Assistive Devices Program
Pricing and Supply Chain Review
Final Report
Project Background and Scope
Despite rising costs, funding of assistive devices and provision of high quality services to individuals with long-term physical disabilities in Ontario continues to be a priority for the Ontario government. However, the process in which the Ministry of Health and Long Term Care (MOHLTC) funds the Assistive Device Program (ADP) seems to be costly based on the findings from the 2009 ADP audit performed by the Office of the Auditor General of Ontario (AG). The AG identified issues of over-pricing and spend management across the Program, and concluded that the Program’s pricing reviews were not completed on a timely basis and did not take into account potential for capturing rebates or volume discounts. In order to address the AG findings, ADP has engaged in several initiatives including a Modernization Project that seeks to address program opportunities. A specific focus of the
Modernization Project is to review the funding and pricing of the various device categories, to identify solutions for mitigating value for money risks and ensure that the vendors are compensated equitably and the clients are paying a fair price.
PricewaterhouseCoopers LLP (PwC) was retained by ADP to support the Modernization Project in achieving its mandate by conducting a supply chain and funding / pricing evaluation. The scope of the review was as follows:
•General:
o Determine and document opportunities for ADP to play a role in the supply chain of assistive devices; o Evaluate current ADP funding framework and models, and evaluate other appropriate funding models; o Document alternative options and impact analysis, and recommend new funding and pricing framework; o Present action plan to Senior Management; and
o Provide an arms-length, transparent evaluation of current funding models. •Specific to the Supply Chain Review:
o Conduct a detailed evaluation of the supply chain for devices funded by ADP to identify opportunities that can drive supply chain efficiencies;
o Provide sustainable options and alternative models for ADP to expand its role in the supply chain; and
o Outline recommendations and corresponding business impacts and requirements of implementing each option. •Specific to the Funding / Pricing Review:
o Document in detail and evaluate the current funding and pricing models used by ADP for all categories of devices; o Identify costs drivers and their impact on pricing of the devices’ categories;
o Conduct a review of the funding and pricing models and make recommendations on future state funding / pricing models that would provide ADP with best value for money while supporting ADP’s objective of providing client-centred support and funding to Ontario residents who have long-term physical disabilities; and
o Conduct a jurisdictional review (comparable assistive device programs) to identify other models that might be adopted.
Project Approach
The work plan below illustrates the collaborative approach taken to address the requirements listed above and to outline the
findings, recommendations, a business case for change and an implementation roadmap that will help facilitate the achievement of the Modernization Project’s mandate. The project was 8 weeks of effort across 3 months of calendar time.
Week 1
N/A Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Current State Assessment
Analysis and Opportunity Identification Recommendations and Final Report Confirm scope,
key dates, roles, work plan and communications plan Mobilize team and conduct Kick-off Meeting Review available documents to obtain overview of current state business process and systems
Desktop review of documentation Interviews with ADP Staff
Interviews with external stakeholders Documentation of the current state models Confirmation with ADP Staff
Jurisdictional Scan
Interviews with Jurisdictional Representatives
Current State Confirmation and Recommendation Development Workshop
2nd Recommendation
Development Workshop
Final Report Development
Current State Evaluation highlighting strengths and opportunities Gap Analysis
Analysis of data collected
Identification of Funding / Pricing Model and Supply Chain Options Refinement through discussion with ADP staff
2 Final Report Feedback Meetings
Weekly project status meetings with discussion of recommendation development
Validation events
Project Approach
The project was completed over an eight week period, during which PwC interviewed internal ADP staff and conducted internal future state development workshops to solicit input from the staff members on future state options. As well, PwC interviewed external stakeholders which included:
•Other departments within the Ministry; •Manufacturers;
•Vendors and Health Service Providers; •Equipment Pools; and
•Clients.
PwC also conducted a jurisdictional review to compare and contrast the ADP program with other comparable programs. Jurisdictions that were included in the review included:
•Alberta (Alberta Aids to Daily Living Program);
•Saskatchewan (Saskatchewan Aids to Independent Living Program); •Quebec (Régie de l'assurance maladie du Québec);
•New Zealand (Accessable and Enable) ; and •South Australia (Domiciliary Equipment Service).
ADP’s Supply Chain was assessed from both a qualitative and quantitative perspective in order to identify advantages of the existing supply chain structure as well to highlight potential opportunities for ADP to expand its supply chain roles and capabilities. The qualitative assessment involved a review of qualitative data including interviews, existing documentation and a comparison of ADP’s current supply chain against a targeted future state. The quantitative assessment involved an analysis of ADP’s financial data including Accounts Payable spend and spend with the Transfer Payment Agencies. Quantitative information will provide a baseline against which any future solution can and will be measured.
Summary of Key Findings
PwC found that the ADP structure and business processes that are employed, are generally effective and aligned with ADP’s mandate of providing client-centered support, access and funding to Ontario residents who have long-term physical disabilities. Over the last number of years ADP management and program staff have been successful in driving internal improvements and have positively impacted service delivery to clients. The following are some initiatives that have been implemented or in the process of being implemented:
•Implementation of a new information system that seeks to increase the level of automation in the claims process, improve cycle time, reduce Accounts Payable backlog and improve ADP’s ability to monitor the authorizer and vendor network;
•Improved transparency of the procurement of home oxygen services by establishing a vendor of record list and establishing clear requirements for vendors;
•Internal process improvements as part of the Modernization Project to drive efficiencies; •Standardization of claims processing;
•Issuance of customer satisfaction surveys every 2 years which highlight the fact that 87% of respondents reported overall satisfaction with the program;
•Use of standing committees to facilitate input on policy development and overall program direction; and •Increasing the quality and amount of information on the program’s website to improve program transparency.
