of decentralizing different
healthcare technology management activities. Such decisions will depend on:

◆ your country

◆ your health service provider

◆ which level of the health service you work at

◆ the degree of autonomy of your health facility

◆ the scale and type of procurement to be carried out.

If you have limited management and technical skills at your level (for example, health
facility or district level), and procurement and commissioning activities represent a
heavy workload, much of the work described in this Guide should be undertaken at a
higher level in your organization (for example, regional or central level).

We suggest that the Procurement Unit and the HTM Working Group (Section 1.1)
have a large role to play in advising the Health Management Team on all equipment
matters. Depending on the size of your facility or what level of the health service you
are operating at, your HTM Working Group may prefer to set up a number of smaller
sub-groups.

Remember that procurement and commissioning activities are extensive multi­disciplinary tasks, and therefore require staff with different backgrounds, skills and
experience. The suggestions given in this Guide are only intended as examples of
the type of background required for the members of the groups and sub-groups. It is
likely that many staff will sit on more than one sub-group. If you are short of staff,
you could use fewer members, as relevant to the operational level of the sub-group.

1.2 Introduction to this specific guide

14

In this Guide, the following groups and sub-groups are suggested:

The Procurement Unit which is responsible for managing the procurement
activities could have the following types of staff:

◆ Procurement Manager.

◆ Purchasing and Supplies Officers.

◆ Technical staff, for example a biomedical engineer.

◆ Health planner.

◆ Equipment users, for example a medical advisor.

◆ Finance officers and accountants.

A Procurement/Tender Committee which manages the tender and quotation
process and awards contracts. This could include the following types of staff:

◆ Procurement Manager.

◆ HTM Manager.

◆ Finance Manager.

◆ Co-opted users – invited to relevant meetings which discuss the equipment

purchases for their specialities.

A Specification Writing Group which is responsible for developing generic
equipment specifications, and the technical and environmental data sheets. This
could include the following types of staff:

◆ HTM Manager.

◆ Maintenance staff from various disciplines.

◆ Purchasing and Supplies Officer.

◆ Stores Controller.

◆ Managers and representatives from equipment user departments

– clinical, paramedical, and support services (as appropriate to the equipment
being considered).

A Commissioning Team which is responsible for commissioning and acceptance,
and which could include the following types of staff:

◆ Purchasing and Supplies Officer.

◆ HTM Manager.

◆ Maintenance staff from various disciplines.

◆ Stores Controller.

◆ Support Services Manager.

◆ Representatives from equipment user departments (as appropriate to the

equipment being considered).

◆ Where necessary, stores and grounds staff to help move and open crates.

1.2 Introduction to this specific guide

15

A training sub-group which considers equipment-related training issues, and could
include the following types of staff:

◆ Human Resource Manager.

◆ Head of Medical Services.

◆ Head of Support Services.

◆ HTM Manager

◆ In-service Training Coordinator.

◆ Infection Control Officer, senior users, and maintenance staff (as appropriate to

the equipment being considered).

Your Procurement Unit will carry out the regular and annual planning and
procurement work. However, they may face difficulties if they have to take on the
workload of an extra process, such as equipping a whole new facility. In these
instances hired consultants, external support agencies, or other NGOs may run such
development projects, including the healthcare technology procurement component,
taking it outside the control of your staff that usually plan and procure. Such
situations should be avoided and could be overcome by setting up a formal project
committee where key personnel from all contributors and stakeholders are involved.

We suggest a project sub-group, which sets goals and oversee the progress of any
externally assisted projects (whether for routine equipment procurement or for
major development projects), in consultation with the external funding agency. Such
projects are usually cross-sectoral and can occur across several levels of the health
service; therefore the sub-group should include a variety of types of staff from:

◆ management

◆ equipment user departments

◆ the HTM Service

◆ support services (including the Procurement Unit).

Tip

•

There may seem to be a large number of sub-groups but the aim is to:

- spread the work around different members of staff so that the HTM Working
Group (Section 1.1) does not have to do everything

- ensure that the Procurement Unit is not solely responsible for everything; and

- make the process more ‘open’ and less likely to be biased and manipulated.

•

If you have a small health facility with few staff, the groups created to undertake
procurement and commissioning activities could be much smaller or you could allow
these tasks to be undertaken at a higher level in your organization. Try to use
relevant staff with experience and involve those who show an interest in the task.

•

This Guide has allocated many tasks to the HTM Manager and HTM Working Group
on the assumption that they possess technical (maintenance) skills. If they don't, you
should seek assistance from maintenance staff higher up the HTM Service.

1.2 Introduction to this specific guide161.2 Introduction to this specific guide

17

Country Experience

In one country the following personnel are involved in procurement:

◆ Technical specifications are drawn up by the central Health Ministry for all common

equipment (for example, suction pumps, basic X-ray machines). For complex
equipment, specifications are formulated when and where necessary.

◆ To develop specifications, technical committees are formed by the central

procurement agency – the Biomedical Engineering Division of the central Health
Ministry. Each committee comprises two clinicians nominated by their academic
body (for example, the College of Radiologists), one biomedical engineer, and one
administrator. The specifications are revised annually.

◆ The Biomedical Engineering Division acts as a procurement agency, and has the

total financial allocation available within it. But it deals directly only with procurement
of complex equipment and foreign funded projects. The requirements of individual
health facilities are handled by the respective facilities. The Biomedical Engineering
Division releases the financial allocations required. It also assists health facilities with
technical expertise during evaluation, commissioning, and handover of equipment.

◆ All health facilities have set up Equipment Sub-Committees to deal with equipment

matters. The Equipment Sub-Committees are composed of:

- the head of the institution

- clinicians representing the various disciplines

- the matron

- theatre/ICU sisters

- representatives of equipment users (for example radiographers)

- the pharmacist in charge of purchasing equipment

- the Biomedical Engineering Division representative (if required)

◆ Equipment Sub-Committees are entrusted with preparing the annual equipment

requirements, prioritizing them and submitting them to the Biomedical Engineering
Division for budgeting. Once the budget is approved, the Biomedical Engineering
Division informs each facility of their share of the allocation and offers assistance
with procurement of complex equipment if required. The Equipment Sub­Committees then report monthly to the Biomedical Engineering Division on their
progress. They also coordinate the commissioning and handover process.

◆ Once the equipment lists are received from facilities, the Biomedical Engineering

Division prepares two master lists consolidating all requirements – one for new
purchases, one for replacements. It then submits the estimates to the treasury for
funding. There is a ceiling on annual capital expenditure for the social services
sector, involving health, education and labour ministries. The treasury makes the final
decision on budget allocation depending on the requirements of the whole sector.
The treasury also decides the foreign and local component of allocations and
informs the health ministry. The Biomedical Engineering Division allocates local
funds to the respective health facilities.

A wide range of people in the health service will be involved in procurement and
commissioning activities, as can be seen from the membership of these sub-groups.
It is important for everybody involved to take collective responsibility for these
activities, to ensure equipment is well chosen and installed, and therefore lasts a
long time. The key tasks and functions of the different groups and individuals that
are described in this Guide are summarized in Box 4.

Section 1 summary

18

Procurement
Managers and
Procurement Units
(at all levels of the
health service)

Procurement/
Tender
Committees

Health Service
Providers

◆ are key to a successful procurement system

◆ are responsible for overall management of procurement activities

◆ undertake procurement according to health service provider, national, and

external support agency regulations, policies, and plans (Section 2)

◆ liaise with any other organization procuring equipment on behalf of the health

facility/decentralized health authority

◆ collate submissions on equipment needs and draw up the procurement list

(Section 3.1)

◆ prequalify suppliers, as appropriate (Section 4.4)

◆ prepare procurement paperwork with assistance from the Specification Writing

Group (Section 5.5.2)

◆ administer the quotation and tender processes for the Procurement/Tender

Committee (Section 6)

◆ undertake direct ordering, local purchasing of low-value goods, and ordering of

recurrent supplies (Section 6.5)

◆ evaluate low-value quotations and award low-value contracts according to set

criteria (Sections 6.3 and 6.4)

◆ organize and monitor delivery, customs clearance, and transport to site (Section 7)

◆ process procurement paperwork for payment (Section 8)

◆ set annual action plans for procurement and review progress (Section 9)

◆ for each round of procurement, endorse the chosen purchasing method, timetable,

and source of funds (Sections 5.3 and 5.4)

◆ manage the tender and high-value quotation processes

◆ evaluate all tender bids and high-value quotes and award contracts according to set

criteria (Sections 6.3 and 6.4)

◆ ensure there are regulations, policies, and plans for procurement and

commissioning (Section 2)

◆ ensure there is a Purchasing/Supplies Procedure Manual (Section 2.2)

◆ ensure there are suitable evaluation criteria for products and suppliers

(Sections 3.2 and 4.4)

◆ decide on the models of procurement to use (Section 4.1)

Working Together

BOX 4: The Collective Responsibility for Procurement and Commissioning Activities

Continued opposite

Section 1 summary

19

HTM Working
Groups (at
all levels)

Heads of
Department and
HTM Managers

Specification
Writing Groups

Commissioning
Teams and HTM
Teams

Training
sub-groups

Stores Controllers
(at all levels)

Accountants and
Finance Officers

Project sub-groups

◆ are responsible for all equipment matters

◆ develop long-term Equipment Development Plans and annual plans (see Guide 2)

that procurement is based on

◆ develop long-term and annual income and expenditure plans (see Guide 2) to

cover the procurement and commissioning costs

◆ ensure procurement and commissioning are managed as part of the HTM cycle

(Section 2.2)

◆ quantify needs for equipment, equipment-related supplies, and associated services

(according to procedures in Guide 2) and submit them to the Procurement Unit
(Section 3.1)

◆ develop a library of clear generic equipment specifications

◆ assist in preparing purchase documents by writing the technical and environmental

data sheets

◆ keep the information up to date (Section 5.5.2)

◆ are key to a successful commissioning system

◆ identify who will be responsible for installation and commissioning (Section 5.1)

◆ organize and ensure all pre-installation work and preparatory activities are carried

out as planned, from the time of placing the order through to the arrival of the
goods (Section 7)

◆ undertake the formal acceptance process for newly received equipment (Section 8)

◆ plan and monitor that all services (installation, commissioning, initial training) are

delivered as requested, or undertake them (Section 8)

◆ hand over equipment to the user department and equipment-related supplies to

the Stores department (Section 8)

◆ set annual action plans for commissioning and review progress (Section 9)

◆ identify training needs

◆ identify suitable personnel of the right discipline to be trained

◆ identify suitable trainers (Sections 5.1 and 7.1)

◆ develop training materials (Section 8.3)

◆ receive, hold and distribute all equipment and equipment-related supplies, as

appropriate (Section 7.3)

◆ undertake the formal acceptance process for newly received equipment-related

supplies (Section 8)

◆ organize the general stores inventory and the stores stock control system (Section 8)

◆ keep accurate records and order stock on time

◆ protect stock against loss through theft or misplacement

◆ are responsible for the financial integrity of the procurement and

commissioning process

◆ ensure that payments are made according to agreed payment schedules, after the

official acceptance of the goods (Section 8)

◆ liaise with external support agencies providing assistance for routine procurement

or major development projects (Section 2.2)

◆ set goals and review progress of externally-assisted projects (Section 9)

Working Together

BOX 4: The Collective Responsibility for Procurement and Commissioning Activities (continued)

20

2 Framework requirements

21

2. FRAMEWORK REQUIREMENTS

Why is This Important?

In order to deliver quality health services, it is essential to undertake effective
healthcare technology management.

There are various framework requirements to help you do this. These include
legislation, regulations, standards, and policies.

These framework requirements create the boundary conditions within which
you undertake healthcare technology management. They include central or
national guiding principles, policy issues, and high-level assumptions that can
impede or assist you in your work.

It is very difficult to function effectively if these framework requirements do not
exist, and you should lobby your organization to develop them.

Depending on how autonomous your health facility is, you may be able to
develop these framework requirements at facility, region/district, or central level.

In most industrialized countries, laws, regulations, policies and guidelines form an
indispensable part of health service management. For many developing countries,
however, these regulatory procedures have yet to be developed.

Guide 1 provides a fuller analysis of how to develop these instruments, and shows that
effective healthcare technology management (HTM) is essential in order to deliver
quality health services. Section 2.1 summarizes these points and offers advice on:

◆ the regulatory role of government

◆ establishing standards for your health system

◆ policy issues for HTM

◆ the importance of introducing an HTM Service

◆ managing change.

Section 2.2 goes on to discuss the background conditions specific to this Guide, and
provides advice on:

◆ management authorities responsible for procurement and commissioning activities

◆ central health service policies and plans for equipment and procurement

◆ availability and best use of skills, and economies of scale

◆ the role of external support agencies.

2.1 Framework requirements for quality health services

22

2.1 FRAMEWORK REQUIREMENTS FOR QUALITY
HEALTH SERVICES

Regulatory Role of Government

The World Health Organization (WHO) identifies four distinct functions for
health systems:

◆ The provision of health services.

◆ The financing of health services.

◆ The creation of health resources (investment in facilities, equipment, and training).

◆ The stewardship of health services (regulation and enforcement).

Health service provision and financing, as well as resource creation may be taken on by
both the government and private sector. Thus, there are various options for organizing
health systems:

◆ Mainly public.

◆ Mainly private for-profit (for example, run by a commercial organization), and

private not-for-profit (for example, run by faith organizations, NGOs).

◆ A mixture of government and private organizations.

However in all these systems, the government is solely responsible for the regulation
of health services. The reason for this is that the government has a duty to ensure
the quality of healthcare delivered in order to protect the safety of the population.
These regulations may then be enforced directly by government bodies or they may
be enforced by publicly funded bodies, such as professional associations, which apply
government-sanctioned regulations.

Most governments would agree that the protection of health and the guarantee of
safety of health services is vital. However, in many countries this regulatory function is
underdeveloped, with weak legal and regulatory frameworks.

To regulate health services, the government should:

◆ adopt suitable quality standards for all aspects of health services, including

acceptable international or national standards for healthcare technology, drugs,
and supplies in order to ensure their efficacy, quality and safety

◆ establish systems to ensure standards are met, so that the bodies enforcing

regulations have legal sanctions they can use if standards are infringed

◆ establish wide-ranging policies covering all aspects of the utilization,

effectiveness, and safety of healthcare technology, drugs, and supplies

◆ establish systems to ensure these policies can be implemented.

2.1 Framework requirements for quality health services

23

For health services, the Ministry of Health is the body most likely to develop these
government regulations. Other health service providers need to be guided by
government laws, and should look to the Ministry of Health for guidance or follow
their direction if required to do so by law or regulation.

Establishing Standards for your Health System

The government should agree on which quality standards have to be met by the
health services in general. These will cover areas such as:

◆ procedures and training

◆ construction of facilities

◆ healthcare technology, drugs, and supplies

◆ safety

◆ the environment

◆ quality management.

Since drawing up these standards can be both time consuming and expensive,
governments may often choose to adopt acceptable international standards (such as
ISO), rather than develop their own. However, they must be suitable and applicable
to your country’s situation and fit in with your country’s vision for health services.

The adoption of suitable international or national standards for healthcare technology
is of particular relevance to this Guide. Such standards would cover areas such as:

◆ manufacturing practices

◆ performance and safety

◆ operation and maintenance procedures

◆ environmental issues (such as disposal).

