Translating Strategies into Tactical Actions: The Role of Sourcing Levers in Healthcare Procurement

Abstract

Expensive medical devices, especially in the areas of orthopedics, and cardiology, have a significant impact on hospital costs and the delivery of high-quality services. These medical supplies are known as physician preference items (PPIs), as they act as “surrogate buyers”—impacting the selection and sourcing of products. There is a gap between the purchasing strategy and the adoption of tactical activities for these complex medical supplies. In the context of the healthcare exceptionalism thesis, this research investigates how healthcare organizations can successfully adopt suitable sourcing levers aiming to achieve different purchasing results. This research conducts a multi-case study in 15 healthcare organizations in nine countries. Three new sourcing levers specific to the healthcare sector emerged, based on the healthcare exceptionalism thesis. It was possible to identify five main sourcing levers clusters. The fit between strategy and tactical level can be allowed by the implementation of suitable sourcing levers—facilitating the achievement of the desired objectives. Healthcare procurement practitioners should assess the fit between strategy and the tactical level by employing suitable sourcing levers. Organizations wishing to move towards a value-based procurement approach should adopt a set of supporting sourcing levers to enable this transition.

1. Introduction

The concept of sourcing levers has been employed across sectors to understand excellence in the purchasing process by applying appropriate sourcing strategies for different purchasing needs with associated market conditions [1]. Understanding such levers, especially in sectors that are challenged by escalating costs, is especially important. In industrialized countries, healthcare costs are rising, and purchasing is the second largest expenditure after wages [2]. Underway is an effort, across nations, to move from purchasing on the basis of cost to purchasing for value [3,4]. This should come as no surprise as medical supplies, including what are apparently commodity products like needles, face masks, and gloves, account for a significant portion of hospital expenses as they are consumed in large volumes across various departments. Specialty products, especially implants, which are associated with specific surgeries, are known as physician preference items (PPIs) and comprise up to 60% of the total budget for medical supplies [5]. Healthcare organizations have been striving to control the costs of these items, particularly in recent decades, due to technological advancements and increased demand from an aging population [6].

Sourcing levers are a set of activities that are implemented at the tactical level to achieve a purchasing strategy [1]. Sourcing levers differ from sourcing strategies since they translate the purchasing strategy into tactical actions [7]. Understanding how sourcing levers can be implemented to support PPI purchasing strategy within the constraints posed by clinicians is key to achieving both cost and quality goals for strategic medical devices. This study explores how healthcare organizations implement PPI sourcing levers to achieve the desired purchasing objectives. Building on the understanding that sourcing levers and their application cannot be used in isolation [8,9], we asked the following: how can healthcare organizations implement effective sourcing levers to achieve the desired PPI purchasing objectives?

Investigating the sourcing levers is an important element in highlighting the strategic potential of procurement in the healthcare sector since they translate the strategies into tactical activities. Sourcing levers pose a significant impact on the actions implemented by decision-makers to attain performance objectives [1]. This research contributes to the existing body of knowledge on healthcare purchasing by providing a new angle on the role of sourcing levers, considering the perspective of healthcare organizations. Taking into account the healthcare exceptionalism thesis [10,11] this study investigates how sourcing levers for PPI purchasing support reconcile different purchasing objectives. To do so we analyzed the purchasing practices for cardiology and orthopedics implants in 15 hospitals across nine countries facing similar healthcare challenges. We are particularly interested in investigating the network of healthcare procurement experts, in a broad sense, who share similar challenges regarding PPI purchasing. This network can be seen as a “domain of interconnected practices” [12].

A mix of organizations was included in this research, aiming to expand the possibility of detecting different sourcing levers. The goal was to select cases to highlight the differences between the research units and the specific environment in which healthcare organizations operate. This paper is structured as follows. Section 1 presents the theoretical background and the relevant literature on purchasing strategy and sourcing levers. Next, in Section 2, the methodological aspects of the study are described. Section 3 discusses the main results of the research, followed by a discussion in Section 4. Finally, Section 5 concludes the paper, summarizing the main insights, presenting practical and theoretical implications, and suggesting directions for future research.

1.1. Purchasing Strategies and Sourcing Levers

Purchasing strategy refers to the “set of rules that guide the configuration of the firm’s purchasing effort over time in response to changes in competition and the environment to permit the firm to take advantage of profitable opportunities.” [13]. Within the supply chain literature, there is a long-standing debate regarding the “strategy–tactics” relationship [14] and the need to better understand tactical work [15,16]. Needed is clarity, as undiscriminating use of the term [1] can hamper both research and practice. Purchasing strategies are best designed to meet the overall goals of an organization and extend to broad considerations regarding product sourcing and contracting—with tactics being linked to achieving the goals [17]. In the context of the healthcare system, where value to the patient is dominant, dimensions of a purchasing strategy and related tactics are frequently articulated around ways to achieve triple aim goals (cost, quality, outcomes). In this context, strategies are best thought of as the objectives pursued and tactics frequently associated with managing relationships with a wide range of stakeholders, especially clinicians and relevant suppliers [18]. The following section focuses on the nature of purchasing strategy and the importance of tactical levers to attain strategic goals. We then discuss the specificities of the healthcare sector and how they may impact PPIs’ tactical levers.