Although ADP has been successful in driving some improvements, PwC observed a number of current state challenges which, if addressed, would lead to further improvements in compliance, overall cost-effectiveness, improved program management and address the issues raised in the 2009 Auditor General’s Report.
PwC understands that it has been a strategic decision by ADP not to play a significant role in the supply chain. As such, the supply chain evaluation highlights current state implications of that decision, and focuses on opportunities where ADP can increase its supply chain involvement and capabilities.
The following section will outline findings from the PwC review, including what elements of the program are working well and some challenges that are impacting ADP’s ability to maximize its effectiveness.
Summary of Key Findings
The following are advantages of the current pricing / funding models and supply chain structure observed:
Current State Advantages
Implications
Equipment Pool Model – PwC noted a number of advantages associated with the equipment pool
model:
•The Equipment Pools are contractually obligated to competitively tender and establish contracts with the manufacturers to get best value for money.
•The Equipment Pools (e.g. Ventilator Equipment Pool) have been successful in securing volume rebates as part of the contract negotiation process.
•Consolidated purchasing allows the Equipment Pools to take advantage of bulk buying from the manufacturers in order to further drive down pricing.
•Freight efficiencies are realized by consolidating deliveries at a central warehouse which further drives down pricing.
•Refurbishment program promotes recycling and drives savings by maximizing asset longevity.
• Drives value for money by competitively tendering for manufacturer pricing, consolidation of purchasing and shipments and refurbishment of assets.
Ongoing Audits – The Verification and Testing Unit (VTU) conducts detailed audits of transactions
on behalf of ADP. In the last three years, $2.4M* in vendor overpayments have been recovered through this process.
• Recovery of overpayments.
Current Funding Models – PwC noted a number of advantages associated with the current funding
models:
•The grant model maximizes client choice and minimizes transactional costs for low dollar value, high volume transactions.
•The maximum contribution model allows the market to establish the price.
•The fixed price model establishes a consistent price for all ADP clients.
• Drives value through reduced transactional costs.
• Client satisfaction metrics indicate positive outlook of the program.
Current Pricing Models – PwC noted a number of advantages associated with the current pricing
models:
•The establishment of a Vendor of Record in the procurement of home oxygen services sets forth clear requirements for vendors at a price that is mutually agreeable.
•In most cases, guarantees the vendors a defined markup and ensures fair compensation.
• Establishes a price based on clearly defined requirements of the vendors.
Summary of Key Findings
Current State Advantages
Implications
Expert and Dedicated Staff – ADP staff members have significant knowledge and experience with
respect to the products that are funded, as well as overall program administration. They provide high levels of customer service, addressing and resolving client issues as they arise. The processes employed by ADP and its staff members are highly consistent with ADP’s vision of providing client- centered support and funding to Ontario residents who have long-term physical disabilities and to provide access to personalized assistive devices appropriate for the individual’s basic needs.
• High levels of client- centred support consistent with ADP’s mandate.
Commitment to Running a Cost-Effective Program – ADP is committed to continue its efforts to
strengthen program accountability, to ensure the efficient use of resources and the provision of high quality devices at competitive prices. Many accomplishments have been made to-date, and ADP is focused on implementing sustainable processes that drive value for its stakeholders.
• High focus on improving program accountability and cost-effectiveness.
Summary of Key Findings
During the review, a number of challenges were observed. These challenges appear to be impacting ADP’s ability to maximize its cost-effectiveness. '
Current State Challenges
Implications
Managing Conflicting Priorities – Conflicting strategic priorities appear to be impeding ADP’s ability
to maximize its cost-effectiveness. ADP aims to provide comprehensive access and client-centered support to clients. This strategic imperative can conflict with an alternate focus of securing the best pricing for assistive devices, especially if client choice or access is limited as a result of achieving these prices. Striking the right balance between customer service and achieving value for money will be paramount in determining future direction.
Guiding Principles – While ADP staff appear to have a good understanding of requirements that
drive funding / pricing decisions, a set of funding / pricing guiding principles does not exist. Guiding principles should link to ADP’s overall strategic objectives and be formalized to support its mandate.
Spend Management – While there are a formal registration contracts and agreements in place with
all vendors there is opportunity to leverage spend more effectively in order to drive maximum value for money. Challenges and observations related to spend management are outlined below:
•Limited strategic sourcing activities. Price setting is primarily based on manufacturer self reported landed costs to vendors as opposed to contracting for prices via a competitive tendering approach.
•ADP is not taking advantage of commercial terms such as rebates and early payment discounts which are prevalent within the industry. The Ventilator Equipment Pool is taking advantage of manufacturer rebates and early payment discounts. Other buying groups within the industry (e.g. VGM) have been successful in establishing secondary discounts with manufacturers.
•Of the 1502 vendors, 103 vendors represents 80% of ADP spend. This long “tail” indicates an opportunity to leverage ADP volumes in order to establish favourable commercial terms with
manufacturers and vendors and work more strategically with a rationalized supply base in exchange for improved rates / prices. If leveraged effectively, it is expected that pooling of ADP volumes would drive significant value given ADP’s 35% market share within Canada’s Assistive Devices Market.*
• Challenge in maximizing cost-effectiveness
• Difficulty in meeting strategic objectives
• Lack of consistency in pricing / funding decision making process
• Excess Manufacturer / Vendor margins
• Inability to obtain competitive price for clients
• Client dissatisfaction
• Challenge in adequately addressing all of the AG’s concerns
Summary of Key Findings
Current State Challenges
Implications
Pricing Optimization – The current approach to the pricing of ADP devices lacks robustness in some
areas and limits ADP’s ability to ensure maximum value for money. Several challenges were noted:
•In the current Cost Assessment Mark-up Model, a fixed mark-up percentage (33 1/3) is applied on the quoted manufacturer to vendor device price to allow for the vendor cost. There are inherent
challenges and risks imposed by this model:
•The vendor cost becomes proportional to the manufacturer’s price of the device. For example, if the manufacturer’s price increases by 10%, the value attributed to the vendor’s cost is automatically increased.