These are important since countries can suffer if they acquire sub-standard and
unsafe equipment. Again, in the majority of cases ministries of health would save
money and time by adopting internationally recognized standards. For more
information on introducing internationally recognized standards into your
procurement procedures, refer to Sections 3.2 and 5.5.2.

It is not enough simply to establish these standards; they also need to be adhered to.
You should establish a national supervisory body that has the power to ensure that
health service providers comply with the standards in force. To be effective, such an
enforcement agency must be allocated sufficient financial and personnel resources.
It should also be linked or networked with corresponding international bodies.

Much healthcare technology in developing countries is received through foreign aid and
donations, but such products don’t always meet international standards. Therefore, your
country will need to negotiate with external support agencies. The best way to do this is
to draw up a list of donor regulations – see Section 3.3 and Annex 6.

Standard

a required or agreed level

of quality or attainment

set by a recognized authority,

used as a measure,

norm, or model

2.1 Framework requirements for quality health services

24

The legal system plays an important role in enforcing such standards, by ensuring
that any infringements can be effectively prosecuted. It is therefore essential that
the legal system is allocated sufficient financial and human resources to enforce
claims against any institution operating equipment that does not meet the
prescribed standards.

Developing Policies for Health Services

Every country needs to establish wide-ranging policies covering all aspects of health
services. National health policies are usually developed by the Ministry of Health. If
these policies are linked to regulations, then other health service providers must also
follow them. Each health service provider can expand them internally, and must
establish systems to ensure they are implemented.

One key framework requirement for this Series of Guides is that your health service
provider should have started work on a Healthcare Technology Policy (for guidance
on this process, see Annex 2). Such a policy usually addresses all the healthcare
technology management (HTM) activities involved in the life-cycle of equipment,
as shown in Figure 4.

Figure 4: The Healthcare Technology Management Cycle

Planning and
Assessment

Decommissioning
and Disposal

Maintenance
and Repair

Operation
and Safety

• Create
awareness

• Monitor
and
evaluate

Budgeting and
Financing

Technology Assessment
and Selection

Procurement
and Logistics

Training and Skill
Development

Installation and
Commissioning

2.1 Framework requirements for quality health services

25

Here we will consider just four issues that provide key background conditions:

◆ A vision for health services.

◆ Standardization.

◆ The provision of maintenance.

◆ Finances.

A Vision for Health Services

Every health service provider needs a realistic vision of the service it can offer. This
should include a clear understanding of its role in relation to other health service
providers in the national health service. Only when this vision is known can the
health service provider decide what healthcare technology is needed, and prioritize
the actions required to develop its stock of equipment.

It is unhelpful if lots of individual health facilities pull in different directions, with
no coordinated plan for the health service as a whole. The central authority of each
health service provider should be responsible for considering what sort of healthcare
should be offered at each level of their health service. Preferably they will collaborate
with the Ministry of Health, or follow their guidance if regulated to do so.

If there is no health service plan, there is no framework on which to base decisions.
Guide 2 provides further information on developing a vision and planning your
healthcare technology stock.

Standardization of Healthcare Technology

Introducing an element of standardization for healthcare
technology will help you to limit the wide variety of makes and
models of equipment found in your stock. By concentrating
on a smaller range for each equipment type, your technical,
procedural, and training skills will increase and your costs and
logistical requirements will decrease (see Guide 1).

It is easier to achieve standardization if equipment is planned and
ordered on a country-wide, district-wide or health service

provider basis. It is therefore important to combine forces with
other facilities or health service providers, and it may be wise to follow standardization
strategies of the Ministry of Health. It is important that these standardization efforts
do not just apply to products purchased by health facilities, but also to donations.

Standardizing your healthcare technology may be difficult for a number of reasons.
Your country and local businesses may have their own trade practices and interests.
National donors may have tied-aid practices, while the procurement procedures of
international funding agencies, health service institutions, and individuals may act
against your standardization strategies (Sections 3.3.2 and 3.3.3).

Standardization

(also known as rationalization,

normalization and harmonization)

– the process of reducing the

range of makes and models of

equipment available in your stock,

by purchasing particular named

makes and models.

2.1 Framework requirements for quality health services

26

You may need to hold discussions with organizations such as the Ministry of Industry
and/or Trade, the chambers of commerce or specific business associations, as well as
external support agencies. However, it is well worth persevering, as standardization
offers many benefits, both in terms of cost and efficiency.

Provision of Maintenance

Proper maintenance is essential to ensure that the equipment you have purchased
continues to meet the standards required throughout its entire working life.

Undertaking maintenance belongs to the service provision function of health
systems, and could therefore, in principle, be carried out by the government, the
private sector, or by a mixture of the two.

It is useful to organize the maintenance system along similar lines to the health
service provision already existing in your country. For instance, if the health sector is
predominantly run by the government, it is probably simplest to let the government
run the maintenance organization as well. In contrast, if private organizations run the
health services, it makes little sense for the maintenance activities to be carried out
by a government body. In the majority of cases, a mixed system is most likely.

However, the government may wish to take a regulatory role and establish regulations
that guarantee that healthcare technology performs effectively, accurately, and safely.
The rules established are valid for all health service providers, irrespective of their
type of organization.

Specific maintenance requirements would not need to be prescribed by the regulatory
body. Instead, it is up to individual health service providers to decide how these will
be provided. However, the nature and the complexity of some maintenance services
often call for partnerships between the public and private health service providers.
Partnerships may also exist between health service providers and private sector
sources of maintenance support. For more details, refer to Guide 1.

To provide maintenance services, you will normally need to establish good links
between maintenance workshops. This will create a network that supports the needs
of all your health facilities. Maintenance is, of course, only one of many HTM
activities that need to be carried out. However, the fact that maintenance workshops
usually already exist in most countries serves as a useful starting point for establishing
a physical HTM Service across your health service provider organization and across
your country. For more details on how to organize an HTMS, refer to Guide 1.

2.1 Framework requirements for quality health services

27

Finances

To ensure that healthcare technology is utilized effectively and safely throughout its
life, your health service provider will need to plan and allocate adequate capital and
recurrent budgets. See Guide 2 for more advice on this.

In a government-organized system these funds have to be provided by government
budgets, while private systems or mixed systems must generate the required funds
from their customers, or from benefactors and donors.

Depending on your health service provider and country, your HTM Service may be
able to generate income by charging for services provided. Whether this income can be
used to further improve the HTM Service depends on the policies of the responsible
financing authority (such as the treasury or central finance office). Guide 6 provides
advice on this.

The Importance of Introducing a Healthcare Technology
Management Service

We have established the importance of:

◆ adopting standards for healthcare technology

◆ developing healthcare technology policies

◆ establishing systems to ensure these policies are implemented.

All these aims could be achieved if each health service provider practised healthcare
technology management (HTM) as part of the everyday life of their health service.
The best way to do this is to have an HTM Service incorporated into each health service
provider organization.

Box 2 (Section 1.1) shows that HTM provides a wide range of benefits. Guide 1
attempts to express this in terms of the sorts of savings that can be made if HTM is
effectively carried out. Taking maintenance as an example, we can see that it has not
only a positive impact on the safety and effectiveness of healthcare technology, but
that is also has two important economic benefits:

◆ It increases the lifespan of the equipment.

◆ It enhances the demand for health services, since demand for services is crucially

dependent upon the availability of functioning healthcare technology.

Healthcare technology that is out of order quickly leads to a decline in demand, which
will in turn reduce the income and quality of services of the health facilities. You will
lose clients if, for example, it becomes known that malfunctioning of sterilization
equipment may endanger the health of patients. Similarly, patients will avoid visiting
health facilities that do not possess functioning diagnostic equipment.

2.1 Framework requirements for quality health services

28

Thus the justification for introducing an HTM Service is that it will benefit you
economically and clinically, by ensuring that healthcare technology continues to
meet the standards required throughout its working life.

The activities of an HTM Service belong to the service provision function of health
systems. However, the government may wish to take a regulatory role and establish
regulations that guarantee that HTM occurs. To achieve this, it will be necessary
to have:

◆ a government body to provide regulations that will ensure the continued

performance and safety of healthcare technology throughout its life

◆ a control mechanism to check that all health service providers pursue these

healthcare technology management activities effectively

◆ legal or other sanctions that are enforceable if the rules are infringed.

The government body responsible for providing regulations could be the central
level of the national HTM Service. Each health service provider could then develop
its own HTM Service. It should involve a network of teams and committees that
enable HTM to be practised in all facilities. In order to establish an effective HTM
Service, you will need to provide sufficient inputs, such as finance, staff, workshops,
equipment, and materials. Only in this way will you get the outputs and benefits that
you require. For details of how to develop such an HTM Service, see Guide 1.

The organizational chart for the HTM Service will vary depending on the size of your
country and your health service provider organization, and whether you are just
starting out. However, Figure 5 provides an example of the relationship between
HTM Teams and HTM Working Groups (Section 1.1) that we envisage.

How to Manage Change

The regulatory requirements presented in this Section may appear somewhat
idealistic, compared to the reality in many health systems. However, the aim is not
to highlight the deficiencies of existing systems, but to provide a blueprint for a
functioning healthcare technology management system. Hopefully, this will enable
you to get the right framework conditions in place, and thus improve the effectiveness
and the safety of your health services.

We are not recommending that your health service provider:

◆ throws out all its current HTM strategies and starts again

◆ makes sudden and sweeping changes that are likely to fail if they are over ambitious.

Rather it is better to take a step-by-step approach, introducing changes gradually, with
a careful review process. To implement an HTM system with all the complexities
described in this Series of Guides will take several years, and to try to achieve
everything at once could be disastrous. However, for healthcare technology
management to improve, it is important to act.

2.1 Framework requirements for quality health services

29

Figure 5: Sample Organizational Chart for the HTM Service

health

manage-

HTM

Working

HTM

Team

ment

team

technical

assistance

Group

Workshop

support

technical

health

manage-

HTM

Working

HTM

Team

ment

team

technical

assistance

Group

Workshop

support

technical

health

manage-

HTM

Working

HTM

Team

ment

team

technical

assistance

Group

Workshop

support

technical

health

manage-

HTM

Working

HTM

Team

ment

team

technical

assistance

Group

Central level

Zonal level

– large

Facility level

– small

2.1 Framework requirements for quality health services

30

It is possible to write down all the correct procedures and yet still fail to improve the
performance of staff. To ensure that your HTM procedures are effective, it is important
for there to be good managers who can find ways to motivate staff (Section 9.2). Simply
ordering staff to implement new procedures doesn’t usually work. It is much better to
discuss and develop the procedures with the staff who will implement them. This could
take the form of discussion, working groups or training workshops. People who are
involved in developing ideas about their own work methods are more likely to:

◆ understand the objectives

◆ understand the reasons why processes are necessary

◆ be encouraged to change their way of working

◆ be more interested in making changes which result in improvement

◆ see that the aim of the HTM procedures is to improve their delivery of healthcare.

We recognize that many readers will face difficulties such as staff shortages, poor
finances, lack of materials, a lack of influence and time, and possibly even corruption.
Introducing new rules and procedures into a system or institution that has no real
work ethic, or which possibly employs dishonest workers, will not have any
significant effect.

Therefore, strategies may be required to bring about cultural and behavioural change.
For example:

◆ When materials are short, instead of focussing upon breakages and loss, place more

emphasis upon the importance of staff working hard and putting in the hours.

◆ Favour good managers who are seen to be present and doing what they preach.

◆ Encourage an atmosphere where staff are praised for good work, rather than a

culture of judgement and criticism.

Introducing rules and administrative procedures alone will not be sufficient to bring
about cultural change. You will also need to find ways of increasing performance and
productivity, and acknowledging/rewarding good behaviour is essential. For example:

◆ It is better to break a tool while actively undertaking maintenance, rather than

breaking nothing but never doing any work.

◆ It is better to break a rule in an emergency (such as withdrawing stocks from

stores), rather than stick to the rules and risk the possible death of a patient.

Annex 2 has some examples of useful reference materials. To bring about such
changes, you will require skills in:

◆ managing change

◆ staff motivation

◆ effective communication

◆ encouragement

◆ supportive training with demonstrations.

2.2 Background conditions specific to this guide

31

All parties involved in the network of HTM Teams and HTM Working Groups need
to participate in developing the HTM Service. This will encourage a sense of
ownership of the service and its responsibilities, and will lead to greater acceptance
and motivation among staff. If you are short of skilled staff (such as technicians,
managers, planners or policy-makers), you may need to obtain specialist support to
assist with some of these tasks.

2.2 BACKGROUND CONDITIONS SPECIFIC TO
THIS GUIDE

Your country and health service provider may have existing regulating principles and
conditions which will affect, or can inform, aspects of your procurement and
commissioning work.

You will need to find out whether the regulations, policies, and procedures discussed
in this Section exist in your country and organization. If they do, it makes sense to
follow them. If such regulations do not exist, you will need to highlight these issues
at the central level of your organization, and continue to follow the advice provided
in this Guide at your level.

Management Authorities Responsible for Procurement
and Commissioning

If you work for a health service provider organization, you must conform to:

◆ any existing regulations and guidelines concerning equipment procurement and

commissioning activities, which are produced by the central management body.

In addition, there may be other higher authorities that provide regulation and
guidance on equipment procurement and commissioning. Some examples of these
are provided here:

◆ The Ministry of Finance usually provides regulations and guidelines for

government procurement, stores management, imports, and customs duties.

◆ Other health service providers may look for guidance from the Ministry of Health.

◆ Any National Regulatory Authority might provide regulation and guidance on

product standards, and monitor the imports of equipment and equipment-related
supplies.

◆ The national Healthcare Technology Management Service, or your own, should

provide guidance on equipment installation, commissioning, and acceptance.

◆ Other agencies may have been given authority to procure and commission certain

types of equipment, and you must either follow their guidelines or not interfere
with the equipment outside your responsibility. For example:

- In the government sector, the Ministry of Works may be responsible for health
buildings, plant, and service supply installations; the Ministry of Supplies for
furniture and office equipment; and the Ministry of Transport for vehicles.

- In the non-government or private sectors, there may be a Maintenance Service
and/or a Logistics Division with authority over different types of equipment.

- The national electricity supply, water supply, and telecommunication authorities
will have varying responsibilities for different types of equipment.

These management authorities should have paid special attention to policies,
procedures and guidelines in their relevant area. These will provide you with a clear
sense of direction and enable you to make informed decisions about procurement
and commissioning activities. Without the existence of such framework conditions,
the task of selecting, procuring, and using suitable health sector goods becomes
much more difficult.

One area of particular importance is the policies and procedures to cover
unauthorized procurement outside the system (for example, doctors with contacts to
donors). Your policies and procedures should make sure any items obtained through
unauthorized procurement are supported with maintenance, and that any recurrent
costs have been accounted for. Policy can either support unauthorized procurement
or discourage it, but either way it should be made plain.

Guide 2 on planning and budgeting provides advice on developing policies for
purchasing, donations, replacement, and disposal of equipment. Such policies should
include information about when to purchase, what to purchase, when equipment
should be replaced, reasons for replacement, and when you should write off
equipment (see Section 3.1 and Annex 3).