Strategy is defined as a certain pattern over time that implies a set of corporate decisions [19]. As the definition of purchasing strategy is rather fuzzy in academia [18], organizational strategic objectives should be used to determine the purchasing strategy, since it is used to support the corporate strategies [20]. This is in line with the perspective of Hesping and Schiele [7] in which the purchasing strategy is understood as the approach adopted to achieve the organizational and associated purchasing department objectives.

“Tactical” sourcing levers are used to implement the strategy by deploying a set of sourcing activities considering a set of purchasing objectives [8]. Our framing of the research draws upon the work of Hesping and Schiele [1], which provides a classification of sourcing levers into seven categories (

Table 1. Sourcing levers.

Sourcing Levers	Description
Volume bundling (VB)	Consolidation and volume leverage
Price evaluation (PE)	Focused on price goals, and cost structure
Extension of supply base (EXT)	Increase the number of suppliers
Product optimization (PODOPT)	Modifying/improving products and materials
Process optimization (PROSOPT)	More efficient and effective processes with suppliers
Optimization of supply relationships (OSR)	Developing and maintaining effective buyer–supplier relationships
Category-spanned optimization (CSO)	Orchestrating trade-offs among sourcing categories

): volume bundling (VB), price evaluation (PE), extension of the supply base (EXT), product optimization (PODOPT), process optimization (PROSOPT), optimization of supply relationships (OSR), and category-spanned optimization (CSO). Each individual sourcing lever includes a set of activities that are conducted to improve the sourcing performance [21].

In the healthcare sector, volume bundling/consolidation of spend within and across aligned organizations and with the support of group purchasing organizations has facilitated economies of scale for buying supplies [22]. Yet this can be hampered in the face of physicians’ preference, within a hospital, for different suppliers [23,24]. Succinctly, product selection and optimization in the healthcare sector, distinct from prior to sourcing concerns related to technology analysis for new and innovative products [25], is characterized by purchasing products that clinicians consider to be acceptable, if not preferred in the healthcare sector and for innovative products [26,27].

Consolidation challenges put aside, price evaluation considers the analysis of cost structures within the context of product characteristics and contribution to care. It is important to move away from the unit price mindset to a total cost of ownership approach. Total cost of ownership includes all costs incurred in the purchasing process, such as those associated with contract implementation and logistic issues, among others [28]. Healthcare organizations increasingly consider this approach since the purchase of PPIs may require training for a new medical device, acquisition of peripheral materials, time consumed in utilizing the product in the course of practice, and different rates of failure, requiring revision surgery. The latter is especially important in countries where there is no reimbursement for revision surgeries.

Process optimization considers the interactions between suppliers and healthcare organizations. Optimizing processes can provide more timely and cost-effective procurement of medical supplies [29]. Consignment, centralized supply systems, and inventory control are examples of process optimization between suppliers and hospitals [30].

As these are expensive items, procured in a complex dynamic interaction with different stakeholders, it is important that the procurement department work in partnership with both internal stakeholders and suppliers [22]. Given the aforementioned strong preferences, physicians may bypass the purchasing department decisions and work directly with the supplier representative [2]—thus undermining efforts by the supply chain to engage with clinicians to achieve consolidation. The physician–supplier bond is intensified as some suppliers provide financial and non-financial incentives to physicians, such as visiting the operating room to provide guidance during surgeries and offering financial resources to physicians.

Balancing costs with other conflicting trade-offs can be challenging. For example, in the face of conflicting purchaser and supplier financial goals, providing medical items that result in value added to the patients and, at the same time, lowering the costs associated with the purchase of those items is complex [3]. This is a challenging goal to achieve, especially in the absence of comparative effectiveness information, which is critical for assessing the value of many PPIs [2]. While organizations such as the National Institute for Health and Care Excellence (NICE) in the U.K. and ECRI in the U.S. provide guidance for supporting the identification of equivalent products, the implementation of decision-making based on evidence, in the face of physician preference remains, for many healthcare systems, difficult. Regardless, the purchasing department plays a key role in orchestrating different and competing trade-offs.

Within this study, the results of the procurement process are analyzed concerning two dimensions: value-based purchasing and factors associated with total cost of ownership (TCO). The concept of TCO goes beyond the price of the item purchased, including the associated costs with that acquisition [28]. In the health sector, a TCO focus can support efforts to implement value-based purchasing with suppliers committed to products with better outcomes for patients.