•The model assumes that devices with a higher manufacturer’s price require greater resources on the part of the vendor. For example, the vendor receives a higher price for personalizing a device that has a higher manufacturer price.
•The model provides for a 25% margin for the vendor to cover service and overhead costs and make a profit. In practice, margins can vary quite considerably (e.g. market conditions, volume discounts the vendor may have with the manufacturer.
•A high level review of WSIB procurement practices and pricing highlighted the fact that WSIB has been successful in leveraging its volumes to drive down prices with manufacturers, and has been able to achieve lower prices than ADP in some sampled products.
•In some categories (e.g. mobility, CPAP, insulin pumps, etc) pricing is set for a group of devices within the category as opposed to establishing a true cost for each device type. Vendors are incented to sell clients a lower model in order to maximize margins. The risk of vendor up-sell is mitigated since the authorizers are required to specify the exact device required by the client.
•For the cost assessment mark-up model , the data is self-reported from the manufacturer and there is no mechanism to validate the accuracy of this data. Almost 50% of total ADP spend is driven by this pricing model.
•Where manufacturer information is not available, ADP applies a 30% flat discount to manufacturer MSRP prices and takes a weighted average price across several manufacturers.
•There does not appear to be a definitive understanding of the vendor services included in the price (e.g. service, warranty period, etc).
• Not achieving best value for money
• Manufacturer / vendor overpayments
• Challenge in
adequately addressing all of the AG’s concerns
• Client dissatisfaction
Summary of Key Findings
Current State Challenges
Implications
Supply Chain Resources – ADP staff members have significant knowledge and experience with
respect to the products that are funded, as well as overall program administration. Given ADP’s
decision not to focus on supply chain, ADP has not invested in supply chain resources with experience in financial/market analysis, strategic sourcing, contract negotiation, spend analytics, or vendor
management.
Contract and Vendor Management - Several challenges related to contract and vendor management
were noted during the PwC review:
•With the exception of the Equipment Pools, Insulin pumps and Home Oxygen products there is limited focus on establishing contracts with manufacturers to obtain the best value for money.
•Data was limited, but based on the review PwC approximates that 30-40% of spend is on contract, primarily due to the Home Oxygen VOR. Pricing for the remainder of the spend is primarily based on manufacturer self-reported landed cost data or online research of MSRP costs.
•There is no mechanism in place to ensure that the vendors are complying with all the terms of the contract. Spot audits are conducted and have identified areas of non-compliance, but they are reactive in nature.
•There is no process in place to analyze vendor spend and consolidate the vendor base to drive value (e.g. driving higher volumes to vendors in exchange for cheaper rates). All vendors are able to
register as long as they meet ADP prescribed criteria. Based on a review of the vendor base, Hearing Aids, Mobility and Visual Aids had the highest number of vendors of all products. This trend is
relatively stable across all regions. Although the widespread number of vendors and high degree of commonality indicate a potential opportunity to consolidate, any consolidation exercise will need to ensure that accessibility is not impacted.
•There is no evidence of robust analytics on device longevity (e.g. depreciation) prior to setting policy and replacement periods. Vendors are incented to replace products (even if not defective) once eligibility is renewed rather than refurbishing the current device (e.g. CPAP equipment can last 10 years but clients are eligible for an exchange after 5 years). Replacement, however, is not automatic as ADP evaluates the merit of refurbishing vs. buying new based on vendor quotes.
• Challenge in obtaining best price for clients.
• Challenge in
adequately addressing all of the AG’s concerns
• Vendors not fully delivering on their commitments
• Client dissatisfaction
• Challenge in
adequately addressing all of the AG’s concerns
Summary of Key Findings
Current State Challenges
Implications
Product Standardization – There is no process in place to analyze product spend and consolidate
the product catalogue to drive value (e.g. product standardization can lead to increased volumes and cheaper prices with manufacturers). All devices are approved as long as they meet ADP prescribed criteria. There is no formal, consistent process in place to check for existing substitute devices. There is, however, a formal delisting process (e.g. if the product is no longer manufactured ). Of the 8,000 devices that are managed by ADP, spend in FY09 was observed against only 2,373 of the devices, which represents only 30% of the product catalogue (analysis includes grant codes, e.g. DHGRANT, OGGRANT). This indicates that there may be an opportunity to consolidate the product catalogue.
Budgeting / Forecasting – No formal budgeting / planning / forecasting process in order to develop a
budget reflective of market demand at the device level. Forecasted annual spend /growth is based on a percentage increase year-over-year as opposed to conducting a detailed bottom-up build to facilitate accurate demand and supply planning. ADP has identified improvement opportunity in its
budgeting/forecasting process and is currently developing a robust, bottom-up forecasting model and approach that accounts for its spend profile and industry statistics.
Process Opportunities – Process inefficiencies within ADP processes appear to be driving up vendor
costs and ultimately the pricing (e.g. manual faxing of insulin applications / orders to the vendor results in the vendor incurring a great deal of customer service costs and delays in delivering products to clients). In an effort to address opportunities for improving efficiency, ADP is presently engaged in a lean assessment which seeks to identify areas for improving efficiencies within the program.
• Not achieving best value for money
• Challenge in adequately identifying and addressing variances • Challenge in accurately forecasting demand and supply needs
• Improving efficiency can result in cheaper prices – lower cost to serve
• Client dissatisfaction
Summary of Current Pricing Models
Current Pricing Models
ADP currently employs three overarching strategies for setting the price: cost assessment, market price assessment and competitive tendering. ADP has adapted each according to the description provided below.
