When suppliers make proposals to PHSA Supply Chain they will often include Value-Adds as part of their offering as a way of increasing the value of their proposal. Depending on the category, Value-Adds may form a significant portion of the overall value, financial and/or otherwise, of the supplier’s proposal. Supply Chain’s management of Value-Adds is designed to maximize the value to the health authorities, encourage creativity among suppliers and demonstrate complete transparency.
Value-Adds may take the form of cash rebates, no-charge product, educational support, Fellowship grants, discounts on other categories of products and services or discounts that offer increased value (such as growth rebates) to the customer. For some departments or programs who receive significant Value-Adds from suppliers, the Value-Adds essentially form part of the baseline department budget. Supply Chain recognizes that continuance of the Value-Adds is critical for the maintenance of their operations.
The following principles guide our approach to Value-Adds:
- Value-Adds proposed by suppliers will be converted to reduced product pricing where possible.
Value-Adds may remain directed and not converted to reduced product pricing when
- The proposed Value-Add aligns with previously determined priorities of the health authority to which the Value-Add is directed,
- The proposed Value-Add defers health authority expenditures that would have otherwise been funded by the health authority, and
- Conversion to reduced product pricing is either not possible or results in lower overall value to the provincial health system.
- To ensure that Value-Adds are appropriate, fill a need, deliver value and do not add costs elsewhere, Supply Chain and the supplier will negotiate the decision about which Value-Adds are to be included and where the Value-Adds are directed.
- All Value-Adds are declared, visible and accounted for. Supply Chain will make this information available to health authority administrations.
- All Value-Adds will be routed through PHSA Supply Chain and not delivered directly to clinicians, departments or sites.
- Supply Chain’s Request for Proposal (RFP) evaluation criteria recognize the value offered in supplier Value-Adds.
- Value-Adds that result from a provincial contract are considered a provincial resource.
- Value-Adds directed to a specific health authority, facility, department or program will have their value (as determined by Supply Chain) subtracted from that health authority’s share of other Value-Adds, rebates or savings distributed by PHSA Supply Chain to the health authorities. A health authority will not accept directed Value-Adds with total value greater than its share of the provincial amount.
PHSA Supply Chain is accountable for the negotiation, tracking and distribution of Value-Adds provided on contracts implemented by Supply Chain. Key stakeholders will be consulted on the appropriateness, relevance and preferred method of disposition. Suppliers will provide notification of all payments of cash Value-Adds and provision of non-cash Value Adds to Supply Chain to enable Supply Chain to track and follow-up on Value-Adds. Suppliers will direct cash Value-Adds to the attention of PHSA Supply Chain. Supply Chain allocates the total accumulated cash Value-Adds from contracts to the health authorities on a periodic basis.