1.2. Health Sector Exceptionalism and PPI Purchasing

While some sourcing levers may be universal, they require alignment with the nature of the industry. The healthcare sector has been depicted by its unique characteristics—referred to as “exceptionalism” [10,11]. These characteristics have a considerable impact on the definition and the implementation of the purchasing strategy, especially around PPIs [31]. The exceptionalism thesis was applied by investigating the specificities of the procurement process in the healthcare sector, with particular focus on PPI purchasing.

Purchasing physician preference items (PPIs) is a complex process due to the dynamic relationships between suppliers and hospitals [6]. Similar purchasing challenges exist outside of the healthcare context, highlighting the pressure faced by managers to reduce costs and meet specific preferences [32]. Physicians hold a significant role in the procurement process of PPIs as they have influence, if not control, over patient admissions and, depending on a country’s reimbursement system, the resulting income flows in healthcare systems [33]. Despite their influence, physicians may have disagreements with the product choices made by the purchasing department, which seeks to standardize products to achieve cost savings, thus adding complexity to the situation [17]. Although a collaborative buyer–supplier relationship is key to an effective purchasing strategy, in the healthcare sector, these relationships, especially for purchasing PPIs, have been characterized by a lack of trust [32]. Aligning the interests of suppliers, purchasing managers, and physicians is critical to balancing buyer–supplier relationship issues [34].

2. Methods

An exploratory approach is adopted in this research since it aims to explore a phenomenon that has not been investigated in depth [35]. This study takes a qualitative approach, utilizing semi-structured interviews with experts from healthcare organizations’ purchasing departments. The suitability of the interviewees was assessed by sending an e-mail asking about the characteristics of the procurement process regarding the design of the purchasing strategy and how it was operationalized in practice. Due to the exploratory nature of this research, we decided to include a set of countries with distinct health systems structures, aiming to obtain a wider mix of approaches to PPI management. Regardless of governmental immersion in the health sector, the hospitals investigated were directly involved in the purchasing decisions for PPIs. Most importantly, they actively deployed sourcing levers to support the purchasing strategies.

2.1. Interview Guide

A semi-structured interview guide was developed to collect data, providing flexibility in the discussion flow. It allowed for additional exploration of unforeseen questions based on the respondent’s answers [36]. The questionnaire was produced in French, English, and Portuguese to accommodate the diverse range of respondents sought. The interview guide consisted of five main parts: (i) organization description; (ii) purchasing management (at both the strategic and tactical levels), including purchasing objectives, process stages, stakeholders involved, selection criteria, (iii) reconciling physician and patient interests, (iv) supplier relationships and product nature, (v) key lessons of PPI purchasing. The questionnaire is available in the Appendix A.

2.2. Respondent Selection

The recruitment of our respondents was carefully planned, and a recruitment screening was performed. The principal inclusion criterion was the presence of PPI purchasing. We purposively selected a mix of hospitals, as we searched for distinct types of successful purchasing strategies. Purposive samples are commonly used in qualitative research aiming to identify and select the right cases that can provide in-depth information [37]. Across different organizations, people from distinct title positions were interviewed (i.e., category manager, procurement manager, materials manager). Within countries, the organization selection criteria were the following: (i) hospitals with a surgical center, (ii) hospitals that had a purchasing department, (iii) hospitals that presented a structured procurement process and, of course, (iv) hospitals involved in the procurement of PPIs.

The choice of respondents within the selected hospital systems was conducted carefully, as it was necessary to recruit people who were more familiar with the phenomenon studied. These respondents could provide insights into challenges related to physician choices, the supplier market, and the purchasing strategy.

Table 2. Respondent descriptions.

Respondents	Country	% GPD Healthcare	Number of Hospitals	Nature of the Products	Nature of the Healthcare Sector	Function
CAN1	Canada	11.7%	1	Cardiac stents	Public	Innovation director
CAN2			22	Cardiology implants	Public	Procurement manager
CAN3			11	Angio radiology	Public	Procurement manager
USA1	United States	17.8%	28	Vascular grafts	Private	Materials manager
USA2			6	Spine metal fix	Private	Category manager
USA3			3	Cardiovascular Implants	Private	Category manager
BEL1	Belgium	11.1%	1	Orthopedic surgery	Mostly Public	Procurement manager
BEL2			7	Pacemakers	Mostly Public	Procurement manager
FRA1	France	12.4%	150	Orthopedic prosthesis	Mostly Public	Procurement manager
FRA2			5	Rhythmology devices	Mostly Public	Procurement manager
ENG	England	11.9%	342	Orthopedics, Hip joints and Knee joints	Public	Procurement manager
DEN	Denmark	10.8%	10	Orthopedics, Knee implants	Public	Procurement manager
NOR	Norway	10.1%	20	Pacemakers	Public	Project manager
NEW	New Zealand	9.7%	14	Pacemakers	Mostly Public	Procurement manager
BRA	Brazil	9.6%	1	Orthopedics, and cardiology	Public	Procurement manager