As procurement is a quasi-legal process and procurement and stock control involve
large amounts of money and assets, it is usual for them to be strictly regulated. In the
government sector it is often the Ministry of Finance that develops a Purchasing
Regulations and Procedures Manual (also known as a Supplies Regulations and
Procedures Manual). An outline of the form such a document could take is given in
Box 5 on page 34.

2.2 Background conditions specific to this guide

32

2.2 Background conditions specific to this guide

33

Country Experience

One country’s purchasing policy is:

a) priority is given to replacement of obsolete equipment

b) sophisticated and complex equipment for all facilities is procured by the Central

Health Ministry

c) foreign funded procurement is handled by the Central Health Ministry

d) all the purchases are carried out through competitive bidding

e) where sophisticated or complex equipment is concerned, the ‘turnkey’ approach is

always adopted (where the supply of equipment includes installation, commissioning,

initial training for operators, warranty, building modification, safety, service and

maintenance for five years after warranty)

f) other equipment is procured by the respective institutions under national

procurement guidelines

g) an expert committee at national level formulates generic specifications for each item

and circulates them among healthcare institutions in the country. These specifications

are upgraded annually. The technical committee for drafting specifications consists of

two consultant clinicians nominated by the respective academic bodies (such as

the College of Paediatricians), one biomedical engineer who acts as secretary to the

committee, and one administrator.

Another country’s purchasing policy for the government sector lays down general

principles such as:

i) Purchasers should base all procurement of goods and services on value for money,

comparing issues such as quality (or fitness for purpose) and delivery against price.

Value for money should be judged on whole life-cycle costs, not simply initial costs.

ii) Goods and services should be acquired by competition unless there are good

reasons to the contrary.

Separate manuals may be required to cover different circumstances, as the source
of funding for procurement will influence the way in which you arrange and carry
out procurement:

◆ If funding for procurement is provided by an external funding agency such as

xa development bank (for example, the World Bank), it usually has its own
procurement procedures and requirements. These procedures may take
precedence over national law, in which case you would have to follow them.

◆ Other ministries may have responsibility for purchasing some items of equipment.

For example, vehicles may be purchased by the Ministry of Transport, and plant
and service supply installations by the Ministry of Works. Procurement using
national budgets will be governed by national rules and regulations.

The manual should describe who it applies to:

◆ In the government sector, different ministries will be involved in procurement,

such as Health, Works and Supplies. The Ministry of Health, Central Medical
Stores, or Supplies department may share joint responsibility for medical supplies
and equipment. However, some independent programmes (for example, dental
and laboratory services) or health facilities may handle their own procurement.

◆ For other health service providers, different divisions may be involved, such as

those for purchasing, logistics, supplies, or transport.

The manual should provide:

◆ charts showing the place of purchasing and supplies within the organization

◆ job descriptions including roles and responsibilities for all posts within purchasing

and supplies

◆ administrative information for staff – for example, absences, hours of work.

The manual should provide:

◆ policy statements setting out objectives, responsibilities and authority for

purchasing and supplies

◆ terms and conditions for purchasing

◆ relationship with suppliers, especially regarding gifts, entertainment, etc

◆ supplier and product selection

◆ acceptable freighting methods and insurance

◆ customs regulations

◆ reports to management.

The manual should contain:

◆ descriptions, accompanied by flowcharts, of procedures relating to requisitioning,

ordering, transporting, customs clearing, receiving, inspecting, storing, and paying
for goods

◆ procedures relating to the rejection and return of goods

◆ procedures in respect of the disposal of scrap and obsolete or surplus items

◆ descriptions of procurement and stores records, and how they should be kept.

2.2 Background conditions specific to this guide

34

BOX 5: Typical Contents of a Purchasing/Supplies Manual

Authority/coverage
of the manual

Responsible
purchasing bodies

Organizational
issues

Policy issues

Procedures

Continued opposite

2.2 Background conditions specific to this guide

35

Funding for procurement may come from a number of sources, including:

◆ national funds

◆ central funds

◆ own funds, such as cost recovery schemes

◆ loans

◆ donations.

There should be descriptions of any variation in procedures depending on the type
of funding source.

Different people (in different posts) responsible for purchasing are only allowed to
purchase up to a particular monetary value. These authority levels and financial
limits should be described.

The manual should include a statement describing how the policies and procedures
should be implemented, and how progress is monitored.

Complete copies of the manual should be given to the following people:

◆ Directors at health facility and decentralized health authority levels.

◆ Purchasing and supplies staff, both centrally and locally.

◆ Heads of teams involved in purchasing and supplies (such as finance teams, and

HTM Teams).

BOX 5: Typical Contents of a Purchasing/Supplies Manual (continued)

Financial resources
and funding
mechanisms

Financial limits
for procurement

Implementation

Distribution of
the manual

The Purchasing/Supplies Manual:

◆ does not specifically address issues that are crucial to the successful purchase of

equipment. So, alongside the Manual, the Procurement Service and HTM
Service will also need to consult this Guide for further advice

◆ does not normally cover the technical details of the commissioning activities.

Thus, you need guidelines from the HTM Service, Ministry of Works, or any
other relevant body, on issues such as site preparation, installation,
commissioning and acceptance of equipment.

Your health service provider needs to:

◆ develop written procedures and guidelines on all the aspects of procurement and

commissioning that are covered in this Guide. This should take the form of a
simple and easy-to-read guide that staff can refer to, and which can also be used
as a training aid.

Central Plans for the Health Service

Equipment Development Plans and Budgets

Before any procurement and commissioning activities can take place, you must
properly plan and budget for them.

Such planning is essential to limit wastage. Proper planning ensures that scarce
funding is properly allocated, with high priority needs being dealt with first, and avoids
unnecessary purchases. Maintaining an accurate inventory record and stock control
system is invaluable when planning your purchasing requirements. Guide 2 describes
how to plan and budget for your equipment. (Topics covered in Guide 2 include:
establishing the Equipment Development Plan, purchasing policies, appropriateness
criteria, Model Equipment Lists, equipment specifications and equipment inventory.)

Your budgets need to cover all your procurement and commissioning needs. When
drawing up the budget, you need to differentiate clearly between different types of
expenditure. For example, the capital budget is usually spent on equipment, and the
recurrent budget is spent on running costs (such as consumables and spare parts).
When procuring any item of equipment, you must commit funds to keep it in
running order for a number of years or, if possible, over its lifetime.

The Procurement Process and Plan

Procurement and commissioning can be thought of as a cycle that includes various
steps, as shown in Figure 6. This process can be time consuming and expensive, but
is necessary if you want to end up with the correct functioning equipment for your
situation. Figure 6 also shows that procurement is just one part of the healthcare
technology management cycle. Other areas of healthcare technology management
also feed into the process, so that the procurement process can be reviewed and
improved. Not all cycles correspond exactly to the procurement cycle in Figure 6,
but good ones incorporate all the stages.

Product selection is an important stage in the procurement process. Products must
be selected based on a thorough needs analysis and adjudication system, taking into
account the level of the health facility and the skills available. More sophisticated
equipment is generally needed at higher levels, as the range of diagnostic and
treatment services offered broadens (Section 3.2).

While there are several options for buying equipment, the majority of equipment
purchases are carried out as either a tender or quotation process (Sections 4.2 and 6).
Whatever method you use:

◆ you need to prepare a purchasing plan that indicates all the different procurement

activities that must be carried out, with details and a timetable of when they
should take place (Section 5.4)

◆ your purchasing method and plan should be designed to avoid the risk of collusion

and corruption. It should also ensure transparency, accountability, and value for
money, and foster fair competition.

2.2 Background conditions specific to this guide

36

Figure 6: Procurement Cycle Within the HTM Cycle

2.2 Background conditions specific to this guide

37

O

C

D

N

A

T

N

E

M

E

R

U

C

O

R

P

Managing the

purchasing process

invitations to bid,

receipt of offers,

evaluation and selection,

award of contract,

ordering from stores

(Section 6)

Preparing

quantification,

option finalization,

document preparation

(Section 5)

M

M

I

S

S

I

O

N

I

N

G

C

Y

C

L

E

Getting ready for arrival

monitor progress,

site preparation,

organize for delivery

(Section 7)

Delivering

freight,

customs clearance,

storage,

distribution

(Section 7)

Decision-making

background conditions,

priorities, options,

selection criteria,

partnerships, methods,

supplier identification,

technology assessment

Budgeting and

Financial Management

(Guides 2 and 6)

(Sections 1, 2, 3 and 4)

cost effectiveness,

sales

feedback

Procurement and

Commissioning

Monitoring

feedback, review,

quality control,

needs assessment,

selection policy,

organization,

specifications

feedback

suitability

(Guide 3)

set goals

(Section 9)

feedback

performance,

contract

feedback

Accepting

performance,

consumption

feedback

receipt and check,

installation,

commissioning,

initial training,

handover,

payment

Operation, Safety and

Decommissioning

(Guide 4)

(Section 8)

Planning and

Policy Development

(Guides 1 and 2)

E

L

C

Y

C

T

N

E

M

Maintenance

and Repair

(Guide 5)

H

E

A

L

T

On-going

Training

E

G

A

N

A

(Guides 2, 4 and 5)

E

C

H

N

O

M

L

Y

O

G

H

C

A

R

E

T

Availability and Best Use of Skills

This Guide presents a detailed and complete description of the procurement and
commissioning process. To carry out the procedures outlined here, you will require a
reasonable number of well-trained staff. In government sectors, this level of
management and technical skills may be available at national or central level or even
in large hospitals, but may be a problem at district level. In many non-government
health facilities, purchasing is often the responsibility of individuals or groups who
have little or no specialized training in equipment procurement, and who may lack
technical expertise.

The current decentralization efforts in the health sector will bring about significant
changes in the management and procurement of healthcare technology. District
managers may be asked to quantify and specify all future procurement activities.
This task is large and complex, and the present skills of district managers in some
countries will be inadequate.

For these reasons, it may be necessary to:

◆ encourage planning, budgeting, and procurement tasks to be undertaken at

central level for those facilities and service levels which cannot undertake the
whole management process themselves

◆ encourage the planning and implementation of commissioning by a zonal level of

the HTM Service that has sufficient skills

◆ encourage district managers to understand the process and be aware of what they

are able to manage, and where they need help.

Training is therefore essential in order to ensure effective procurement and
commissioning. All staff involved, from all agencies, must be properly skilled,
managed and coordinated, with clear lines of responsibility and authority being given.
This is important, as lack of coordination and decisions made on an ad-hoc basis can be
costly. Poor practices not only lead to waste and delays but can also provoke
allegations of corruption and inefficiency.

Tip

•

To make the process of coordination easier, you should clearly identify which
different departments (in your organization and others) have a role to play in
procurement and commissioning, detailing their job titles and responsibilities.

Obtaining equipment is a multi-disciplinary team task and you will need to involve
individuals from across the health facility and organization (Section 1.2). As a
minimum, it is likely that you will require specialized procurement expertise and
experience, and will also need to involve personnel from the finance, medical,
nursing, maintenance, and support services. In addition:

◆ HTM Working Groups should take the coordinating and monitoring role to ensure

that procurement takes its rightful place in the healthcare technology
management cycle (see Figure 6).

2.2 Background conditions specific to this guide

38

Experience in Southern Africa

In one southern African country, poor procurement procedures and lack of consultation

between different disciplines led to problems. The Ministry of Works staff were not consulted

by the Ministry of Health on the plumbing fittings to be put in a hospital, although they would

be expected to maintain them.

The hospital experienced many problems with blockages of the toilets and flushing of the

cisterns that were purchased from France. The Ministry of Works maintenance personnel

tried to end these problems by replacing the toilet and cistern fittings with ones generally

used in Africa. But this could not be done, because the European fittings used non-standard

positions for water entry and waste exit, and the pipework installed could not be attached to

the products available in Africa.

Complexity of equipment will determine the number of people involved in the
process and their expertise. Placing several individuals on a number of different
committees will enable better coordination as well as the most informed and
best decisions.

Tip

•

Generally speaking, the greater the technical nature and complexity of an item, the
greater the involvement should be of technical staff in the buying decision.

Economies of Scale

As your management system improves, decentralization often promotes accurate and
timely decision making. However, certain activities may be better carried out at a
central level, because it will not be economical to develop such knowledge at district
or facility level. These could include defining equipment levels, developing
technical specifications, and undertaking installation and commissioning. This is a
good example of how the ‘economy of scale’ for technical knowledge will challenge
the decentralization process.

Procurement may also be more efficiently carried out at a central level. Procurement
of small quantities increases both the initial and the life-cycle costs of equipment
(Section 3.2), because you cannot benefit from the savings that bulk-buying offers.

When making a needs assessment for one hospital, you are likely to arrive at low
quantities of a broad variety of equipment. So undertaking calculations at facility
level will not enable you to benefit from economies of scale. Instead, by combining
procurement for several facilities at the same time, and gaining the resulting
standardization, you can obtain significant advantages. These include better prices
for bulk orders of equipment, consumables, and spare parts, shared training costs,
and improved aftersales commitment from the supplier.

2.2 Background conditions specific to this guide

39

Thus it is preferable to:

◆ undertake equipment management and needs assessment at district or regional

level, and merge procurement needs for a number of facilities or districts. This
will result in the ideal combination of accurate management and procurement
advantages, proportional to the economy of scale.

You may face problems with this rationalization and savings strategy when external
support agencies target funds at individual facilities or districts. Thus it is preferable to:

◆ ensure external support agencies follow your Model Equipment Lists, Generic

Equipment Specifications, and standardization policy (see Guide 2), in order to
overcome the drawbacks.

The Role of External Support Agencies

The role of external support agencies in procurement is very important. Although
their assistance is invaluable to many developing countries, often the recipients do
not receive good quality products that are appropriate to their situation. These
unfortunate circumstances arise when:

◆ there is a lack of knowledge of how to make appropriate choices of complex

technologies

◆ there are formal procedures and rules (such as the use of open tenders) which do

not lend themselves to selection based on the best overall deal for your situation.

Thus, throughout this Guide we highlight the areas where conflict may arise between
your wishes and external support agency practices, and try to suggest resolutions.

Tip

•

Ultimately you will have to learn how to identify the right external support agency
for different procurement needs.

Another problem is control of externally assisted projects (whether for routine
equipment procurement or major development projects). Often external support
agencies, hired consultants, or NGOs run such projects, including the healthcare
technology procurement component, and take control away from the staff who are
normally responsible for planning and procurement. Such situations should be
avoided and could be overcome by setting up a formal project committee/
organization where key personnel from all contributors and stakeholders are
involved. This could be a sub-group of the HTM Working Group (Section 1.2).

By setting up a formal project committee, your organization would have access to all
the information and a channel to influence the project, without having to bear the
full workload of the additional process. Further information on establishing project
organizations is not a part of this Guide, but it is recommended that you consider
such solutions when similar situations occur.

2.2 Background conditions specific to this guide

40

One useful initiative includes the following strategies:

◆ A project committee made up of a range of local managers (such as technical,

medical, financial) who have an input and veto into the design, specifications,
procurement package, and purchase sources for the project.

◆ An implementing/procurement agent, contracted to act only as advisor to the

health service provider. The agent would carry out specific actions such as
administration or paperwork, on behalf of the health service provider. However,
they would not act in the health service provider’s place.