Pricing Model Description
Cost
Assessment
Market Price Assessment
Mark-up Method
Time and Materials Legacy cost* Survey, RFI, etc. Competitive Tendering
Manufacturer to vendor quoted cost + fixed mark-up percentage
• Applies a percentage increase to the quoted manufacturer to vendor device price. The goal is to cover all costs incurred in producing and delivering the device and to provide a margin to cover an allocation of the vendor / health service provider’s direct costs and a level of profit for the vendor / health service provider.
• Fixed mark-up percentage is currently 33 1/3.
• For some devices, price is set for specific grouping of devices type within category, irrespective of manufacturer or model. Price is averaged for data collected from manufacturer and/or group of manufacturers for the device.
• If manufacturer quote is not provided, a 30% discount to MRSP pricing is applied.
• Assumes that the direct costs of the vendor/ health service provider are proportional to the cost of the device.
• Price is based on a Time and Materials Study
• Price was based on an estimate of the total cost the assistive device(s) to the client.
• There is no reconciliation between total actual cost and total amount funded.
• Price is based on a review of vendor costs.
• Prices is negotiated with manufacturers/vendors usually through a competitive tendering process.
Price was established based on an assessment of costs at point in time. Depth of assessment conducted to establish price has not been defined.
Summary of Current Funding Models
Current Funding Models
ADP currently employs three overarching models for funding the device: a Fixed Price Model, a Maximum Contribution Model, and a Grant Funding Model. A description of each is provided below.
Funding Model Description Fixed Price Funding Maximum Contribution Funding Grant Funding
• ADP funds a defined percentage of the ADP price.
• ADP prices are listed in the ADP Product Manuals.
• Clients can only purchase specific products from registered vendors.
• ADP controls the market as the registered vendor can set a retail price lower than the ADP price, but may not charge more.
• Funding is paid to the registered vendors once the client application has been approved and the device delivered to the client. The client (or third party payer) is responsible for the balance.
• ADP funds a defined percentage up to a maximum contribution, based on the price ADP expects a vendor to charge ADP clients.
• Registered vendors are able to establish their own retail prices. The client (or third party payer) is responsible for the balance between the funded amount and the vendor’s retail price.
• Funding is paid to the registered vendors once the client application has been approved and the device delivered to the client.
• The client receives a defined sum of money, either one-time or at recurring intervals, as a contribution towards the cost of their assistive device / medical supply.
• The device / medical supply is most often purchased in an open market environment.
• The client may purchase their assistive device / medical supply from their vendor of choice.
• No claw back and/or verification of actual spend, although client is to maintain receipts in the event of audit.
Supply Chain Gap Analysis: Business Area
The table below outlines ADP’s current involvement in each of the supply chain business areas and an assessment of the gap to the desired future state. The future state was developed during the workshop with ADP staff.
Area
R A C
I
Key Activities
Budgeting / Forecasting • Establishing budgets and forecasts that sets targets for the business
• Identifies anticipated volumes in order to plan activities
Sourcing and Pricing • Market research
• Spend reviews to identify opportunities for reducing prices
• Competitive Tendering
Contract Management • Managing contract timelines, expiry dates, negotiations, etc.
Purchasing • Process of buying and receiving the products
Customer Service / Issue
Management •• Application processTaking calls and resolving vendor / client issues
Returns Management • Process of managing product returns, warranty, recalls
Vendor Management • Process of ensuring that vendors are complying with their contractual terms.
Vendor / Product Catalogue
Maintenance •• Approving vendors and products for listingProcess of adding & removing vendor / products from the catalogue Invoice Validation and Payment • Validating invoices and paying vendors
Indicates range of “As-Is” capabilities
Indicates anticipated future state capabilities
RACI Definitions
• Responsible: the individual who performs the work
• Accountable: the individual who has the power to modify the business process
• Consulted: the individual who is involved in the process for additional information
• Informed: the individual who needs to be informed about the outcome of the process
Supply Chain Gap Analysis
The table below outlines a maturity assessment of ADP’s Supply Chain. The assessment is based on PwC’s Supply Chain maturity framework as well as benchmarking against other jurisdictions and a target ADP future state.
Area Developing Practicing Optimizing Leading ADP Challenges and Opportunities
Strategy
Governance No evidence that strategic directives or goals translate into specific operating-level actions for the supply chain. There does not appear to be a mechanism in place to measure supply chain performance against
overarching goals and objectives. Some policies are in place (e.g. conflict of interest) but a comprehensive set of supply chain policies and procedures does not appear to exist. As ADP takes on more supply chain responsibility, it will need to
Structure /
Organization There is good coordination and alignment of ADP resources. Resources appear to be highly skilled clinicians with significant experience in program administration, but are not experts in financial analysis and supply chain management. This presents a risk for ADP given the level of spend that they are managing. There are examples of collaboration with the Ministry of Government Services (e.g. Home Oxygen VOR), but these appear to be ad- hoc in nature.
Performance
Management Does not appear to be a process to analyze supply chain performance on a routine basis in order to drive improvements (e.g. spend analytics, contract vs. non-contract spend, vendor scorecards, etc). Supply Chain metrics are not leveraged to drive performance. There is a process to review pricing every two years, but limited market/spend analytics are performed.
Process With the exception of the Equipment Pools, there are gaps in supply chain processes including strategic sourcing and contract management. Spend does not appear to be leveraged or controlled effectively in order to drive value (e.g. competitive tendering, product / manufacturer / vendor standardization, contract management, etc).
Information Systems / Technology
Currently, supply chain processes are primarily manual. ADP is in the midst of an IT implementation that aims to automate a significant amount of front office processes to drive efficiencies. Go-live date is set for June 13, 2011. Indicates range of
“As-Is” capabilities
Indicates anticipated future state capabilities
Assessment Definitions
• Developing: Base maturity levels, opportunity for substantial improvement in practices.