summarizes the main characteristics of the participating organizations which purchased items such as cardiovascular implants (e.g., pacemakers, cardiac stents, vascular grafts) and orthopedics implants (e.g., spine metal fix, hip and knee joints). The number of hospitals within the system varied among the participants, and a mix of products under two categories was selected to provide diverse insights. While orthopedics products might present higher variability in product characteristics compared to cardiologic devices, they present similar challenges regarding the purchasing process (e.g., high costs, strong physicians’ preferences, increasing technology development, and associated services). The challenges associated with PPI purchasing provided the basis for the choice of these categories of medical devices—being all relevant from a management perspective.

2.3. Data Collection

Data was collected between December 2019 and the end of August 2020 through interviews lasting 60 to 90 min. Respondents received the interview guide in advance to familiarize themselves with the questions and be better prepared. In one case, a written questionnaire had already been answered, enabling targeted follow-up during the interview. All respondents were willing to be contacted again for clarification if needed. Diverse sources of information were used during the data collection. The interviewees provided access to documents and PowerPoint presentations regarding their purchasing process, the institution’s websites were carefully researched, and the interviewees allowed us to check for further information after the interviews were conducted. The analysis also returned to the literature in order to compare the points of view with the assertions made in other studies. The number of organizations included in this study was determined by the point at which data saturation was reached [38].

2.4. Data Analysis

The interviews were recorded and summarized. Data analysis followed the coding strategy by Miles, Hubermann [39], with two researchers coding respondents’ answers. A mix of deductive and inductive coding was used, allowing room for codes to emerge from the collected data [40]. The coded information was organized in matrices, with one axis representing respondents and the other axis presenting research topics. The initial matrix grouped general information, and subsequent matrices contained intersected information from the initial matrix, helping manage and connect data. Detailed summaries were generated, and observations were validated through careful record review. Data analysis was also performed by both deductive and inductive coding. Some categories were derived from literature, while other categories, as is common in qualitative research, emerged from the data. This approach was chosen aiming to include categories that were not considered in the literature, considering the specificity of the healthcare sector.

Table 2 presents a mix of public and private nature in the countries studied. All respondents reported challenges in managing PPIs. The aim of data analysis, a core precept of qualitative research, was to reduce or accentuate the differences between the cases and uncover levers not previously reported [41]. Internal validity was ensured by mainly investigating which are the significant components of the patterns that emerged, and what mechanisms created them [42]. Reliability was ensured in this study by achieving greater consistency. It was implemented through data triangulation, which was used as a means to compare the distinct structural levels of the same system [35].

3. Results

This section discusses the results obtained from different healthcare organizations investigated. The first part of the results explores the main characteristics of each organization regarding sourcing levers, and the main features of the procurement process are explored. The clusters were developed using a combined deductive and inductive coding approach, drawing from existing theories and patterns emerging from the empirical data [43]. Sourcing levers were identified by examining procurement practices, purchasing strategy deployment, and stakeholder dynamics. Clusters were formed based on the co-occurrence of sourcing levers and the degree of alignment between their adoption and purchasing strategy. A qualitative pattern recognition process, supported by iterative coding, ensured analytical robustness [39]. Following this, the results are discussed aiming to reflect the sourcing levers used to support the purchasing strategy.

3.1. Description of the Sourcing Levers

The sourcing levers were generated based on the aforementioned study by Hesping and Schiele [1], which classified sourcing levers into seven categories. Our study builds on previous literature through the application of the exceptionalism thesis in the healthcare sector. This procedure consisted of analyzing each step of the procurement process and identifying elements that can support the translation of the strategy into tactical activities that are specific to the healthcare sector. The description of the sourcing levers can be found in

Table 3. Description of Sourcing levers.

Sourcing Levers	Description	Enhancement Thesis Related
Volume bundling (VB) *	Consolidation and volume leverage	Specified in procuring through GPOs (group purchasing organizations)
Price evaluation (PE) *	Focus on price goals and cost structure	Specified in limiting physicians’ choices to achieve cost-containment
Product optimization (PODOPT) *	Modify/improve products and materials	Specified in patient-centric and value
Process optimization (PROSOPT)*	More efficient and effective processes with suppliers	Specified in collaborating with suppliers and services provided
Optimization of supply relationships (OSR) *	Develop and maintain effective buyer–supplier relationships	Specified in effectively engaging the supplier in the procurement process
Category-spanned optimization (CSO) *	Orchestrate trade-offs	Specified in orchestrating costs and value
Pre-purchasing activity (PPA) **	Prepare the procurement process	Conduct a detailed analysis of the procurement needs and requirements and the supply market
Quality meeting requirements (QMR) **	Engage internal stakeholders and meet requirements	Standardization procedures to manage the physicians’ preferences
Maintaining the supply market (MAT) **	Ensure the availability of supplies	Consider the continuity of the medical supplies and the services provided

* Hesping and Schiele [1] categories. ** Emergent categories.