◆ A tender process that preferably involves selective bidding. This would ensure

that an element of standardization can be maintained, and preferred sourcing is
adhered to. The tender process can be undertaken by either the agent or the
health service provider.

◆ The agent should display the bids in comparison tables so that the health service

provider can choose the most economically advantageous option (taking into
account a full range of issues and not just the cheapest price).

Such strategies are required to enable developing countries to regain some control.
Where there is a strong local Procurement Unit it is possible to subject gifts to the
same scrutiny as is the purchase of equipment. In some developing countries, for
example, the maintenance service is asked to advise on its capacity to guarantee
maintenance before a donation is accepted. In other countries, unsuitable shipments
of donated equipment are turned away from the port of entry.

The suggestions in this Guide aim to improve the quality of support from
external agencies, not to hinder it.

2.2 Background conditions specific to this guide

41

Experience in Sri Lanka

The Ministry of Health plans procurement and identifies funding sources. If the procurement

is financed through external support, a steering committee and a technical/finance

committee are appointed at central level.

The steering committee is comprised of the Secretary to the Health Ministry, a representative

of the Department of External Resources, a representative of the National Planning

Department, and the Chairman of the Tender Board. Its responsibility is to set up the time

frame for procurement in consultation with the technical/finance committee, to monitor

progress every two months, and to liaise with the external support agency.

The technical/finance committee consists of senior consultant clinicians covering the

respective clinical disciplines, a biomedical engineer, a finance manager, an administrator,

and a member of the Procurement Support Bureau. (The Procurement Support Bureau in the

Treasury Department has a pool of experts on procurement issues, whose expertise on

topics such as contract negotiations and legal matters is valuable.) The technical/finance

committee is responsible for writing specifications, drafting tender documents, evaluating

bids, and making recommendations to the tender board.

The tender process is administered by the Biomedical Engineering Division of the Health

Ministry. Its responsibilities are invitations for bids, coordinating with the committees,

issuing awards, signing and managing the contracts, and acceptance and handover of

the equipment.

Box 6 contains a summary of the issues covered in this Section.

2.2 Background conditions specific to this guide

42

Section 2 summary

43

BOX 6: Summary of Issues in Section 2 on Framework Requirements

Government

Ministry of Health

All Health Service
Providers in general

Quality Health Services

◆ actively regulates health services whether they are provided by public providers,

private providers, or a mixture of the two

◆ develops checking systems and legal sanctions for infringement of health

regulations

◆ adopts suitable standards for quality health services, in general

◆ specifically for healthcare technology, adopts standards for:

- design, development, and manufacturing

- performance and safety

- use and training

- waste disposal

◆ develops donor regulations to ensure all equipment received through foreign aid

and donations also complies with the standards

◆ establishes public or quasi-public supervisory bodies to enforce regulations

and standards

◆ develops national policies for health services

◆ specifically develops a Healthcare Technology Policy to cover all healthcare

technology management activities including:

- a vision

- an element of standardization

- the provision of maintenance

- provision of finances for all HTM activities

- the organizational structure for an HTM Service

◆ regulates on these issues (if required)

◆ develops an HTM Service made up of a network of teams and working groups

◆ uses the central level of the HTMS as the national regulatory body, if necessary,

and to ensure that HTM policies are implemented

◆ provides sufficient inputs to ensure the HTMS is effective

◆ uses strategies to manage the changes involved carefully, so that they can

be successful

◆ conform to regulations and guidelines provided by government

◆ conform to the standards set by government

◆ follow the policies of the Ministry of Health if regulated to do so

◆ develop their own internal Healthcare Technology Policy and expand strategies

◆ develop their own HTM Service made up of a network of teams and working

groups, with sufficient inputs to ensure it is effective, in order to ensure that
HTM policies are implemented

◆ follow MOH regulations on the HTMS if regulated to do so

◆ implement strategies to develop skills in managing change, staff motivation,

effective communication, encouragement, and supportive training with
demonstrations

◆ introduce rules and procedures using discussion, working groups, training

workshops, etc with the staff that will implement them

◆ include all parties involved in the network of HTM Teams and Working Groups

in the development of the HTMS

◆ introduce changes to HTM step-by-step, with a careful review process

Continued overleaf

Section 2 summary

44

BOX 6: Summary of Issues in Section 2 on Framework Requirements (continued)

High-level
Regulatory Bodies

Health Service
Providers

All groups
involved in
procurement and
commissioning
(at each level of
your organization)

Procurement and Commissioning

◆ ensure that regulations, policies, guidelines and Procedure Manuals exist for

procurement, standards, logistics, customs, stores management, installation and
commissioning

◆ ensure it is understood which agencies are responsible for procuring and

commissioning which equipment

◆ ensure the regulations, policies, guidelines, and procedures are updated regularly

◆ ensure additional policies and guidelines are developed for their organization on

replacement strategies, appropriate selection criteria, standardization, recurrent
cost provision, and initial training for equipment

◆ ensure adequate planning and budgeting takes place (see Guide 2), and

procurement of equipment occurs according to those plans and budgets

◆ ensure a procurement cycle and plan are developed and understood by staff

◆ develop written procedures for all aspects of procurement and commissioning

◆ ensure that multi-disciplinary teams are established to manage the procurement

and commissioning process for healthcare technology, with sufficient technical
input from the HTM Service

◆ negotiate with external support agencies to ensure that the right procedures are

used that will enable equipment appropriate to your needs to be procured

◆ establish a project sub-group that works jointly with external support agencies for

routine equipment procurement or major development projects, in order to
retain control within the health service

◆ only decentralize procurement and commissioning activities to levels where

skills exist

◆ use economies of scale to your advantage by:

- making use of technical skills and guidance from levels where the knowledge exists

- combining forces with other levels to undertake needs assessment and bulk-buy
equipment and supplies to gain procurement savings and standardization

◆ conform to regulations, policies, guidelines and Procedure Manuals provided by

relevant bodies for procurement and commissioning activities, which dictate who
can procure and commission what, when, and how

◆ only undertake procurement and commissioning activities at suitable

decentralized levels in your organization where sufficient skills are present

◆ carry out their duties as team members according to their role and responsibility

within the procurement and commissioning process

3. HOW TO DECIDE WHEN AND WHAT
TO PROCURE

Why is This Important?

Your aim is to obtain equipment in the right quantities that is both suitable and
appropriate for your needs, and fits your budget.

Obtaining equipment is intensive work, both in terms of time and resources.
You therefore need to consider a number of factors before committing to
buying, accepting donations, or hiring equipment.

You should consider whether acquiring the equipment represents rational and
good practice. Any decision should take account of which supply sources are
available, and also consider whether the funding organization has particular
requirements that could influence your options.

You need to make some important decisions when considering the procurement of
equipment. In this Section, we consider the following:

◆ Why you need to procure (Section 3.1).

◆ Issues to consider when choosing equipment (Section 3.2).

◆ A review of the different ways to get equipment (Section 3.3).

◆ Whether to obtain new or second-hand items (Section 3.4).

3.1 WHY YOU NEED TO PROCURE

Procurement Policies

Before carrying out any equipment procurement (through purchases, donations or
rentals), you should already have carried out all the planning and budgeting activities
which are described in Guide 2.

In other words, you should already have drawn up:

◆ an up-to-date Equipment Inventory

◆ a vision for health service delivery

◆ purchasing, donations, replacement, and disposal policies

◆ Model Equipment Lists.

3 How to decide when and what to procure

45

Planning and budgeting activities should result in an Equipment Development Plan,
covering short- and long-term needs. Thus, ideally, all procurement should be for
those items laid out in the Equipment Development Plan for the current year, plus
occasional additional items required to cover contingencies (emergencies and
unplanned-for events).

In line with the suggested Purchasing and Donations Policy in Guide 2, the five
main reasons for procuring equipment (listed in order of priority), are normally:

1. Equipment requires replacement

Equipment should be replaced when:

◆ it has reached the end of its life

◆ it is no longer economical to repair

◆ it has become technically obsolete. (For example, the manufacturer no longer

produces spare parts or accessories, the technology or technique is no longer
considered appropriate, or a more cost-effective or more clinically effective
model becomes available.)

In order to merit replacement, the equipment should be providing an existing
service (such as a dental chair for a dental clinic). For valid reasons why
equipment requires replacement, see the typical contents of a Replacement
Policy in Annex 3.

Tip

•

Replacement is not an expansion of services, but merely a way of continuing to offer
existing services.

This may be a good time to review your existing services and consider whether
there is a continued need for the equipment concerned. It is also an opportunity
to consider improving the service.

2. Regular supplies of equipment-related items are required

Examples of equipment-related items which are required on a regular basis
include any of the following:

◆ Consumable items (such as X-ray film, ECG recorder paper).

◆ Replacement accessories (shelves, patient probes).

◆ Spare parts (light bulbs, bearings).

◆ Materials for their maintenance (oil, tubing).

3.1 Why you need to procure

46

It is quite common for health facilities to be unable to function effectively during
much of the year if these items are not planned for and purchased. Many may
need to be imported from abroad.

3. Additional equipment is necessary for providing a basic standard level of care

The basic standard level of care, in equipment terms, is provided by your Model
Equipment List. The items that are currently missing from your stock are
determined by comparing your up-to-date Equipment Inventory with the
standard set in the Model Equipment List (see Guide 2).

You should consider more sophisticated technologies only when these core
equipment needs have been fully met.

4. Additional equipment is required to improve services and go beyond a

basic level of care

Improvements to health services may be brought about by rehabilitating existing
health facilities, upgrading facilities, or building new ones. Any such improvements
and expansion should be carried out in accordance with the strategic plans for the
health facility, such as those laid out in your long-term Strategic Business Plan
(see Guide 2).

5. Additional equipment is required that is outside the health facility’s

own plans

Procuring equipment outside your plans should only occur if the extra items:

◆ have been called for by directives from the central health service provider

organization or a national body

◆ have been identified as a new need, or

◆ cannot be stopped/refused for political reasons, such as out of the ordinary,

high profile, or political projects.

These five reasons for procuring equipment can only be acted upon if the following
key factor is in place:

◆ Funding becomes available.

Once you know your needs and have made plans for equipment procurement
(points 1 to 5 above), you can only ever procure if you have the budget to cover
your plans. When funding does become available, it enables you to pursue the
objectives set out above. Any such allocation of funds should be according to your
Core Equipment Expenditure Plan (see Guide 2), to ensure that the money goes
to the highest priority activity. Thus procurement will be planned and not random.

3.1 Why you need to procure

47

Procurement Planning Tools

Box 7 outlines a number of ‘planning tools’ you can use to help you to decide why you
need to procure. Your Procurement Unit will need to work with many different types of
health staff, in order to identify relevant information on procurement needs (Section

5.1). Further details on how to develop these tools, and how different health service
staff can use them, are provided in other Guides in this Series.

BOX 7: Planning Tools Which Help You Decide to Procure

Planning Tools How They Help

When replacing items:

Replacement Policy
(see Annex 3 and Guide 2)

Equipment Inventory
(see Guide 2), and
maintenance record system
(see Guide 5)

Replacement and
condemnation criteria
(see Annex 3 and Guide 4).

Core Equipment Expenditure
Plan (see Guide 2).

Disposal Policy
(see Annex 3 and Guide 2)
and disposal procedures
(see Guide 4).

Stock control system
(see Section 7.2 and
Guides 4 and 5).

3.1 Why you need to procure

48

Establishing and implementing this tool is much more likely to ensure that
the necessary regular planned replacement of equipment takes place.

These tools enable you to identify the need for replacement equipment at
any time. For easy reference, estimated lifetimes for equipment could be
entered into the inventory and could then prompt you when to purchase.
Remember that the natural life of equipment is shortened by harsh
environment, over-use, unskilled handling, neglect of maintenance and
damage. Equipment malfunction and down-time also increase with the age
of the equipment. Accordingly, cost-effectiveness decreases with age.

These help you to judge when equipment has reached the end of its life,
and therefore help you identify when equipment needs replacing.

Some equipment will have to be replaced every year, so it makes sense to
spread your budgeting for replacement over time. By allocating some
money each year, you can avoid facing a large replacement bill later on. This
tool should spread these costs over the long term.

You can estimate your equipment replacement needs each year by
reckoning that each piece of equipment has an average lifetime of 10 years.

This means that roughly 10 per cent of your equipment stock needs
to be replaced each year.

When you replace equipment, these tools will help you dispose of the old
machine. There may be government regulations regarding disposal that will
help you develop these tools.

Replacement equipment-related supplies should be purchased after an
up-to-date stock take. Accurate stock control systems help with planning
and ordering.

Continued opposite

3.1 Why you need to procure

49

BOX 7: Planning Tools Which Help You Decide to Procure (continued)

Planning Tools How They Help

When buying additional
new items:

Equipment Development
Plan, and Annual Purchase
Plan (see Guide 2)

Package of inputs
(see Sections 5.1 and 5.5.2
and Guide 2)

Core Equipment Financing
Plan, and Annual Budget
(see Guide 2)

3.2 ISSUES TO CONSIDER WHEN
CHOOSING EQUIPMENT

Once you know why you are procuring equipment, you need to know what types of
goods are suitable. In order to make the best use of scarce finances, you must try to
obtain only the equipment that is most appropriate for your needs.

Choosing equipment is not easy, due to the wide range of products available.
External influences also play a part. For instance, external support agencies may
impose their own conditions regarding suppliers, which may result in inappropriate
equipment being supplied or procured (Section 3.3.2). In such cases, it is wise to
renegotiate or, if that fails, consider declining the funds or gifts and trying elsewhere.

It is the responsibility of the Procurement Unit, the HTM Working Group, and the
Procurement/Tender Committee to choose equipment. To help them to obtain only
equipment which is appropriate to your needs, your purchasing and donations policy
(Section 2.2) should clearly specify the ‘good selection criteria’ to employ. All
equipment should:

◆ be appropriate to your setting

◆ be of assured quality and safety

◆ be affordable and cost-effective

◆ be easily used and maintained

◆ conform to your existing policies, plans and guidelines.

Such selection criteria should then be used during the procurement process, when
you evaluate and adjudicate between different offers from suppliers (Section 6.3).

New equipment should be purchased according to your Annual Purchase
Plan (drawn each year from your long-term Equipment Development
Plan). This is based on an up-to-date inventory and Model Equipment
List. Accurate inventory record-keeping helps with planning and ordering.

Planning in advance for what will be needed after the purchase is every bit as
important as the purchase itself. Thus, you must ensure that you procure the
package of inputs required to keep equipment functioning through its life.

Capital expenditure can only take place once you have identified sufficient
funding sources. Your long-term Core Equipment Financing Plan and your
Annual Budget should allocate known and possible sources of funds against
elements of your planned expenditure.

Tip

•

You must ensure that product selection (screening) criteria are specified in your
purchase documents (Section 5.5.2), so that suppliers are aware of how their
products will be judged.

Country Experience

Often developing countries have been tempted to over-specify their requirements for

sophisticated or complex equipment because funds for the procurement are part of a foreign

aid package and have to be utilized for a specific purpose. Even if they need a basic

technical platform, a sophisticated version and accessories are ordered at once because the

funds will not be available after the budget line is over. Since only the basic functions of the

equipment are commonly used, the funds utilized for advanced features are wasted.