• Practicing: Some mature practices with some challenges to deliver benefits / mitigate risks.
• Optimizing: Mature and efficient practices with the ability to deliver benefits and mitigate risks.
• Leading: In alignment with leading practice, mature practices with little room for improvement.
Pricing Model Gap Analysis
Pricing Model Assessment: Evaluate against ADP strategic objectives and identify opportunities
The table below reflects PwC’s understanding of ADP’s strategic objectives and identifies current pricing challenges that may be impacting ADP’s ability to fully realize its strategic objectives. '
Pricing Model Challenges and Opportunities Evaluation
Cost Pricing Mark-up
Method • • Relies on good faith of manufacturer for accurate cost information. Does not encourage efficiencies by the manufacturer.
1
• Mark-up percentage has not been formally and recently supported or validated.
• Benefits vendors who are able to negotiate lower manufacturer costs,
discounts/rebate. Inevitably leads to margins that may be higher than the market may otherwise dictate them to be.
• Opportunity for ADP to leverage buying power of all clients and vendors for best manufacturer price and for dedicated vendor management ensures service delivery needs are consistently met.
Time and
Materials • Significant investment of resources required. May be able to refresh hourly rates without re-evaluating standard times. Refresh hourly rates may increase price.
2
• Opportunity to reflect impact of new materials/technologies used in manufacturing which may result in decreased prices.
Legacy
Cost • Price is based on historical cost and has not been updated / does not take into account a changing environment. A change in price may be required to maintain the 25/75 cost share relationship, if this is the desired state.
0
Market PriceAssessment Survey, RFI, etc. • • Relies on good faith of vendors for accurate cost data. Opportunity for ADP to collaboratively engage with vendors and formulate definitive service requirements and compensate vendors based on this supported data.
2
Competitive Tendering • Obtain the best price• Build market and price expertise and leverage leading supply chain practices.
4
4 Best positioned to meet objectives 1 Significant opportunity, somewhat suited to meet objectives3 Some opportunity, well positioned to meet objectives 0 Significant opportunity, not suited to meet objectives
Funding Model Gap Analysis
Funding Model Assessment: Evaluate against ADP strategic objectives and identify opportunities
The table below reflects PwC’s understanding of ADP’s strategic objectives and identifies current funding challenges that may be impacting ADP’s ability to fully realize its strategic objectives. A full circle implies that the model is best positioned to achieve objectives and is a leading practice, while an empty circle implies that the model is not best suited to meet the objectives.
Funding Model Challenges and Opportunities Evaluation
Fixed Price Funding • Requires a definitive price which controls the market.
• Ensure underlying pricing model obtains best value for money
3
Maximum ContributionFunding •• Client (or third party payer) absorbs varianceMay not achieve 75 / 25 cost sharing relationship
• Ensure underlying pricing model obtains best value for money
• Requires ongoing market research to manage client portion
2
Grant Funding • Client (or third party payer) absorbs variance• Requires appropriate, functioning internal controls to ensure recurring payments are made to only eligible individuals
• Requires regular audit to ensure grants spent in accordance with guidelines
• Opportunity to consolidate buying power of ADP to achieve a lower price for the client
2
4 Best positioned to meet objectives
3 Some opportunity, well positioned to meet objectives 2 Opportunity to better meet objectives
1 Significant opportunity, somewhat suited to meet objectives 0 Significant opportunity, not suited to meet objectives
Note to reader on the 75 / 25 Cost Share Structure
ADP was designed with a 75 / 25 cost share structure, and evaluation of this structure was not part of the scope of this review. (ADP funds 100% of the device cost for clients receiving social assistance.) The evaluation presented here within does not consider this cost share structure. The challenges and opportunities identified, retain the assumption that ADP will continue to funds 75% of the device price and the client is responsible for the remaining 25%.
Supply Chain Opportunities
The table below outlines advantages and challenges associated with ADP’s current supply chain, and outlines some opportunities for improving capabilities. Examples where other jurisdictions have leveraged some of these opportunities are indicated below.
Description
Advantages
• Current sourcing and pricing process tends to maximize client choice.
• Some examples of tendering with manufacturers (e.g. Equipment Pools).
• Wide vendor group & diverse product catalogue allows for maximum access and choice across the province.
• In some cases, vendor requirements are clearly established and defined (e.g. VOR for Home Oxygen).
• ADP administers client satisfaction surveys and conducts vendor audits to ensure the client received the device and appropriate service level.
Challenges&
• Lack of rigour in the sourcing, contracting and price setting process may be contributing to excess manufacturer / vendor margins and an inability to obtain competitive pricing for clients.
• Lack of supply chain consolidation (sourcing, purchasing, logistics) drives duplication of efforts and impedes ADP’s ability to effectively leverage its spend, leading to extra costs within the supply chain network.
• ADP does not have internal supply chain expertise (e.g. strategic sourcing and contract management).
Opportunities • Improve spend and market analytics and implement sophisticated strategic sourcing and contract managementtechniques (e.g. competitive tendering) to leverage spend to drive maximum value for money.
• Consolidate products and manufacturer / vendor base to drive value for money. Opportunity
Considerations in Developing Solutions
• & Need to establish a clear balance between client choice and driving value for money (e.g. through product
standardization, manufacturer / vendor rationalization). These initiatives cannot limit access of services to a point where there would be a conflict with ADP’s strategic mandate.
• & ADP must balance decreasing costs to clients, with the need to ensure a network of viable vendor businesses around
the province that can serve disabled clients in rural and Northern areas.
• & In some categories there are limited number of manufacturers and vendors and ADP may not have sufficient leverage to
drive down prices. Other
Comparable Jurisdictions
• Programs in other jurisdictions have leveraged their buying power and have competitively tendered and established contracts directly with manufacturers for the landed cost of the device.
• Vendor buying groups have been successful in establishing secondary discounts with manufacturers.