. Three new sourcing levers emerged from the data analysis in the procurement process: pre-purchasing activities (PPA), quality and meeting requirements (QMR), and maintaining the supply market (MAT). The healthcare-specific sourcing levers are discussed in the following paragraphs.

Pre-purchasing activities (PPA) is identified as a sourcing lever that aims to prepare the procurement process before it starts. The unique complexity of the stakeholders’ dynamics regarding procurement decisions requires a detailed analysis of the procurement requirements and the supply market conditions. This sourcing lever is specific to the healthcare sector as it aims to support the purchasing strategies by ensuring the alignment between procurement decisions and the internal stakeholders’ requirements. Activities conducted in this sourcing lever include value analysis, category management, spend analysis, and supply market consultation, among others [44]. For example, DEN developed category management, which involved patients in a group process and consultation, among other initiatives to prepare the procurement process. A procurement manager highlights this affirmation: “Before the procurement process starts we develop a detailed category management for each product. Then, we study the supply market to make sure we find the best supplier to deliver the solution we are looking for each product” (Procurement manager, DEN).

Quality and meeting requirements (QMR) represent a sourcing lever that aims to establish consensus among the stakeholders and prevent maverick buying. It consists of designing appropriate approaches to ensure that the medical supplies meet the quality and service levels required. It also prevents physicians from conducting maverick buying practices by allowing physicians to express their choices of PPI from a list of pre-qualified suppliers, or by establishing spending limits for each product. In turn, the overall procurement costs can be reduced, and most importantly, it ensures that the purchasing strategy will be adopted in practice. This sourcing lever also ensures that physicians and other relevant stakeholders are engaged early in the procurement process to allow consensus regarding decision-making. The following quote supports this statement. “Standardizing is very difficult, because physicians have school habits. There is a medical-pharmaceutical committee for medications and a similar committee for materials. If the physician wants to use a new prosthesis they need to discuss it with the committee, because they need to approve it first” (Procurement manager, BEL1). We note here that the value analysis process involving physicians can be identified in both the PPA and QMR categories—a factor key in the exceptionalism theme regarding physician dominance.

Maintaining the supply market (MAT) emerged as an important sourcing lever to PPI purchasing, replacing the traditional sourcing lever of “expanding the supply market”. The adoption of this sourcing lever aims to ensure the availability of supplies and the services associated with PPI purchasing. Organizations within a small supply market do not have the option to expand their supply base because they are dependent on suppliers’ services, such as training for example. Therefore, these healthcare organizations are dependent not only on the products manufactured by these suppliers but also on the services provided by them. The importance of this sourcing lever becomes more evident when the suppliers available in the supply market that can provide specific services are scarce. A respondent from NEW pointed out: “New Zealand is a small country, so it is not thousands of suppliers… you want to keep the vendors because New Zealand is small. If some of the vendors are not locked in a long contract, they just leave and don’t come back, they go to America” (Procurement manager, NEW).

Product optimization (PODOT) is represented by developing innovative products and solutions with suppliers. Organizations that present this sourcing lever are looking for long-term gains and better clinical outcomes by procuring improved medical supplies. Clinical outcomes are generally stated in an agreement, including clauses for addressing failures and readmission for revision surgery. Organizations that have an outstanding PODOT sourcing lever tend to pursue improved clinical benefits to the patients through making better purchasing decisions, and they also present clinical indicators to keep track of the suppliers’ performance. For example, DEN not only evaluates suppliers’ performance according to the different medical supply categories but also includes performance/outcomes data such as the patient’s average time of hospitalization, patient readmission rate, and patient revision rate. Likewise, the innovation director of CAN1 explained: “What we are really interested in the outcomes… we try to explain to suppliers what a good outcome would look like, and what a good technology would look like” (Director of Innovation, CAN1).

Optimization of supply relationships (OSR) involves working closely with suppliers and engaging in discussions to provide a solution or improvement to the supplies acquired. The relationship with suppliers is focused on improving the procurement process and engaging the supplier in the early stages of the procurement process. As an example, CAN1 conducts an innovative procurement process in which the healthcare organization invites suppliers through a public mechanism called competitive dialog to discuss what kind of products suppliers can offer and mainly what outcomes suppliers can provide. It involves an extensive discussion with suppliers to assess product-related outcomes and select the most suitable supplier in terms of solutions aimed. The following quote brings evidence of the use of this sourcing lever: “The first step is the request for information meetings, we engage with suppliers we have. We bring a subject matter for the expert panel, we dialogue with our product leadership group with and a couple of other physicians that are part of the process. Then, we send the request for proposal strategy to suppliers and we spend the following weeks on the analytics phase of it, when we look at their responses” (Materials manager, USA1).