For example, one country in 2001 purchased a Multi Slice CT scanner with 3-D

reconstruction, virtual endoscopy and CT fluoroscopy facilities. However, it is used only for

conventional CT scans. The funds used to procure the additional features were

approximately 40 per cent of the procurement budget. The operators responsible for the

machine were not computer literate, so had to undergo basic computer training before they

could be trained how to use the scanner. The scanner was put into operation almost three

months after installation and it took about eight months to get it going smoothly. Thus eight

months of warranty were wasted.

When you are preparing your purchase documents (Section 5.5.2) it is important
that you state clearly what you want, in order to avoid unsuitable equipment being
procured. The main issues are presented here, and summarized in Annex 3 (see
Box 53).

3.2.1 Appropriateness to Setting

Be sure that you select equipment that conforms to the ideals shown in Box 8.

If you are considering procuring a particular item, it can be useful to talk to someone
in a facility that has experience of using that model. Do not be afraid to ask the seller
about the performance of the equipment in local conditions and ask if they (or a
nominated agent) could provide staff training and maintenance, if required.

3.2 Issues to consider when choosing equipment

50

3.2.1 Appropriateness to setting

51

BOX 8: Key Factors Determining the Appropriateness of Equipment and Supplies

Factors Issues

You have the skills

It suits your climate
and conditions

It is simple to use

It fits into your
health facility

Equipment can be operated and (preferably) maintained by your staff, with or
without additional training.

It has been designed or adapted to cope with the location where it will be used.
For example:

◆ In humid climates:

- mould grows on microscope lenses, unless supplied with a drying agent (such as
silica gel) to store with them.

- if air-conditioning is switched off at night, water condensation builds up on
printed circuit boards causing short-circuits, unless they are covered in a
polymerized film.

◆ In high ambient temperatures:

- condensers and heat exchangers of sterilizers, designed to suit European water
temperatures, do not condense effectively leaving linen wet, unless a long
drying cycle is provided.

◆ With unreliable power supplies:

- some equipment is highly sensitive to power surges and requires suitable
electronic suppressors and filters.

◆ With unreliable water supplies:

- some equipment is sensitive to poor quality or hard water and requires suitable
filters or treatment plant.

◆ In dusty environments:

- some equipment is sensitive to dust levels and requires manual filters.

The equipment should have a limited number of settings and modes of operation
(unless you are buying extremely specialized equipment to suit extremely specialized
personnel). Experience shows that equipment with more than three settings requires
a specialist.

The equipment:

◆ is compatible with existing equipment and knowledge in the organization (if

possible)

◆ is suited to the power source and power quality available

◆ does not require unavailable or unreliable service supply installations (utilities)

◆ does not require more space than you have.

You may find that you have to procure additional pieces of equipment to go with
your original item, if it is to work in your environment. For example:

◆ A voltage stabilizer (surge suppressor plus filter). This offers protection against

power supply fluctuations, but does not protect against power cuts. It monitors
the power supply, removes surges and spikes, and maintains a continuously
regulated alternating current output to the item.

◆ An uninterruptible power supply. This offers protection against blackouts and

power cuts of limited duration.

◆ An air-conditioning unit.

◆ A water filter or treatment plant.

3.2.2 Assured Quality and Safety

All equipment and supplies must be of sufficiently high quality. Some key areas that
determine quality are shown in Box 9.

3.2.2 Assured quality and safety

52

BOX 9: Key Factors Determining the Quality of Equipment and Supplies

Factors Issues

Performance

Sources

Materials
and design

Safety

Standards

Labelling and
packaging

Remember, a highly sophisticated piece of equipment will not necessarily perform
better than a piece of equipment which is more basic, but easier to use. (See
discussion above on ‘appropriateness to setting’.)

Try to always buy from reputable companies, if possible. Unfortunately there are
still many companies that supply poor quality and unsafe products (for example,
infant incubators containing asbestos insulation, hydraulic operating tables that
leak and will not rise, suction pumps that spark, operating theatre lights incorrectly
wired thus producing shadows).

Check the durability and quality of the materials used. Remember, thin metal
bends, cheap material tears, and small castors make it difficult to move items.
Also check whether the equipment design is robust, and whether the equipment is
easy to clean, operate, and maintain.

User and patient care and safety should never be compromized by poor quality
items. Poor quality equipment (as well as bad installation, lack of maintenance, and
improper use) can all lead to potentially dangerous situations, such as exposing
patients and staff to radiation, electric shock and infection. Refer to Guide 4 for
detailed guidance on operation and safety issues.

Equipment should always meet recognized standards. There are a variety of
formal safety standards and guidelines relating to equipment. These include
standards covering:

◆ design, development, construction, and manufacturing practices

◆ performance and safety requirements

◆ operation and maintenance procedures

◆ environmental issues (such as disposal)

For examples of different international and national standards relating to
equipment, see Annex 4.

Packaging should protect equipment and supplies from damage or deterioration
during transit and storage. Goods should be specially packed and crated for shipment
to avoid damage. Although most supplies are quite durable, some (such as rubber
tubing and latex items) will spoil if left unused for too long. Plastic wrapping helps
to protect such items against high humidity, and is more robust than paper wrapping.

Labelling should include information about country of origin, date of manufacture
and, if appropriate, expiry date and storage instructions. Labels and packaging
should avoid long and unusual symbols.

Before purchasing specify the shipment packing requirements (Section 5.5.2) and,
if possible, check the quality of the labelling and the packaging.

3.2.2 Assured quality and safety

53

People involved in choosing equipment should at least be aware of the major
national and international standards and quality certificates that apply to
equipment. Be aware that:

◆ apparently standard quality certificates may be based on varying factors

◆ export certificates and ‘good manufacturing practice’ certificates are both issued

by authorities in the country of origin – thus their value depends on the capacity
and diligence of the issuing regulatory authorities.

Not all countries have the necessary facilities and technical personnel to conduct
complex quality and safety testing of goods. In these circumstances, there may be
facilities that could be used in neighbouring countries, or the wider region.

Another way of ensuring quality and safety is by procuring from reputable and
certified manufacturers and suppliers. The quality of manufacturing standards
differs from country to country. Useful tips include:

◆ Only procure equipment and supplies from licensed, reputable and reliable sources.

◆ Before buying, ask the supplier which safety and performance standards an item

complies with.

◆ Be wary of copies (items made to look like a well-known brand) as these are often

of poor quality and do not conform to international standards.

3.2.3 Affordability and Cost-Effectiveness

There are a number of aspects to affordability and cost-effectiveness:

i. Cost and Quality

Cost and quality often go together. Better quality equipment is more expensive, but
cheaper equipment is often of poor quality. Buying the cheapest item can be a false
economy, because it may need repairing or replacing more frequently. It may be
more cost-effective to spend more on a higher quality item that is more reliable and
lasts longer.

When procuring, you should consider not just the initial cost of
purchasing, but also the life-cycle costs of the equipment. These
are the costs covering the entire lifetime of the equipment, such
as for use and maintenance. They can often amount to more
than the initial purchase price. You may find that an item with a
higher initial price has lower running costs over the long-term
than a cheaper alternative.

Life-cycle costs

are those costs associated with

obtaining, using, caring for and

disposing of equipment, as well

as the support, training and

operating costs incurred over the

period in which the item is used.

Remember also that the cost of transportation and installation of poor quality
equipment is at least as high as for more expensive equipment of possibly better
quality. For most developing countries, with their long delivery routes, limited
finances, and difficult operating conditions, equipment of good quality will in the
end prove the better and more economical choice.

ii. Cost-effectiveness

In order for an item to be considered cost-effective, all the life-cycle costs have
to be planned for and should be balanced against the benefits gained from the
equipment. There are a variety of life-cycle costs related to healthcare technology,
and most of these are hidden. This can be illustrated by using the image of a
hippopotamus as shown in Figure 7. Hippos are known for only having a small
proportion of their bulk showing above the water, while the vast majority is hidden
dangerously below the surface.

Figure 7: The Hippopotamus Syndrome of Life-cycle Costs for Healthcare Technology

For accurate cost estimates you need to categorize your equipment, ranging from
simple health facility furniture to highly sophisticated medical equipment. The cost of
installation, training, maintenance, and spare parts normally increases as the level of
sophistication of the equipment increases (see Guide 2 on planning and budgeting).

3.2.3 Affordability and cost-effectiveness

54

Purchasing costs

Cost of recording
and evaluating
data

Administration
and supply
costs

Operating
costs

Staff
costs

Maintenance
costs

Training
costs

Transport and
installation
costs

Costs of
removal
from service

Consider these costs carefully. Choices can then be made in an informed way. For
example, a basic autoclave can sterilize up to the same standard as a sophisticated
electronically controlled autoclave. However, both purchase and maintenance costs
would be significantly lower for the basic unit.

Did you know?

The purchase price of a piece of equipment represents only a small part of the total lifetime costs
of owning that item.

The average estimate is that the purchase price is only 20 per cent of the overall cost of ownership.

Therefore, the cost of operation, maintenance and training through the life of the equipment may
be as much as four times the purchase price.

To limit your costs, you should consider an element of standardization (Section 2.1).
For example, obtaining equipment from a limited range of trusted suppliers is more
economical in terms of service visits, spare parts, consumables, and training.

If you cannot meet these costs, you should reconsider whether it is worth getting
the equipment, and the benefits of doing so. Some criteria for judging cost­effectiveness are:

◆ If the equipment is not available, will the management/treatment of a significant

number of patients be impossible or unsatisfactory?

◆ Can the equipment significantly reduce other expenses (such as length of

hospital stay, need for referrals to a more expensive higher-level facility, the need
for expensive personnel or drugs)?

◆ Is the equipment too dependent on foreign sources and skills for spare parts and

maintenance?

iii. Cost to Get Equipment Functioning

There are various costs involved with getting equipment onto site and functioning
effectively when it first arrives. Further details on how to estimate such costs are
given in Guide 2 on planning and budgeting.

Before you procure any item of equipment, you need to make a careful comparison of
the local and overseas costs for factors such as import duties, customs tax, freight,
handling and insurance. Box 10 itemizes the factors which influence the cost of
procuring equipment.

3.2.3 Affordability and cost-effectiveness

55

BOX 10: Components of the Overall Cost to Purchase Equipment

If you know the net purchase price of a piece of equipment, then the following additional components are
required, depending on the equipment type, to provide the overall cost of the equipment:

Cost components Percentage of purchase price

Package of inputs (accessories, consumables etc) for one year 2–7%

Installation, commissioning, and initial training 0–15%

Spare parts for two years’ operation 0.5–20%

Freight charges 8–15%

Insurance 1.5%

Contingency 3%

Further additional components may be required, such as:

Charges of a procurement agent 5–10%

Site preparation work 0–10%

Warehousing, unloading/lifting equipment 0–1%

Service support for one year 0.5–7%

Refer to Guide 2 to see how these figures relate to different equipment types.

The cost of the planning, delivery, installation, and training for equipment
often exceeds the cost of the equipment itself.

iv. Cost to Keep Equipment Functioning

There are several costs required to keep equipment functioning throughout its life.
Further details of how to estimate such costs are given in Guide 2 on planning and
budgeting. Cost components could include:

Consumable material costs. For some equipment, the cost of consumables,
replacement accessories, and spare parts represents the main bulk of life-cycle costs.
Ask yourself the following:

◆ What consumables, accessories, and spare parts do you need to operate and maintain

the equipment? Does the equipment use its own specialized consumables?

◆ How much will these items cost?

◆ Are consumables and accessories available as disposable or reusable products?

◆ How many of these items have a short life (for example, those which are fragile

and vulnerable to mechanical damage or repeated sterilization, those with fixed
lifespans, those with shelf lives)?

◆ Can you obtain regular and reliable supplies of consumables, accessories, and

spare parts?

◆ Where will the items come from and how easy is it to get hold of them, in

particular those with a short shelf life?

3.2.3 Affordability and cost-effectiveness

56

◆ Are the items part of an ‘open’ procurement system, in other words anyone can

supply them for your equipment, different manufacturers’ products can fit your
machine, and this competition leads to lower-cost items? Or are the items part of
a ‘closed’ procurement system, in other words they are only made by the
equipment manufacturer, you are limited to one supplier only, and this monopoly
leads to more expensive items?

◆ How long will they continue to be available? (Up to 10 years is a reasonable period

for most equipment, and most manufacturers will agree with this.)

◆ Is the equipment likely to become obsolete due to technical and general advances

in the sector? (Equipment manufacturers normally supply spare parts and
consumables for out-dated equipment for up to only five years after a particular
model has been taken out of production.)

Most suppliers know and can offer advice on which high-usage consumables,
accessories and spare parts should be kept on hand.

Operational costs. To ensure the equipment can be used to provide the service
required, further operational questions should be considered:

◆ What staff are required to manage, maintain, and use the equipment?

◆ Are staff available with the necessary skills and qualifications? What is their

current workload?

◆ Do you need to train your staff? Do you need to hire additional/specialist staff?

◆ What service supply installations does the equipment require (such as electricity,

water, gas, fuel)?

◆ How much will these items cost?

◆ Will you be able to afford any future upgrades and replacements for the equipment?

Maintenance costs. To ensure that equipment is continuously available for use,
further questions must be answered:

◆ Is service support available locally, in the region, or from overseas?

◆ Will you be charged for service visits under warranty terms?

◆ Do you need a maintenance contract?

◆ What will a maintenance contract cover, and how much will it cost?

An easy way of estimating maintenance costs would be to ask suppliers to include and
specify maintenance costs in their bid/quote. However, there is internationally
recognized advice on typical maintenance costs. As shown in Box 10, the annual cost
can range from 0.5 to 7 per cent of the equipment purchase price, depending on the
type of equipment.

3.2.3 Affordability and cost-effectiveness

57

Experience in Sri Lanka

It can be difficult to attain maintenance skills in-house for sophisticated equipment, since

manufacturers often will not provide advanced in-depth maintenance training for third parties

(in other words, the client) preferring to provide it to their own staff or those of their

representatives. Thus, the Ministry of Health in Sri Lanka has adopted the following policy

when purchasing sophisticated equipment:

◆ Require the manufacturer to have a local agent that can undertake the maintenance needed.

◆ Negotiate a five-year post-warranty service contract (including parts and labour) with the

local agent at the time of purchase.

In this way:

◆ the local agent earns a respectable profit to run their business

◆ the Ministry of Health obtains a working machine, while keeping the service costs in the

range of four to five per cent of the equipment value.

All sophisticated equipment on the Ministry of Health’s inventory is on a service contract,

and they know the exact costs involved for maintaining such machines. Once the service

contract prices are known, they find that the budget estimates for the balance of the

equipment can be easily calculated.

Training costs. Training is essential if you want to make effective use of equipment.
Do not compromise on training, but include actual needs in your calculations.
Consider the following for each type of new equipment:

◆ How many equipment operators and maintainers need to be trained? How many

training sessions will you have to run?

◆ How much will the instructor, the facilities, and any equipment-related materials

cost for the training sessions?

◆ How much will it cost to develop training materials, buy manuals, and obtain

training equipment?

◆ How often will you have to repeat these training sessions to allow for staff

turnover, and gradual loss of skills?

Such training requirements are necessary initially, at the commissioning phase (when
equipment first arrives). Training is also required on a regular basis, throughout the
life of the equipment and the careers of your staff. For more details on analysing
training requirements, drawing up an Equipment Training Plan, and estimating
training costs, see Guide 2 and Section 5.1.