• WSIB competitively tenders with manufacturers for pricing (e.g. hearing aids).
• & Programs in other jurisdictions have consolidated the supply chain and realized savings/efficiencies (Australia)
Pricing and Funding Opportunities
The table below summarizes the advantages and challenges associated with ADP’s current pricing and funding models, and outlines some opportunities for improving capabilities.
Description Advantages
• Current funding models are enablers for ADP in achieving its strategic objectives.
• Current pricing models tend to maximize client choice and does not restrict access.
• Current pricing model for HOP was a collaborative process which obtained valuable input from the vendors.
• Equipment pools are an effective strategy for consolidating purchasing power to drive value through the competitive tendering process.
Challenges
• Lack of rigor in the price setting process may be contributing to excess manufacturer / vendor margins and an inability to obtain competitive pricing for clients.
• Lack of accurate and reliable data from vendors on their costs incurred to personalize the device for the client does not support or validate the current 33 1/3 mark-up.
Opportunities
• Engage in competitive tendering to leverage spend to drive maximum value for money.
• Attribute a value to the vendor cost to ensure maximum value for money and appropriate compensation for stakeholders.
• Create a sustainable framework reflecting the underlying pricing and funding guiding principles for selecting the best-fit pricing and funding model to drive value.
Opportunity Considerations
• & Need to establish a clear balance between client choice and driving value for money (e.g. through product standardization, manufacturer / vendor rationalization).
• & Any rationalization initiative (e.g. competitive tendering) cannot limit access of services to a point where there would be a conflict with ADP’s strategic mandate.
Other Jurisdictions
• & Programs in other jurisdictions have leveraged their buying power and have competitively tendered and established contracts directly with manufacturers for the landed cost of the device.
• & Programs in other jurisdictions have established a vendor cost separately from the manufacturer device cost.
Future State Options to Close the Gap
In order to address the current state gaps that were identified as part of the review, several options were developed in collaboration with ADP staff and management to outline opportunities for ADP to increase its role in the supply chain. As well, a revised funding and pricing framework was developed that will allow ADP to make funding and pricing decisions using a robust, analytically-driven process that will drive value for money while maintaining ADP’s mandate of providing client-centered support and funding to Ontario residents who have long-term physical disabilities.
Supply Chain Options
Several options for a future state ADP supply chain operating model were considered and are outlined below. A discussion of the options, including the scope, advantages, disadvantages and impacts of each option follows. The options have been categorized into three overarching options, some of which have several sub-options within.
# Option Name Brief Option Description
1& Status Quo Option 1: Continue as-is with enforced existing policies.
2& Address AG Concerns Option 2: ADP to improve robustness and frequency of pricing reviews to ensure that market realities are taken into consideration when setting pricing (e.g. technological advances). 3
Address AG Concerns and Implement Leading Practice to drive Value for Money
Option 3a: ADP to invest in and expand its Strategic Sourcing and Contract Management capabilities .
Option 3b: Leverage a 3rd Party for Strategic Sourcing and Contract Management.
****Note: It is assumed that Options 3a and 3b would include adoption of the proposed future state pricing and funding framework recommended as part of the report. This will be discussed beginning on page 28.
Future State Options to Close the Gap
Supply Chain Options
These options are illustrated on the continuum of increasing effort and benefit below. Each option and sub-option builds upon the previous option both in terms of anticipated benefits as well as anticipated costs and change management efforts. As ADP moves up the curve, assistive devices are more strategically sourced and better value for money is achieved.
Inputs
Required
Expected Benefits
Future State Supply Chain Options – Option 1
A discussion of the supply chain options, including the description, key requirements, advantages and disadvantages is outlined below.
Option 1 Status Quo
Description • Continue with current state processes with enforced existing policies.
• Maintain existing price setting processes.
• ½ to 1 FTE to ensure that existing policies are enforced. Key
Requirements
Advantages Challenges Risks
• Minimal investment required • Limited hard savings
• Minimal risk • Difficulty in achieving best price for clients
• Minimal change/impact to clients and vendors • Difficulty in addressing AG concerns
Future State Supply Chain Options – Option 2
Option 2 Address AG Concerns
Description • ADP to improve robustness and frequency of pricing reviews to ensure that market realities are taken into consideration when setting pricing (e.g. technological advances).
• Continue to establish pricing by collecting vendor and manufacturer cost data.
• To improve the robustness of the pricing review process ADP should incorporate the following two elements on a go-forward basis:
• Conduct market research to understand how device pricing fluctuates, and overlay the findings of the market research against the vendor and manufacturer cost data to establish a fair price that is based on
manufacturer/vendor costs as well as market realities; and Key
Requirements • Conduct jurisdictional price benchmarking against other provinces or international jurisdictions to compare Ontario prices against prices established by other jurisdictions. This jurisdictional comparison should consider Ontario’s purchasing advantage relative to the other jurisdictions.
• Develop a pricing review schedule for all devices that ensures that all devices are reviewed every two years at a minimum. Apply the 80/20 rule and review devices with high spend and/or high price volatility on a more frequent basis (e.g. once per year).
• Consider hiring a Business Analyst to assist program staff with market research and benchmarking analytics.
Advantages Challenges Risks
• Will address AG concerns at a minimum • Does not address the gaps as identified in the gap analysis
• Low change • Does not obtain best value for money (e.g. relies on good faith
of manufacturer/vendor for accurate cost information and benefits vendors who are able to negotiate lower
manufacturer costs, discounts/rebate. Inevitably leads to margins that may be higher than the market may otherwise dictate them to be).
• Some purchase price savings by enhancing pricing review analytics
• No change management efforts required
• Compliance driven
• Lack of supply chain consolidation (sourcing, purchasing, logistics) drives duplication of efforts and impedes ADP’s ability to effectively leverage its spend.