Process optimization (PROSOPT) aims to improve existing processes with suppliers. Collaboratively working with suppliers is critical to PPIs purchasing as they can provide more effectiveness. For example, organizations from the United States implemented consigned inventory management in order to obtain a more effective procurement process. CAN3 seeks to assess the capabilities of the supplier to deliver services such as inventory management. On the same line, the following quote of USA2 describes the focus on improving the supply processes: “Around 60% to 70% of our PPIs are in consignment. We have an entire team in logistics and operations for the supply chain. We had a system that we were doing inventory and cycle counts and we changed to a system that is more accurate. Our organization is also trying to develop a digital supply chain platform, in which information is quicker and up to date” (Category manager, USA2).

Category-spanned optimization (CSO) involves the employment of a rationalized mix of different sourcing levers to achieve purchasing goals. It is evident that organizations need to observe the budget dedicated to PPI purchasing while pursuing innovation. Thus, these organizations must orchestrate sourcing levers aiming to support the conflicting purchasing objectives. This is the case of NOR: “We track patients’ trends to purchase the right PPI, focus on the best treatment, and the contract is making that possible. We try to find the best results for the patients but also watch the costs closely” (Project manager, NOR).

Price evaluation (PE) is present both in the sourcing stage (cost criteria in the tender process and supplier selection) and in the contracting stage (negotiation with suppliers aiming to obtain lower costs). While considering the costs associated with the procurement process is important to all the organizations, some of them put more emphasis on it. Price is the main factor in supplier selection and contracting—an attempt to employ principles of the total cost of ownership approach. A procurement manager from BRA explains: “The suppliers that offer better prices are invited to send samples of their products. The physicians participate in the process examining the samples received from the best ranked suppliers. If the physicians approve a given sample, then the contract with the supplier is implemented. As we are a public hospital, physicians don’t have many options” (Procurement manager, BRA).

Volume bundling (VB) allows price savings, generally through economies of scale by purchasing a high volume of medical items. This sourcing lever is often adopted through the use of GPOs. CAN3 works with a GPO to obtain the benefits from the economies of scale obtained and, consequently, lower costs: “We buy in bulk and we bring it in our company store…and that way our hospitals know they are buying the right standardized products” (Procurement manager, CAN3).

3.2. Patterns of Sourcing Levers Adopted by Healthcare Organizations

Sourcing levers have a pivotal role in supporting the purchasing strategy [7]. The healthcare sector presents unique characteristics, which makes developing a purchasing strategy for physician preference items (PPIs) very challenging [45]. We used prominent examples of sourcing levers encountered in the healthcare organizations researched to provide an explanation of the sourcing levers in the previous subsection. Notably, each of the organizations presented a set of sourcing levers adopted. It was possible to extract the sourcing levers used in healthcare organizations by analyzing the characteristics of the procurement process in detail, and searching for supporting activities to the purchasing strategy at the tactical level. The mapping of the sourcing levers allowed us to highlight the similarities between the healthcare organizations. The overview of the sourcing levers adopted by each healthcare organization is available in

Table 4. Patterns of the sourcing levers.

Sourcing Levers	CAN1	DEN	NOR	NEW	BEL1	BEL2	USA1	USA2	USA3	FRA2	CAN2	ENG	BRA	FRA1	CAN3
Product optimization (PODOPT)	✓	✓	✓
Category-spanned optimization (CSO)	✓	✓	✓
Optimization of supply relationships (OSR)	✓	✓	✓	✓			✓				✓				✓
Process optimization (PROSOPT)	✓	✓	✓	✓	✓	✓	✓	✓	✓						✓
Maintaining the supply market (MAT)				✓	✓	✓
Pre-purchasing activity (PPA)	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓
Quality meeting requirements (QMR)	✓	✓	✓	✓	✓	✓					✓	✓	✓		✓
Volume bundling (VB)													✓	✓	✓
Price evaluation (PE)							✓	✓	✓	✓		✓	✓	✓	✓

.

The identification of the pattern of sourcing levers adopted revealed five different clusters regarding the purchasing objectives. Noticeably, healthcare organizations with similar purchasing objectives tend to use similar sourcing levers. The purchasing objectives were analyzed in terms of cost containment vs. value-based procurement. Nevertheless, while examining the purchasing objectives, a more nuanced picture emerged (such as the availability of suppliers, managing the procurement process effectively, and managing associated supply chain processes). The purchasing objectives of cost containment and value-based procurement were determined deductively, as they are traditional goals pursued in procurement and well-established in PSM (purchasing and supply management) literature. An inductive coding approach was applied to the remaining purchasing strategies, as studies investigating distinct purchasing objectives in the healthcare sector are scarce. It was possible to identify the organization’s purchasing objectives by analyzing their goals, priorities, and characteristics of the procurement process. In line with Miles, Hubermann [39], the clusters emerged inductively through cross-case pattern recognition and thematic grouping. Figure 1 shows the clusters of the sourcing levers identified in this research.