3.2.3 Affordability and cost-effectiveness

58

3.2.4 Ease of Use and Maintenance

There is no point in procuring new equipment if your staff do not have the expertise
or information to use and care for it effectively. The following four issues should
be considered:

Skills and Training

Before procuring equipment, consider the following issues:

◆ How easy will it be for your staff to use, clean, and maintain the equipment?

◆ Are additional staff training or support services required? If so, can the supplier

provide these or recommend someone who can? This is particularly important
for complex vital equipment, such as critical care equipment (for life support,
anaesthetics, ventilation, infusion, etc) as well as diagnostic imaging,
radiotherapy, etc.

◆ Is the equipment supplied with detailed, easy to use instructions, together with

operator and service manuals?

Tip

•

User and service manuals must contain detailed information on the technical
characteristics and specifications of the equipment. They should include circuit
(wiring) diagrams; planned preventive maintenance schedules; application, trouble­shooting and technical fault-finding routines; spare parts lists; safety procedures;
adjustment procedures and calibration tests.

Maintenance and Support Services

It is important to specify requirements for maintenance and support very clearly
in the purchase document (Section 5.5.2). Before procuring equipment, consider
the following:

◆ If maintenance requires the services of a skilled engineer, is there a local supplier

or agent available to help you in the event of a breakdown?

◆ If not, are maintainers available locally or nationally who can service, maintain and

repair the equipment?

◆ If there is no authorized agent in your country, are there other organizations that

offer this service? For example, the Ministry of Health’s HTM Service or mission
maintenance services (such as the Joint Medical Stores in Uganda, and the
Christian Social Services Commission in Tanzania).

◆ How long is the maintenance contract for?

Typically maintenance contracts are taken out
or renewed every 12 months, but many other
options are possible – negotiate the contract
that best meets your needs.

3.2.4 Ease of use and maintenance

59

Guarantees and Warranties

Before procuring equipment, consider the following:

◆ Does the supplier provide a guarantee or warranty for the equipment and for the

parts? Think of every detail. For instance, in the case of imaging equipment, does
the warranty cover glassware such as X-ray tubes? If so, is it covered on a full
replacement basis or a pro rata basis? (If it is pro rata, you may only receive the full
cost to replace an X-ray tube up to, for example, 30,000 exposures, after which the
amount you receive will depend on how many exposures have been taken.)

◆ If a guarantee or warranty is provided, when does it begin and how long does it

last? Guarantees can last for a year or more. Extended periods – such as three to
five years – are possible, depending on the type of equipment or product.

◆ What conditions does the guarantee or warranty cover? In the case of equipment

breakdown, will the manufacturer replace it, repair it, or provide a refund if the
equipment is found to be defective due to faulty materials or workmanship? Does
it cover both parts and labour costs? Are travel expenses covered, or will the user
be responsible for sending the item back to the manufacturer?

◆ What consumer guarantees exist in your country? What are you covered for (refund,

replacement, repair, compensation, or compensation for consequential loss)?

Tip

•

Guarantees will not cover defects arising from misuse, neglect, accidents or repairs
carried out by service personnel and agencies not authorized by the manufacturer.

Consumables, Accessories and Spare Parts

Finally, consider the availability of consumables, accessories, spare parts and
maintenance materials (refer to point iv in Section 3.2.3 on the cost to keep
equipment functioning).

Equipment that does not have adequate service support, or for which
consumables and spares are not always readily available, is likely to be out
of action for long periods and may have to be replaced prematurely.

3.2.5 Conformity to Existing Policies, Plans and Guidelines

Compliance With Your Purchasing and Donations Policy

As stated in Section 3.1, all procurement should be carried out in line with the
Equipment Development Plan for your facility, should follow your procurement
priorities, and should not introduce items that you cannot afford to sustain.
Equipment purchases and donations by external support agencies should not divert
you from your plans, or be too complex, and should promote your basic standard of
healthcare delivery before introducing more sophisticated services.

3.2.4 Ease of use and maintenance

60

Compliance With Your Standardization Policy

Using a standardization policy can help you to limit the variety of equipment you
buy, and help limit your purchases to a few trusted suppliers (Section 2.1). This is
helpful, as it:

◆ enables you to make more economical use of consumables and spare parts

◆ simplifies inventory and stock control considerably

◆ enables operators and maintainers to more easily gain and retain knowledge

concerning the equipment they deal with

◆ is better in terms of supplier relationships and services – suppliers will have

greater incentive to provide aftersales support at reasonable cost if they believe
you represent a larger market and there is potential for establishing a long-term
relationship with you.

Experiences in Africa

The problem of not standardizing equipment was evident in one country where eight different

types of obstetric equipment were found in a single hospital.

A good example of standardization occurred in Botswana where the same type of X-ray

machine from a single company is used in all primary hospitals. Surgical instruments are

also standardized so that all surgeons are familiar with the equipment wherever they go in

the country.

In several places the highest benefits in standardization have arisen with laboratory

equipment, because it is so heavily dependent on the use of reagents and other supplies.

Compliance With Model Equipment Lists and Generic Specifications

The equipment planning and procurement process should be based on national
equipment lists. In many countries, the Ministry of Health has developed guidelines
or standard lists of equipment for all levels of the health system. If there are no
standard lists available, HTM Working Groups can work together to develop them
based on a consultation process or adaptation of existing lists (from neighbouring
countries, for example). Guide 2 describes how this can be done, and Annex 2
provides some examples.

A standard list is essentially a model list of equipment, based on the type of health
interventions (diagnosis, treatment, and care) a facility is expected to carry out. It
should reflect a suitable level of technology for those interventions, which can be
supported at that level of facility. Referring to such a list can be particularly useful if,
for example, you are faced with a wide variety of makes and models of the same type
of equipment and do not know which to choose, such as choosing between an
electric or foot-operated suction pump.

3.2.5 Conformity to existing policies, plans and guidelines

61

Experience in Uganda

In Uganda, a ‘minimum healthcare package’ has been developed for each healthcare level,

which describes all the interventions required. From this, the National Advisory Committee on

Medical Equipment has drawn up five model lists of medical equipment. The model lists

provide a comprehensive overview of all the equipment and furniture required in a particular

level of health facility.

The lists serve as a model for (re-)equipping all existing and new health facilities. They can

be adjusted according to workloads, and size of the catchment population.

Literature and Knowledge Available to You

If you are considering purchasing any new equipment, it is essential to weigh up the
costs against the potential benefits, before you buy.

It will not be feasible to be fully up to date in a market that is characterized by
rapidly changing technologies. Technology assessment is part of the procurement
process (Section 1.2) but is a large subject area in its own right. Usually there is
limited technology assessment at national level for many developing and other
countries. They rely on international research, however little of this has been
directed at the needs of developing countries (see Annex 2).

You should carry out some market research, and try to find out as much as possible
about the equipment before you buy it. Doing this not only helps you understand
the specific requirements of the equipment, but also ensures that you are purchasing
the most appropriate equipment for your particular needs.

Figure 8 presents a variety of options available for obtaining literature and knowledge
about particular pieces of equipment, and you should use a combination of these.

3.2.5 Conformity to existing policies, plans and guidelines

62

Figure 8: Strategies for Sourcing Information and Knowledge About Equipment Models

3.2.5 Conformity to existing policies, plans and guidelines

63

Strategy Action

Source these from the suppliers or manufacturers for any items

Obtain detailed brochures

Make use of the Internet, if you
have access to it

identified as potentially suitable. Study these specifications and
ask suppliers to clarify any ambiguities or uncertainties.

Regularly search the world wide web (www) and online
databases for relevant information. Be careful not to input
information about yourself or your organization via the internet
that could be used to compromise you later.

Visit trade exhibitions

Contact suppliers and their
customers

Establish a library, as described
in Guide 2 on planning and
budgeting

Develop a catalogue of the
products usually available
within your organization

Make face-to-face contact with suppliers and manufacturers.

Contact suppliers’ offices and ask for the names of customers
who have purchased similar equipment to that which you are
thinking of buying. Visit or contact these customers and ask
them if they are satisfied with the equipment and after-sales
service and whether they had any problems. Be cautious of
any supplier who shows reluctance to share this information.

Set up a reasonably up-to-date library of product information,
technical data and specifications, which can be accessed by
decision-makers and general staff. The library should include
items such as:

• operator and service manuals for equipment, and parts manuals

• healthcare standards directories

• comparative pricing information

• supplier information such as catalogues and brochures

• clinical and/or technology assessment journals

• national and international hazard and device bulletins

• trade directories and other publications which provide
information on sources of equipment

• publications concerning equipment performance and suitability.
Many of these items are available from international and national
sources and databases (see Annex 2).

Compile a catalogue, with illustrations, of the items available
centrally or nationally through bodies such as a Central Medical
Stores and the Supplies Department. This will be useful for
users, maintainers, procurement and stores staff.

Use feedback

Use external assistance

Use pre-purchase
questionnaires

Obtain manufacturer’s updates

Establish a system of feedback from operators regarding the
equipment in use, and from maintainers regarding its technical
history. Then base your decisions on their opinions, when
considering whether to purchase this model again (Section 9.2).

When a major reassessment of the health service’s stock of
equipment is carried out, it may be worth paying for the services
of an experienced consultant.

For any intended purchases that you are not familiar with, the
seller should be asked to complete a pre-purchase
questionnaire as a way of evaluating the supplier before you
decide to buy from them (see Section 4.4 and Annex 5).

The manufacturers of some products (such as MRI and CT
scanners, clinical chemistry analyzers) provide updates on a
regular basis about the application of their equipment, through
application bulletins or scientific journals. Ask the manufacturers
if they provide any such ongoing application literature. Find out
if it is available on a subscription basis only, or is free of charge.

3.3 A REVIEW OF THE WAYS TO GET EQUIPMENT

Once you know the equipment you need, there are several ways to obtain it:

◆ Purchasing – using funds from government (national budgets that are

made available by the Ministry of Finance)

– using independent funds from your own facility or health

service provider

– using funds from some types of external support agency

(see Box 11). These funds can come in different forms:

- as repayable loans with interest, from international financial
institutions, and private organizations

- as grants that do not have to be repaid, from foreign

government aid agencies, and non-governmental
organizations.

◆ Donations – from some types of external support agency (see Box 11).

Pieces of equipment are chosen and supplied free of
charge by non-governmental organizations, charities,
individuals, and private businesses. This can range from gifts
of small quantities of items to substantial equipment
procurement projects.

◆ Leasing, renting, – may be an alternative to outright purchase of equipment for

or hiring those with limited budgets or cashflow problems.

Box 11 shows the different types of external support agencies and their typical
funding preferences.

Note: the use of the word ‘donor’ can be confusing as it can be used to refer to large
governmental aid agencies providing interest-free grants for the purchase of equipment,
as well as individuals providing free gifts of equipment. In this Guide we try not to use
the word ‘donor’, and instead distinguish between being given money to purchase
equipment and being given the equipment itself. Thus, we talk of ‘purchasing using
external support agency funds’ which covers grants (Section 3.3.2), and ‘receiving
donations of equipment’ which covers gifts of equipment (Section 3.3.3).

The ability of your Procurement Unit to choose between these options will vary
depending on your country, your health service provider, your level within the health
service (central, district, or facility level), and your level of autonomy.

3.3 A review of the ways to get equipment

64

BOX 11: Different Categories of External Support

Implementors Source of funds Type of support Target groups

3.3 A review of the ways to get equipment

65

Multi-lateral
finance

Multi-lateral aid

Bi-lateral aid

Non­governmental

Private

International financial
institutions, such as
the World Bank, Asian
Development Bank

Groups of
governments through
aid agencies, such as
the EU/EDF, and
international agencies,
such as UNICEF

Governments through
aid agencies, such as
USAID or GTZ

Religious,
humanitarian, and
charity groups and
individuals

Private banks and
businesses

Contributions of
member states

Contributions of
member states

Tax money, to
some extent
donations

Tax money, to
some extent
donations

Donations

Profits

Repayable loans
with interest

Non-repayable
grants, donations
of equipment,
technical assistance

Non-repayable
grants, donations
of equipment,
technical assistance

Non-repayable
grants, donations
of equipment,
technical assistance

Repayable loans
with interest, non­repayable grants,
donations of
equipment

Predominantly
governmental
organizations

Mixture of
governmental
organizations and
population groups

Mixture of
governmental
organizations and
population groups

Predominantly
population groups
and local non­governmental
organizations

Mixture of all
organizations and
population groups

3.3.1 Equipment Purchases Using Nationally Available Funds

In many countries and facilities, the way in which
items are purchased is determined by who is financing
the purchase. The process varies depending upon:

◆ the objectives of the funding organization

◆ the amount of funds

◆ the timescale in which the item is to be procured.

Funding can cover the entire purchase cost or just the cost of specific components. Funds
may be provided in the form of a one-off lump sum or as an annual sum, renewable over
several years.

The procedures you have to follow depend upon the source of funds and your
organization, as shown in Box12.

BOX 12: How Purchasing Procedures Relate to the Type of Organization and

Funding Source

Type of facility and funds Purchasing procedures required

A public facility using its own
funds or government funds

A non-government facility (such
as a mission hospital or private
hospital) using its own funds

Any type of facility using external
support agency funds or other
special funds (Section 3.3.2)

Did you know?

International organizations, including UN agencies and the World Bank, have purchasing
procedures for buying equipment. You can obtain guidelines from these agencies which you can
adapt to your needs, if you have no procedures of your own.

Using Government Funds

At national level, responsibility for purchasing equipment is divided up between
various government ministries. Within ministries, specific aspects of purchasing may
also rest with particular departments or programmes. For example, in the public sector:

◆ In the Ministry of Health, both the Central Medical Stores (CMS) and the

Supplies Department usually carry out purchasing.

◆ CMS usually purchases and distributes pharmaceuticals, medical supplies and

basic (small) medical equipment, while Supplies is responsible for equipment and
spare parts.

◆ Some independent programmes, such as the dental and laboratory services may

handle their own purchasing, without referral to the MOH Supplies Department
or CMS.

◆ Other ministries, such as Works, Supplies or Transport, may also be responsible

for purchasing some types of equipment (for example, plant, furniture, and
vehicles respectively).

There is often little coordination between these different units and most purchasing
decisions are made on an ad-hoc basis. Often, there is great confusion about who is
responsible for the different aspects of equipment purchasing. In many cases, heads
of units, health facilities and staff do not know what type of equipment they can
obtain from which source, and through which channel.

3.3.1 Equipment purchases using nationally available funds

66

Equipment must be bought using government purchasing procedures
(these are laid down in national laws and regulations).

Equipment can be bought according to your own organization’s
procedures. If there are no purchasing guidelines, you will need to
develop these, or use national or external support agency purchasing
guidelines instead.

Equipment must be bought using the funder’s purchasing procedures.
If these present a problem for your plans or technical requirements,
you will need to negotiate any necessary changes.

Most purchasing at the national level will be funded through national budgets and
external sources. Also most tenders take place at this level.

Tip

•

Find out which bodies, such as ministries, and which sections are responsible for
purchasing different types of equipment. Make a chart for future reference.