Future State Supply Chain Options – Option 3a
Option 3a Address AG Concerns and Implement Leading Practices - ADP to invest in and expand its Strategic
Sourcing and Contract Management capabilities.
• ADP to invest in and expand its Strategic Sourcing and Contract Management capabilities, which includes establishing leading practice processes (e.g. expanded use of competitive tendering with manufacturers, issue surveys and RFI’s to vendors to establish pricing, routine spend/market analysis, establishing contracts directly with manufacturers and vendors for the procurement of goods and services, contract negotiation, manufacturer and vendor performance management, manufacturer/vendor/product standardization, etc).
Description
• ADP to establish an internal Supply Chain team and will need to invest in additional resources to accommodate the extra workload. It is assumed that the level of effort would require at least 6 FTE’s, including 1 Manager, 3 buyers and 2 analysts.
• Will require some investment in technology (e.g. business intelligence software to facilitate proper data analytics and a contract management system).
Key
Requirements
• The Supply Chain team would be responsible for the following:
o Strategic sourcing including research, tendering and manufacturer/vendor selection to consolidate spend and establish pricing for devices;
o Recommendations on vendor costs based on vendor surveys, RFI’s and time and materials studies; o Product standardization including selection of preferred manufacturers and products for funding; o Negotiating manufacturer and vendor contracts;
o Maintaining a centralized database of all contracts and a centralized product and vendor catalogue; and o Ongoing market / spend analytics to continuously identify improvements.
Advantages Challenges Risks
• Addresses some of the gaps as identified in the gap
analysis • Would likely be a lengthy implementation with longer time to benefits, as ADP would be building this from scratch.
• Will fully address AG concerns • May not be maximizing supply chain leading practices.
• Relatively low change • Supply chain is not a core competency for ADP and this may result in conflicts between operations and policy.
• Growth contributes to more jobs internally at ADP
• Some savings through consolidation of spend • Increased operating costs and complexity of the ADP business.
• Relatively low change management efforts required
• Will achieve value for money – cheaper pricing for clients
Future State Supply Chain Options – Option 3b
Option 3b Address Auditor General Concerns and Implement Leading Practices - Leverage a 3rd Party for
Strategic Sourcing and Contract Management.
• Strategic sourcing and contract management to be centralized with a third party supply chain shared services organization (SSO). This is similar to equipment pool model except without the warehousing component.
Description • The SSO could be an internal government organization (e.g. within the Ministry of Health or within another
Ministry/agency) or an external vendor.
• Ultimate controls rests with ADP. Accountability, compliance and strategy is never outsourced.
• The SSO would perform the same scope of services as outlined in Option 3a.
• The relationship between ADP and the SSO and performance targets are set out in an SLA, and would require governance oversight (please see page 82 for more details).
Key
Requirements • Although it is expected that this option will drive the highest degree of benefits for ADP based on PwC’s experience with other SSO’s, a business case is required to evaluate the cost-effectiveness is recommended. As part of the business case ADP will need to consider some of the following: anticipated savings, costs and return on investment, governance and accountability, risk management, SSO funding model and
implementation plan. For further details on the business case, please see Appendix A.9.
Advantages Challenges Risks
• Faster implementation, speed to benefits and highest savings. • Potential for high costs (need to be evaluated against
anticipated savings)
• SSO is contractually obligated to fulfil its mandate.
• Will provide ADP with the assurance that procurement activities are consistent with Ontario’s
Procurement Directives. • Higher level risk
• Through its partnership with an SSO, ADP will benefit from supply chain leading practices (e.g. processes and technologies such as e-Procurement) that will improve supply chain efficiencies and drive value for clients.
• Higher degree of change
• Allows ADP to focus on its core competency of program administration rather than supply chain.
• Scalable solution that provides ADP with the flexibility to consider centralized purchasing, warehousing, logistics and refurbishment of equipment as a potential long-term strategy. Expanding the program to include purchasing/warehousing would allow ADP to realize savings from bulk buying and shipment consolidation.
Future State Pricing and Funding
Proposed Pricing and Funding Framework Overview
The proposed pricing and funding models are built on a foundation which requires ADP to:
1.Examine Pricing and Funding Objectives;
2.Conduct Market Assessment; and
3.Select the Pricing and Funding Model.
In the following pages we present a framework for selecting the pricing model which values the device price separately from the vendor cost to arrive at total price. The decision points in the framework are established around key criteria , which is informed by ADP’s pricing and funding objectives and the market assessment. The framework allows an informed selection of a competitive tendering, time and materials or market price assessment pricing model as these pricing models were evaluated to most closely align with ADP objectives. Our analysis supports continued application of the following funding models: fixed price, maximum contribution, and grant funding. The decision criteria in selecting the best fit funding model for each of the device type has been developed based on synthesis of data collected and is set forth within the section.
Future State Pricing and Funding
Setting the Foundation for Pricing and Funding Decisions
Our proposed pricing and funding models are built on a foundation which involves the following three steps:
1.Examine ADP Pricing and Funding Objectives
A selected model should reflect the organization’s goals and strategic objectives. For example, ADP’s strategic objective to provide access to personalized assistive devices would inform a strategy which was not prohibitive to vendors providing access to clients in underserviced regions.
Through our documentation review, key stakeholder interviews and workshops, PwC has drafted a framework for selecting the strategy supported by the following ADP Pricing and Funding
Objectives:
•Provide ADP with best value for money while supporting ADP’s objectives of providing customer- centered support and funding to Ontario residents who have a long-term physical disability.
•Provide access to personalized assistive devices appropriate for the individual’s basic needs. •Ensure that ADP obtains competitive prices.
•Ensure that the clients receive appropriate services related to their device.
•Ensure that stakeholders in the ADP funding process are compensated appropriately.