• Cluster A—total cost of ownership. The adoption of PE and VB jointly was identified in organizations that prioritize a cost structure. This is the case of BRA and CAN2, which are searching to obtain economies of scale and cost-containment. It is worth mentioning that this sourcing level is achieved through different manners in these organizations. While BRA has a public tender system, in which the supplier awarding and supplier selection phases are designed to match these requirements, CAN2 uses a GPO (group purchasing organization) to leverage volumes purchased to reach such an end.
• Cluster B—managing the internal process. This set of sourcing levers (QMR and PPA) is associated with activities conducted before the procurement process actually takes place. This association of sourcing levers can provide a solid basis for preparing the procurement process. Organizations in this cluster are engaged in managing the internal stakeholders’ dynamic that brings complexity to PPI purchasing (ENG, CAN3, FRA1). Therefore, the focus lies on the internal processes conducted to acquire these medical items. This cluster of sourcing levers can support aligning different stakeholders’ perspectives and prevent maverick buying, for example.
• Cluster C—supply chain optimization. It brings sourcing levers together that are inserted at the intersection of other clusters “PPA, PE, PROSOPT”. It is possible to observe that organizations adopting this set of sourcing levers are concentrated on making their supply chain processes associated with these suppliers more efficient (USA1, USA2, USA3, FRA2). These organizations shift from the procurement process’s internal focus to an external perspective. The main goal is to support the procurement process by optimizing it. These organizations use a set of techniques, such as consigned inventories, for example.
• Cluster D—ensuring suppliers’ services. This cluster consists of the following set of sourcing levers “PPA, QMR, PROSOPT, MAT”. The organizations that showed this pattern of sourcing levers adopted are NEW, BEL1, and BEL2. This set of sourcing levers seems to be essential for ensuring the suppliers’ services associated with PPI purchasing. The main purchasing objective of these organizations is to ensure supply availability and the associated services that the suppliers can provide them. For example, NEW depends on a small supply market to provide services, such as training for new products acquired. Therefore, these sourcing levers appear to support leveraging supply availability in scarce supply markets.
• Cluster E—value-based procurement. Organizations belonging to this cluster presented the following sourcing levers in common: “PROSOPT, PODOPT, OSR, PPA, QRM, and CSO”. Organizations that showed this sourcing lever pattern include CAN1, DEN, and NOR. When used jointly, these sourcing levers appear to support the search for better outcomes and improved value to the patients, as the main feature of the procurement process is to promote better solutions to patients.

These healthcare organizations employ a patient-centric approach, aiming to improve patients’ results. The focus lies in procuring medical supplies that will deliver an improved solution to the patients. For example, DEN sought suppliers of knee implants with higher durability and more innovative features. A consequence was the prevention of revision surgeries and, therefore, achieving cost-containment goals in the long term. Understanding how sourcing levers can be adopted to best support the purchasing strategy can provide insights for healthcare organizations aiming to transition from a cost-based mindset to a value-focused approach in which the patient is the center of the decision-making process. PPA and QMR seem to provide a basis for this cluster.

4. Discussion

4.1. Bridging Strategy and Tactical Activities

Theory suggests that sourcing levers are critical for bridging the gap between the strategic level and tactical actions [1]. The “exceptionalism” thesis provides a lens to understand how sourcing levers are manifest in healthcare organizations—since the healthcare sector is underexplored both in the literature and in practice. Our research contributes to the understanding of sourcing levers as they facilitate achieving different purchasing strategies and alignment with broader organizational goals around value for money and excellence in patient care. The discussion about how to bridge the gap between purchasing strategy and tactical level is scarce in the healthcare sector. To the best of our knowledge, this paper is the first to bring this issue to light.

This research revealed three sourcing levers emerging from data analysis which are specific to the healthcare sector: PPA, QMR, and MAT. Interestingly, two of these sourcing levers are adopted before the procurement process effectively begins (PPA and QMR), different from the traditional sourcing levers that occur once the procurement process has started [1]. This finding highlights the exceptionalism thesis role since the healthcare sector presents unique dynamics that need specific solutions. The healthcare sector has unique procurement requirements due to the specificities of medical supplies and the internal stakeholders’ dynamics [32]. The complex stakeholders’ dynamics in the healthcare sector are exacerbated when purchasing PPIs. These medical supplies allow physicians to conduct maverick buying, as they act as surrogate buyers, undermining the purchasing strategic role [2]. Thus, it is necessary to perform an in-depth analysis of the internal elements and how well they are aligned with the supply market—which is possible through the PPA sourcing lever. Purchasing PPIs also involves significant complexities because of different stakeholders’ perspectives and interests [6], which should be aligned prior to the procurement process by adopting QMR sourcing lever. This structure aims to reach a consensus between the stakeholders participating in the procurement process. Thus, it is critical that important stakeholders, such as physicians, share common goals with the hospital. MAT is an alternative to the traditional sourcing lever “extension of the supply base”. Healthcare organizations are dependent on the service provided by PPI suppliers, [34] so organizations embedded in a small supply market target supply availability by maintaining suppliers in the local market. Therefore, it can be concluded that two main elements guide the exceptionalism thesis in the healthcare sector: (i) the complex internal stakeholders’ dynamics and (ii) the dependence on suppliers’ services for PPIs.