At decentralized levels (for example, district health authority and health facility
levels) government funds allocated can be used to purchase equipment up to certain
value limits. The financial limits will be specified in the Ministry of Finance’s
Purchasing Manual (Section 2.2). Often there are, as yet, limited purchasing skills
at the decentralized levels.

If other health service providers receive government funds they must also follow
the guidelines in the Ministry of Finance’s Purchasing Manual.

Using Your Own Independent Funds

Government health facilities may be allowed to raise their own funds through
some form of cost-recovery programme, or local business backing. The amounts
raised are usually small. Therefore, the purchasing method used will be a simple one
suited to low value, low volume purchases (Section 4.2).

Other (non-government) health service providers can purchase equipment
according to their own rules when using their own funds. Responsibility for
purchasing equipment is often divided up between various departments or
programmes – for example, Procurement, Logistics, Supplies, or Transport divisions.
As for the public sector, there is often little coordination between these different
units. Most purchasing decisions are made on an ad-hoc basis, and often there is
great confusion about who is responsible for the different aspects of equipment
purchasing. Most tenders take place at the central level.

3.3.2 Equipment Purchases Using Funds From External
Support Agencies

This applies to external support agencies that provide loans (repayable with
interest) for you to do the purchasing, and grants (non-repayable) that they often use
to purchase on your behalf in consultation with you.

The Regulations and Procedures of the External Support Agencies

If funding for the purchase of equipment comes from an external source, you need to
purchase the equipment in accordance with the funder’s procedures and conditions,
or negotiate any necessary changes. Particular care should be taken when funding
comes from external sources because some have their own agenda.

3.3.1 Equipment purchases using nationally available funds

67

Others, although they mean well, may have regulations and procedures which
conflict with your aims. You should be aware of the following conflict areas:

1. Your standardization policy

Procurement conditions may be tied to a particular country. External funders are
often tied to national economic interests, which can result in tied aid (where the
product must come from the donor country or another specified group of
countries). This often results in inappropriate technologies being supplied that
do not conform to your standardization efforts. Lack of coordination between the
various external funders can also lead to duplication of effort, and multiple brands.

Country Experience

One country, in 1994, estimated that approximately 75 per cent of medical equipment in their

hospitals and health centres had been funded from sources other than the regular

government budget.

In many countries, hospitals within the same district or region are equipped with a variety of

makes from different suppliers and countries, even for the same type of equipment. This

places a great burden particularly on maintenance personnel, who often have not been

properly trained on the equipment, and on hospital administrators in terms of providing funds

for adequate stock levels of spare parts and consumables.

One hospital requested toilets from two donors. They received two sets, each of three

toilets. One would have been enough, and neither had a path suitable to reach them in the

rainy season.

2. Your available budgets

Funding may be limited to only certain types of projects or goods, and for a set
time frame. External sources of funding may provide one-off equipment
replacements, or equip new facilities. Alternatively, they may directly donate
equipment (Section 3.3.3). However, they often provide no support to keep the
equipment running. Ideally, external support agencies should be willing to
finance both the equipment and a ‘package of inputs’ that will sustain the goods
(Section 5.5.2), as well as provide support for an HTM Service so that
equipment can receive long-term support.

Experience in Pakistan

The Finnish government aid agency supplied laboratory equipment to the Pakistan health

service. The agreement included supply of consumables, spare parts and manuals, user and

maintenance training, and the establishment of maintenance workshops.

3.3.2 Equipment purchases using funds from external support agencies

68

Although offers of equipment may seem attractive, it is important to weigh up the
benefits of having the equipment over the long term (Section 3.2). For example,
will it prove difficult and expensive to run and maintain? Will the recurrent costs
of consumables, spare parts, and maintenance mean the equipment is discarded
once external funds and interest are withdrawn?

3. Your aims and wishes

Procurement conditions may be tied to a particular procurement method. Care
must be taken not to be put in a position where your ability to make decisions
about your choice of equipment is dictated by the use of competitive tenders
(Section 4.2.2).

The aim of tendering is to have a process that means all suppliers submitting bids
are treated the same and no one has the chance of receiving preferential
treatment or offering incentives (in other words, a transparent process), and all
bids remain confidential (in other words, a competitive process). This is achieved
by using formalized rules and procedures. The very inflexibility of these rules and
procedures, however, can affect your ability to make technical judgements about
the bids.

Most international financial institutions (such as the World Bank, African
Development Bank) and many bi-lateral government aid agencies dictate that some
form of tender process should be used (normally international open tenders). Such
open tenders must be competitive and open to anyone to bid. Therefore, your
attempts to get the equipment that suits you may often be regarded as restrictive
practices (and therefore illegal). For example, with an open tender, there can be:

◆ no standardization of equipment

◆ no consideration of additional factors concerning the equipment and supplier (for

example, the aftersales support available locally), other than what is stated in the
specification (Section 5.5.2)

◆ no screening of the manufacturing capability of the suppliers after the tender bids

are in (unless you are allowed to use qualification criteria to judge suppliers and
specify the criteria in the original purchase (tender) document – Section 5.5.2)

◆ no adjudication of bids on any basis other than the cheapest (unless you are allowed

to use a scoring matrix of various factors that determine the best deal and the
selection criteria is specified in the original purchase document – Section 5.5.2).

Procurement is a quasi-legal process and must be conducted in legalistic ways
regardless of technical needs. Therefore such rules make the open competitive
tender process unsuitable for buying complex technologies. As can be seen from the
list above, your only chance of entering some of your technical needs into the process
is to ensure that all of your requirements and methods of adjudication are explained
in full in the original tender document. This can be very hard to achieve, but it is
something you can aim for in the long-term.

3.3.2 Equipment purchases using funds from external support agencies

69

More realistically, successfully procuring the equipment you want depends upon
gaining knowledge of the different external support agencies’ procurement rules.
For example:

◆ For procurement methods involving quotations (Section 4.2.3), you can usually

meet your technical aims and wishes (standardization, provision of aftersales
support locally, quality manufacturing, the best deal).

◆ For procurement using a restricted tendering process with national funds, non-

governmental funds, and some bilateral aid agency funds, you may be able to meet
your technical aims and wishes as long as you stick to the tendering rules and
specify the screening and adjudication processes in detail in advance.

◆ For procurement using an open tendering process and funds from an international

financial institution (a development bank), you probably will not be able to meet
your technical aims and wishes unless purchasing simple equipment.

Thus, the art of getting the right equipment is choosing the right external
support agency to fund it.

For example:

◆ If you want good quality complex technology – such as an ECG monitor – using an

international financial institution to provide the funds would not be appropriate as
their procedures may require you to source the cheapest unit from any supplier and
country, regardless of the quality.

◆ If you want simpler technology in bulk, such as sphygmomanometers, funds and

procedures of an international financial institution could usefully be employed to
source the items globally and obtain the best price.

3.3.2 Equipment purchases using funds from external support agencies

70

Country Experience

In developing countries, the World Bank (WB) mainly supports the financing of capital goods

as opposed to consumable supplies. The World Bank uses its own guidelines on the type of

standard equipment that should be on site at primary, secondary, and tertiary health facilities.

The World Bank does not carry out direct equipment supply, but provides the money as a

loan for purchasing equipment. The borrower buys all goods, works and services, but the

World Bank oversees the borrowers’ use of funds and procurement method (international

open tenders), and ensures that the purchasing is undertaken according to WB guidelines

and is in line with its purchasing policies.

The World Bank has its own step-by-step guide on how the purchase of WB-financed goods,

works and services should be planned and implemented. These guidelines apply equally

when purchasing is carried out by the borrowers, their procurement agents, or other

intermediaries such as UN agencies working on behalf of the borrower.

The strict rules and procedures for international open tenders mean that it has proven

difficult to buy good quality complex healthcare technologies this way that are appropriate to

developing countries’ needs. WB support has been found to be most suited to bulk

purchases of low technology healthcare equipment items.

Securing External Funding

If you are looking to secure funding from an external support agency, you will need to
put forward a convincing business case to support your procurement plan. This case
needs to be framed according to the agency’s guidelines for applying for support.

A carefully constructed Equipment Development Plan or Strategic Business Plan
(see Guide 2) helps to strengthen your proposal, by presenting clear equipment
needs and goals, as well as expenditure and financing requirements. In this way, you
could encourage external sources to donate equipment and offer funds that support
your plans, and hopefully avoid purchasing inappropriate equipment.

Avoiding inappropriate equipment may be difficult but it is not impossible – some
external support agencies have been known to make exemptions to their usual
procurement rules (Section 4.2) in order for the client to obtain equipment
more suited to their needs. Often, it may help if you can highlight specific examples
of problems with equipment due to poor specifications or inappropriate
procurement procedures.

3.3.2 Equipment purchases using funds from external support agencies

71

Country Experience

Many external support agencies place restrictions on sourcing goods, preferring them to

come from a certain group of supply countries. However, health service providers have

obtained exemptions enabling them to include buying from outside the European Union and

ACP countries (countries in Africa, the Caribbean, and the Pacific).

In Malawi, there was a European Union-financed project procuring spare parts. For this

project Malawi managed to get exemptions (for more than 50 per cent of the parts) from

both the EU usual practice to purchase from a single source, and their practice of procuring

only from EU countries. The process delayed procurement, since parts were bought from

many sources, but proved worthwhile because the parts could be sourced either from the

actual manufacturers or from known alternative suppliers. These reputable alternative

suppliers provided generic spare parts at a significantly reduced price. For example,

operating theatre bulbs were obtained for as little as a quarter of the equipment

manufacturer’s cost. Contactors and battery packs from general suppliers showed similar

price differences.

As the regulations and procedures of external support agencies may result in
inappropriate equipment, you should take the steps shown in Figure 9.

Fortunately, the World Health Organization (WHO) and the World Council of
Churches (WCC) have developed guidelines that aim to help both external support
agencies and their potential recipients to understand one another’s needs (see
Annex 2). The aim of the guidelines is for donations to be appropriate, and they
cover both equipment purchased using aid agency grants, and gifts of equipment.
Annex 6 provides a summary of the strategies to pursue for both recipients and
providers of such support.

It will be useful to develop your own guidelines on relationships with external
support agencies – some form of donor regulations (Section 2.1). To do this, you
could adopt or modify the internationally available guidelines.

3.3.2 Equipment purchases using funds from external support agencies

72

Figure 9: Strategies to Reconcile External Support Agency Rules and Your Aims

for Equipment

3.3.2 Equipment purchases using funds from external support agencies

73

Strategy Considerations

Investigate different external
support agencies

Check if their rules will affect
the type of equipment you can
choose

Try to re-negotiate their support

• What goods are different agencies willing to fund?

• What procurement method are they likely to prefer?

• Is the funding tied to the purchase of specific brands from
specific countries?

• Will their purchasing regulations and procedures mean that
you are unlikely to be able to select equipment according to
your own ‘good selection criteria’? (Section 3.2)

• Are these restrictions acceptable for the type of equipment
being purchased, or do you need to request a waiver (an
exemption) from one or more of their regulations?

• Will they accept waiver requests for any of their regulations?

• Discover this before you submit your request for funding.

• Is the external support agency willing to respect the health
facility’s or country’s need to standardize?

• Will the external support agency finance a package of inputs
together with the equipment hardware, to help keep it
functioning for a period of time?

• Can the purchase of equipment be coupled with the
commitment of funds to keep the equipment in running order
for the long-term (for example, support for a national
HTM Service)?

• Is the external support agency willing to redirect funding to the
purchase of different products, which won’t be so badly
affected by their regulations?

Link the right product to the right
procurement method and
external support agency

Try to improve the evaluation
of products

• Which funding source could be used for which type of
equipment?

• Would it be better to decline the funds rather than accept the
wrong equipment item? Be aware that equipment failure may
be attributed to the fault of the user rather than the supplier.

• What alternative funding solutions are there?

• Which funding solutions use procurement methods other than
international open tenders?

• Have you developed your own product selection criteria
(Section 3.2 and Annex 3)?

• If using a quotation-based method, have you used the criteria
in a scoring matrix when evaluating quotes (Section 6.3)?

• If using a tender process, have you stated the criteria in your
tender document (Section 5.5.2) so that all bidders are aware
of how you will be judging the bids from the start?

3.3.3 Donations of Equipment

Occasionally, external support agencies may choose to provide you with equipment
itself, rather than funds. This equipment may either be purchased by the agency
(with or without any input from you), or existing equipment may be supplied.

Many items of equipment may be chosen and donated (supposedly free of charge) by
external sources, charities, or individuals. Donations can range from a single piece of
equipment to projects that provide substantial packages of equipment. In most
cases, equipment will be supplied as new, though second-hand equipment is
sometimes donated (Section 3.4).

Donations may be made as a result of a genuine desire to help, as a direct response
to a request, or to secure financial gains for the donor (such as tax deductions). While
donated goods are obviously an attractive proposition, you need to think carefully
about all the advantages and disadvantages before accepting them.

The issues you need to consider include:

◆ What will it cost?

Are there any hidden charges, such as paying for customs clearance, storage,
insurance and transport?

◆ Is it appropriate?

Is the equipment suitable for your health facility? Does the proposed equipment
fit in with your health priorities and purchasing policies?

◆ Do you have the skills?

Are the necessary staff in place to install, operate, and maintain the equipment?
Are staff suitably qualified or is additional training required?

◆ Is it sustainable?

Does the proposed equipment require consumable items? Are such items
available for a reasonable cost? Will it be supplied with a ‘support package’ of
aftersales support and maintenance?

◆ Why am I being offered it?

Is the proposed donation regarded as a disposable piece of equipment due to
difficulties in maintenance, obtaining spares, etc? If the donated equipment is
second-hand, is it in danger of becoming obsolete in the foreseeable future, due to
lack of parts, manuals or servicing support?

3.3.3 Donations of equipment

74

Country Experience

One country was donated a new hospital building with operating theatres, intensive care

unit, wards and radiology department. Equipment from the donor country was provided,

much of which was substandard, and did not conform to the receiving country’s standard

specifications.

In 2001, another country received a donation of 70 used dialysis machines. The machines

were five different models from three different manufacturers and were supplied without

water treatment plants, manuals and some accessories. Two years later, none had been

commissioned.

A study in 1994 in Ghana discovered that half of the equipment found to be unusable in the

Western Region was originally donated.

In Zambia, some equipment donated to the Ministry of Health, such as doppler units and

suction pumps, proved to be unreliable and unpopular with users.

Some African countries have found that donated mobile clinics and maintenance units in

practice take more than a year to get into running order.

In Vanuatu, sterilizers were donated but lack of adequate water pressure and hard water

resulted in regular failures. An electric nebulizer was donated to a health centre that had no

electricity. Also, a container-load of bed and wheelchair parts was sent in the hope that some

would be usable – it created a large disposal problem instead.

In one country, a private individual donated an electro-surgical unit to a health facility in

gratitude for good treatment. The unit was built for the US power supply (110V) rather than

the local power supply (220V).

A decommissioned military base supplied six advanced ventilators to Nepal without their

external gas flow sensors. As the hospitals could not afford these accessories, the ventilators

could not be used.

3.3.3 Donations of equipment

75

In certain circumstances, you may feel it more appropriate to refuse donations. While
it may feel awkward to do this, there is little point in accepting donations of
equipment that are inappropriate to your needs. If in any doubt about whether to
accept a donation or not, it will be useful to refer to:

◆ the ‘good selection criteria’ outlined in Section 3.2

◆ the summary guidelines for recipients and providers of donations (see Annex 6)

◆ the WHO and WCC donation guidelines (see Annex 2).

