Price vs Value: Getting 'bang for your buck' when it comes to medical device

For the sensible consumer, how you spend your money, be it on goods or services, is always an important consideration. Every customer wants ‘bang for their buck’ – but this is not as simple as spending and getting. The key differentiator of prudent spending is value. A broad definition of value generally centres around what something is worth and is thus easily interchanged with price. However, the two should not be confused: what a consumer pays for something, that is, its price and the value of an item are mutually exclusive concepts – and this is never truer than in medical devices.

With a plethora of new, low-cost options continually being introduced onto the medical devices landscape and the simultaneous increase in pressure on managing costs, it is easy to fall into the trap of procurement or selection based exclusively on price. Unfortunately, in this equation, the concept of value is completely overlooked, and nobody benefits; except of course the manufacturers of cut-rate impersonator products that barter on price alone and exclude all other value from their offering.

Expanding on the concept, the essence of value centres around a trade-off between the benefits a customer receives from a product and the price they pay for it. Evaluating procurement spend with value in mind is a critical strategic means for buyers to gain an advantage over rivals by purchasing with a broader mindset and not the simplistic view that the best feature of a commodity should be its low-price tag. And in the case of so-called commodity products – or those that appear to be fully substitutable with a lower cost alternative – be wary of falsely believing that benefit and utility are the same things.

The focus should extend beyond the utility of a product to some of the softer, non-technical features which are almost certainly excluded in low price substitutes. These include obvious aspects like reliability, service back-up, quality of supplier support, business continuity assurances, and the like. But is also includes further reaching and less associated aspects which are coming more sharply into focus – sustainability, manufacturing practices, corporate ethos and social responsibility investment in customer development, and leveraging wider strategic partnerships with suppliers.

In medical devices, the effects of short-term savings realized from low-cost procurement focus are yet to be felt and while cost containment is a critical success factor in health care this should never be prioritized over clinical outcomes or aspects of value that are inevitably linked to the well-being of all stakeholders.

It remains a complicated evaluation to find the balance between price and value but simply finding in favour of the lowest-priced item in a basket of options is a myopic methodology of procurement which will inevitably do more harm in the long run than what is saved on a price tag in the short-term. While the world has advanced in so many ways, the old adage that ‘cheap is expensive’ still rings true in today’s marketplace.