This research identified that a given set of sourcing levers was implemented in organizations that had a common purchasing strategy. This can be an indication that these sourcing levers can be adopted to support translating a given purchasing strategy into tactical activities. This is important because it ensures the alignment between strategy and the tactical level, which is crucial to achieving the desired objectives [7]. Although a few sourcing levers did not fit into the pattern identified, we believe that the presence of these outliers represents a natural phenomenon, as organizations are embedded in a rich social context with complex dynamics.

4.2. Towards Value-Based Procurement

Our research shows that different groups of sourcing levers support two main dominant purchasing strategies: costs and value-based procurement, but in a more nuanced manner when considering different dimensions [18]. The bottom left from Figure 1 shows a set of sourcing levers that support the adoption of a total cost of ownership approach. This approach has become a known strategy to achieve cost containment by obtaining economies of scale through consolidation of supplies and pursuing suppliers that present lower costs [30]. On the other extreme of the figure, a set of sourcing levers seems to be used to support value-based procurement, which has been adopted by healthcare organizations that envision delivering improved outcomes to patients [3,31]. Patient-centric hospitals such as DEN, CAN1, and NOR have been shown to seek improved results by purchasing medical devices that were proven to deliver superior outcomes in the long term. The patient-centric objective was translated into value-based purchasing by implementing sourcing levers that allowed the pursuit of improved medical supplies (PODOPT) and the search for long-term cost-saving at the same time (CSO). Some cases seem to be leaning in the direction of a value approach by the implementation of superior processes with suppliers (PROSOPT) and developing and improving the relationship with suppliers (OSR). The recent movement towards value-based procurement emphasizes the role of procurement from a strategic perspective, advancing the evolving objectives of the healthcare ecosystem [4].

5. Conclusions

The clustering of sourcing levers revealed a pattern among the organizations investigated in this research. Organizations that adopted sourcing levers in common tend to present similar purchasing strategies. It is critical that organizations adopt an appropriate combination of sourcing levers to reach positive results [7]. It is also possible to observe a shift from the awareness of the internal process (total cost of ownership, managing the internal process), migrating to external elements (supply chain optimization, ensuring suppliers’ services) to a value approach (value-based procurement).

The clusters of sourcing lever showed a pathway that could be pursued by healthcare organizations to shift from cost-containment to value-based procurement. It is worth noting that it does not necessarily imply a stairway, in which all the steps should be climbed, but rather, healthcare procurement professionals could reflect on their priorities linked to the purchasing strategy and adopt the suitable sourcing levers accordingly. Thus, healthcare procurement practitioners can draw inspiration from this research by comprehending how to derive purchasing strategies into sourcing levers, which means translating strategies into tactical actions.

The main limitation of this study is the inclusion of both cardiologic and orthopedics implant categories. The exploratory nature of this research reflects the choices for these two categories of medical supplies. While cardiologic and orthopedics implants may differ in specific purchasing dynamics, they share fundamental similarities (such as high cost and high complexity, being the focus of cost-containment and standardization efforts). Future research should focus on standardizing implant types to achieve higher consistency. New avenues for research should also include exploring contextual aspects related to sourcing levers. For example, understanding the dynamics between sourcing levers and buyer–supplier relationships can be valuable in implementing strategies to lower costs while improving the value delivered [31,46]. Also, future studies could validate the clusters identified in this research through quantitative approaches, such as a survey or statistical clustering techniques, to improve the generalizability of the findings. It would also be insightful to extend the analysis to different categories of medical supplies, such as personal protective equipment (PPE) or pharmaceuticals, to determine whether similar sourcing patterns emerge across different types of medical supplies. With the advent of machine learning and artificial intelligence, there has been a strong focus on automating the procurement process to meet the goals for the supply chain [47,48]. Future studies will be needed to assess how these technologies are applied to support the goals of the health sector supply chain around the levers we have elaborated. A final suggestion for future research is to evaluate the impact of specific sourcing levers on procurement performance metrics and health outcomes. In this regard, the use of machine learning and other data-driven techniques can offer alternative methodological opportunities. For instance, the study conducted by Santamato, Tricase [49] applied a machine learning-based model that integrates efficiency and perceived quality in healthcare services.