If you decide you would like to accept such support, you can submit a request for
funding to the external support agency. Annex 6 provides an example of an
Equipment Donation Request Form.

Tip

•

Remember, donated equipment should be treated the same as if it were purchased.
This means it should be registered and authorized for use in-country, and should be
entered onto the equipment inventory and into the stock control system (Section 8.4).

3.3.4 Leasing and Leasing Type Arrangements

If you do not wish to buy equipment using your capital budget, you may choose some
form of leasing arrangement, which uses funds from your recurrent budget instead. If
you choose to do this, you need to weigh up carefully the costs and benefits. You
must also check whether such arrangements are legal and approved by national
authorities or your central management body.

There are two basic forms of leasing:

◆ Leasing: this is the straightforward hiring of equipment. In this case, the leasing

organization retains ownership of the item and is also responsible for the
maintenance, repair, and updating of the equipment. The lessee (in this case, the
health facility) has possession and use of the equipment until such time as the
lease contract runs out.

◆ Leasing type arrangements: this enables equipment to be acquired

immediately but permits the cost to be spread over a period of time. Examples of
leasing type arrangements include deferred payment (deferred purchase), hire
purchase (paying by instalments), lease to buy, and sale and leaseback (when you
sell something to release funds in order to rent something else).

Few of these schemes are likely to represent value for money, and such schemes
should not be entered into simply as a means of avoiding current cash limit restraints
or shortages of capital.

If you are planning to lease, carefully examine the terms and conditions of the contract,
especially with regard to such aspects as limitations on the use of the equipment, and
responsibilities for its insurance and maintenance. Box 13 lists some of the key issues.

3.3.4 Leasing and leasing type arrangements

76

BOX 13: Advantages and Disadvantages of Leasing/Leasing Type Arrangements

Advantages Disadvantages

◆ Provides certainty as costs are known

in advance.

◆ Reduces the need to tie up capital

funds in fixed assets.

◆ Enables the suitability of equipment

to be assessed over a pre-determined
trial period.

◆ Sometimes enables you to obtain

equipment or material that is hard
to purchase.

In practice, the issue of whether to lease or buy is complex, and depends on
operating, legal, and financial considerations.

3.3.5 Research and Demonstration Models

Some manufacturers provide research models to chosen facilities
for the purpose of testing their performance under real
conditions before large-scale production is undertaken. The
product must still comply with international safety standards.
Occasionally manufacturers try to sell equipment that they say is

pending approval from authorities such as the Food and Drugs
Administration (of the USA). For example, in one case a manufacturer attempted to
sell ventilators pending FDA approval. The sale was refused, and the customer later
learned that FDA approval had been withheld.

Demonstration models can be regarded as second-hand

equipment (Section 3.4), but they usually come with full

documentation and warranty.

You should accept research and demonstration models only

under strict conditions and using the following criteria:

◆ The equipment has been officially tested and approved by an

independent authority.

◆ It conforms to international manufacturing safety standards such as IEC 60101 for

medical and electrical equipment, ISO 5358 for anaesthetic equipment, etc, or
national equivalents (see Annex 4).

◆ The equipment remains the property of the supplier.

3.3.5 Research and demonstration models

77

◆ A fixed obligation is created to pay rental from your

recurrent funds.

◆ The flexibility to dispose of obsolete equipment before the

end of the lease may be reduced.

◆ Doesn’t provide ownership.

◆ Agreements are one-sided. When leasing, if something goes

wrong most risks are transferred to the lessee (for example,
loaned items must be replaced if damaged). Under leasing type
arrangements, although most of the risk remains with the owner
of the equipment this has to be paid for in the rental price, and
additional costs will be incurred, depending on the contract
terms, if a leased item is misused or otherwise damaged.

Research models

pieces of equipment still under

development that are not yet

available on the market.

Demonstration models

pieces of equipment that are

used by manufacturers for the

purpose of demonstrating them

to potential buyers.

◆ The supplier bears the running costs incurred (for example,

accessories, consumables).

◆ The supplier will be responsible for any subsequent litigation arising from using

the equipment on patients.

◆ You are not responsible for the loss or damage of the equipment.

◆ You obtain the consent of the patient or patient’s relatives before using the

equipment on the patient.

3.4 WHETHER TO OBTAIN NEW OR SECOND-HAND
EQUIPMENT

Obtaining used equipment from dealers, auctions, specialist
suppliers or by direct purchase from a previous owner may be an
alternative to buying new. However, if you choose to take this
option, you need to check that your financing source allows it.
Many international aid agencies and financial institutions do not
allow the purchase of used equipment. Some countries also have

a policy of not buying used equipment (though they are often
not in a position to refuse donated used equipment). Important indicators for used
equipment are the reliability of the supplier and the offer of a warranty.

Some companies (such as Philips and GE) offer factory refurbished equipment
that can be an excellent option for buyers with limited funds. Refurbished
equipment normally comes with a one-year standard warranty and a commitment
to supply spare parts for several years.

Second-hand equipment is usually bought by small charities and non-government
health facilities. Often, second-hand equipment is also donated to facilities.
Whether bought or donated, you need to check that second-hand equipment is legal
and approved by your national authorities. Box 14 shows some of the key benefits
and dangers.

3.4 Whether to obtain new or second-hand equipment

78

Second-hand equipment

previously used equipment,

some of which may have been

refurbished (reconditioned,

rebuilt) to return it to good

working order

3.4 Whether to obtain new or second-hand equipment

79

BOX 14: Advantages and Disadvantages of Second-Hand Equipment

Advantages Disadvantages

◆ Often reduces the cost substantially

(on average between 40 and 80 per
cent of new equipment costs).

◆ May be more readily available.

◆ When reconditioned or rebuilt, may

have a long life and be protected by
guarantees or warranties.

◆ May be economical to buy when it

would not pay to acquire new.

◆ May be compatible with others

already in use, thus reducing the cost
of holding stocks of spare parts and
consumables.

◆ Can have problems linked to age and lack of spare parts,

consumables, manuals, or servicing support. Although some
organizations repair second-hand goods to improve their
lifespans, many do not.

◆ Risks are bigger and you may have less protection if anything

goes wrong. Used goods are sold as they are, meaning they are
not always perfect. The supplier takes no responsibility if the
faults are obvious when you make your purchase and you
cannot expect a refund or compensation. You can only ask for
your money back if the equipment does not do the job you
bought it to do.

◆ May be less reliable, last for a shorter period of time, and

require more maintenance than new equipment.

Country Experience

Many health service providers have successfully purchased second-hand goods from

organizations that refurbish equipment (such as Dentaid or ECHO). Such reputable

agencies recondition and restore equipment to its original working condition for the purpose

of resale. The equipment is supplied together with the necessary manuals, accessories,

stocks of consumables, stocks of spare parts, and aftersales support.

Second-hand equipment requires particular care. As a buyer you should try to satisfy
yourself as to the condition, type, make, model and year of the item being supplied,
rather than relying on the seller. However, we recognize that this is difficult if you
are a long distance from the supplier. Figure 10 provides you with some questions to
ask which can help.

Remember, in some countries it is against the law for anyone to sell dangerous
electrical goods. If you are buying or receiving second-hand equipment, carry out
your own checks for any faults before you accept it (Section 8).

Tip

•

It may be more cost-effective to buy new equipment rather than second-hand
equipment which only has a limited life. If in any doubt, compare the costs of new
and second-hand equipment before buying and, if there is not a significant
difference, choose the new.

•

Remember that second-hand equipment should be treated as if it were new. This
means it should be registered and authorized for use in-country, and should be entered
onto the equipment inventory and into the stock control system (Section 8.4).

Figure 10: Questions To Ask if Buying or Receiving Second-hand Equipment

3.4 Whether to obtain new or second-hand equipment

80

Factors Questions to ask

• Is there any indication of age, such as a serial number?

• How much longer will the equipment last?

• Is a history of the equipment available?

Age and condition

• Does it come with all the essential spare parts and
accessories to function as designed?

• Does it use readily available consumables?

• Is it broken, obsolete or outmoded?

• Has it been exposed to extreme climate or extremely heavy
use?

Reconditioned or rebuilt

Safety and performance

Technical literature

Equipment-related supplies

Maintenance and repair

Delivery and installation

• What is its new estimated lifetime?

• What safety standards now apply?

• Has it been fully tested and calibrated?

• Will it be supplied with installation and user instructions, service
and repair manuals?

• Are at least two years supply of the consumables, replacement
accessories, and spare parts required for its function included?

• Will the supplier be able to continue to provide accessories,
consumables and spare parts for the future life of the item?

• Will you be able to source them locally or easily?

• What after-sales support will the supplier provide?

• Will the supplier be able to continue to provide technical
support and maintenance for the future life of the item?

• Will service support be available locally?

• How long will it take from placing the order to receiving the
item?

• What will be the cost, where appropriate, of dismantling,
transporting and re-connecting/installing the equipment?

Training

Terms and conditions

The vendor

• Will staff have to be trained to use the equipment or are they
already familiar with it?

• How does the price asked for compare with the cost of buying
a new model?

• What special terms and conditions, if any, apply to the
purchase?

• Do any guarantees or warranties supersede the protection
given under the Sale of Goods Act?

• What trials, tests or approval period will the vendor allow?

• Are they a well-established company?

• Have they a sound reputation?

Section 3 summary

81

BOX 15: Summary of Issues in Section 3 on How to Decide When and What to Procure

Health Service
Provider, and
Health Management
Teams (at all levels)

HTM Working
Groups and
Procurement Units
(at all levels)

HTM Working
Groups

Procurement Units
and Procurement/
Tender Committees

Health Service
Provider

Health Management
Teams (at all levels)

Procurement Units
(at all levels)

Ways to Obtain Choice Issues Why Procure?

◆ ensure that equipment planning and budgeting takes place, and that the

planning ‘tools’ required to help decide why and when it is necessary to procure
equipment are available, such as:

- an equipment inventory (see Guide 2)

- a maintenance record system (see Guide 5)

- a stock control system (see Guides 4 and 5)

- purchasing, donations, replacement, and disposal policies (see Guide 2)

- an Equipment Development Plan (see Guide 2)

◆ ensure these planning ‘tools’ are used to develop expenditure and financing plans

for all equipment needs, as follows:

- the long-term Core Equipment Expenditure Plan and Core Equipment
Financing Plan (see Guide 2)

- various annual action plans and the annual budget drawn from them (see Guide 2)

◆ use these annual plans to ensure that equipment is purchased for the right

reasons, in the right order of priority, and for which funds are available

◆ detail the ‘good selection criteria’ to employ when selecting equipment and

supplies, according to the Purchasing and Donations Policy, and taking into
account all factors relevant to the location, size, skill-level, and aims of the health
facilities concerned (see Annex 3)

◆ use the ‘good selection criteria’ when evaluating offers and deciding what items

to purchase (Section 6.3)

◆ develops guidelines for negotiating with external support agencies in order to try

and obtain appropriate equipment (see Annex 6)

◆ decides whether the leasing, renting, or hiring of equipment will be allowed

◆ decides whether research and demonstration models will be allowed

◆ consider the different ways of getting equipment when developing the Core

Equipment Financing Plan and income portion of the annual budget

◆ negotiate with external support agencies in order to identify the best type of

funds for each type of equipment purchase (see Figure 9)

◆ procure according to the rules for each of the different ways of obtaining equipment:

- national rules for government funds

- own health service provider’s rules for own funds

- external support agency rules for external funds

- negotiations for donations

- terms for leasing

◆ decide which of the above ways you will use to obtain equipment on the basis of

appropriateness of product, usage rate, costs for purchase, operational costs,
lifespan, life-cycle cost, and availability of alternatives locally and regionally.

Box 15 contains a summary of the issues covered in this Section.

Continued overleaf

Section 3 summary

82

BOX 15: Summary of Issues in Section 3 on How to Decide When and What to Procure

(continued)

Health Service
Provider

HTM Working
Groups and
Procurement Units
(at all levels)

New or Used?

◆ discover whether national regulations allow for the import of either used or

refurbished goods

◆ decide whether the purchase of used items will be allowed for the health service,

and under what circumstances

◆ decide whether the purchase of refurbished items will be allowed for the health

service, and under what circumstances

◆ if allowed to purchase either used or refurbished equipment by central

authorities, always investigate carefully the advantages and disadvantages before
going ahead (see Figure 10)

◆ always carefully commission and safety test this equipment before accepting it

(Section 8)

4. HOW TO DECIDE ON THE WAY
TO PURCHASE

Why is This Important?

Whenever you purchase equipment, you need to decide the best model of
procurement to use (for example, whether to purchase by yourself or collec­tively). You also need to decide upon the most appropriate purchasing
method, and the types of suppliers to approach. Such planning will enable
you to make efficient use of resources, and ensure that any equipment you
buy is appropriate to your needs and is of the right quality. It will also enable
you to work within the appropriate timescales.

Your purchasing decisions will be interlinked with the activities we have
already described in Section 3 on how to decide when and what to purchase.
Your purchasing decisions will also affect the activities in Section 5 on how to
prepare for procurement.

There are various ways of purchasing equipment. You need to know the different
options available to you, so that each time you buy you can select the most
appropriate option. In this Section, we discuss the options open to you by looking
at the following:

◆ Determining your model for procurement (Section 4.1).

◆ Choosing your purchasing method (Section 4.2).

◆ Different types of supplier available (Section 4.3).

◆ Identifying suitable suppliers (Section 4.4).

4.1 DETERMINING YOUR MODEL FOR
PROCUREMENT

There are various models for procurement open to you, and the one you choose may
affect the subsequent purchasing method you need to use (Section 4.2).

Each time you wish to obtain equipment, you need to determine the appropriate
procurement body. This could be your Procurement Unit, the National Procurement
Unit, or an external support agency. Often, you will use various combinations of these
arrangements. For example, your health facility’s Procurement Unit might place
orders with local suppliers, while the national unit deals with international suppliers
(possibly operating through procurement agents and external support agencies).

4 How to decide on the way to purchase

83

Most equipment procurement (purchasing, leasing, and requesting donations) is
undertaken through one of five arrangements:

i. Centralized procurement – procurement takes place centrally, for example at

the national level.

ii. Group procurement – joint procurement by different health facilities, health

authorities (district, diocesean, regional), or health service provider organizations
(public or private).

iii. Decentralized procurement – health facilities or health authorities to which

authority has been decentralized procure equipment themselves, or health facilities
and health authorities with independent funds undertake their own procurement.

iv. Mixed procurement – a combination of centralization and decentralization,

whereby some parts of the procurement process are undertaken centrally and
others at district or facility level.

v. Using procurement agents – private companies are hired to handle procurement.

Centralized Procurement

Centralized procurement on behalf of many health facilities can be undertaken at
the central level of your health service provider organization, or at national level. The
unit responsible for procurement is often determined by the type of equipment to
be bought. Equipment may be procured, for example, through the Ministry of
Health, Ministry of Works, or Logistics Division (Section 3.3).

4.1 Determining your model for procurement

84

Ministry

Ministry

of Works

of Finance

Supplies

Department

Ministry

of Health

Health Service

Provider

Logistics

Division

government facilities non-government facilities