2. Conduct Market Assessment
It is critical for ADP to continually assess the market in which it operates. This involves possessing intimate knowledge of the devices and the key elements of the market, such the manufacturers who are active in the space and the devices they offer. A market assessment for each of the 26 device categories may include: market sizing; market attractiveness assessment;
competitive analysis and benchmarking; market definition and segmentation; and a trend analysis. Pricing is a marketing decision and market research is critical to selecting the most appropriate pricing strategy to meet the pricing objectives.
Future State Pricing and Funding
The focus of this engagement was not to conduct a detailed market assessment. Based upon our understanding of the devices and the market, obtained through documentation review, interviews with key stakeholders, and jurisdictional research, we have the following observations which have been applied in proposing a pricing and funding strategy for each of the 26 device
categories:
•ADP is the dominant buyer in the market for the majority of the device categories. •There are a varying number of manufacturers / vendors for each device type.
•Devices require varying levels of customization / inputs required by the vendor to personalize the assistive device appropriate for the individual’s basic needs.
A detailed market assessment would be required to ultimately inform the final selection of a pricing and funding strategy appropriate for each device category.
3. Select the Pricing and Funding Model
In the following pages we present a framework for selecting the pricing and funding model. The decision points in the framework are established around key criteria , which is informed by ADP’s pricing and funding objectives and the market assessment. We have walked through this framework and present our rationale and the proposed pricing model and funding model for each of the 26 device categories . This includes:
•A description of the funding models to be applied in the future state along with the decision criteria to inform selection; •A description of the pricing models to be applied in the future state along with the decision criteria to inform selection; •A description of how the pricing models could be employed at ADP alongside the component-based priced approach;
•A matrix showing pricing and funding decisions that need to be made concurrently to ensure an efficient and effective process. •Overview of the proposed framework for selecting the future pricing and funding models;
•Discussion of the decisions points in the proposed framework; and •Use of the proposed framework to map the devices to a pricing strategy.
Future State Funding Framework & Decision Criteria
Our analysis supports continued application of the following funding models. The decision criteria in selecting the best fit funding model for each of the device type has been developed based on synthesis of data collected and is set forth below. PwC recommends that ADP adopt these decision criteria in order to inform the selection of the future state funding model.
Funding Model Decision Criteria Rationale
Fixed Price
Funding • Can accommodate all levels of competition. • A market, in which there is low competition, is not incented to provide best price. A fixed price can control the cost for both the client and ADP, and incent the vendor and manufacturer to find the most cost effective and efficient way to provide the device.
• Can accommodate levels of device value and volume
• Low to medium customization • Able to control the price of highly customized devices, but may restrict client choice to only the most basic device.
Maximum Contribution Funding
• Competitive markets • As the vendor may charge more than the ADP price, a competitive market is required to maintain the client portion at a reasonable level which does not impede access for the client.
• Low to medium device value
• High device volume
• Low level of device customization; can
accommodate medium to high customization with some risk to the client
• Devices with high volumes and low levels of customization may have commodity-like properties. Commodity-like products tend to have modest profit margins and be competitively priced.
• Also enables the client to select a more highly customized / performing device at their own expense. As customization may translate to higher value, also increases the risk to the client in the uncontrolled market.
• Widely publicized prices among vendors
Grant Funding • High number of low device
value transactions. • As the cost to the client is ultimately determined by the amount the client pays to the vendor, less the amount of the grant, to keep the price to the client at an affordable level, competition is needed to control the client cost.
• Devices which are a very personal choice to the client.
• Low device unit cost • Clients are free to purchase devices from the vendor or manufacturer of choice.
• Low price volatility
• Low market share • Vendors may not have to be registered with ADP.
• Can reduce administrative processing costs for ADP.
Future State Pricing Framework & Decision Criteria
We recommend ADP increase their use of competitive tendering, time and materials and market price assessment pricing models. These models should be applied for the manufacturer cost and vendor price where appropriate based on the framework and
decision criteria. These pricing models were evaluated to most closely align with ADP objectives, namely that they obtain
competitive prices and that stakeholders in the ADP funding process are compensated appropriately, ultimately providing ADP with the best value for money. Competitive tendering would include both the manufacturer and vendor levels depending on the device type. Please see Appendix A.8 for further details.
PwC recommends that ADP adopt these decision criteria in order to inform the selection of the future state pricing model. It would be the responsibility of the SSO to apply the decision criteria as part of its ongoing market/spend analytics process to determine the optimal pricing models and approach per device category. This would be a sustainable process to ensure pricing is reflective of market realities.
Pricing Model Decision Criteria Rationale
Cost
Assessment Time and Materials
• Low to medium number of
manufacturers / vendors • In markets with low competition among manufactures / vendors,market pricing dictates that prices are primarily driven by laws of supply and demand.
• High device customization
• Appropriate regardless of volume • Best suited for markets with highly variable inputs required on a device to device basis.
Market Price Assessment Survey, RFI, etc.
• Low to medium number of
manufacturers / vendors • In markets with low competition among manufactures / vendors,market pricing dictates that prices are primarily driven by laws of supply and demand. Suited for markets in which the
manufacturer is incented to operate efficiently and pass on the best price to the client.
• Low to medium device customization
• Appropriate regardless of volume Competitive
Tendering •• Competitive marketHigh volume
• Low volume with high device value
• Low device customization
• High customization (with high value)
• Device / service specifications need to be well articulated
• High ADP leverage to drive value
• Competition among providers invites best price.
• High volume and bulk purchases leads to efficiencies which could be passed on to the purchaser. Low volume and device value also provides opportunity to invite best price.
• Commodity devices (those requiring low customization) may not need to be supplied by a specific manufacturer, this opens the market for competition among providers. High customization and high device value also provides opportunity to invite best price. * Characteristics described for both the pricing model and funding models are not exclusive and there may be other factors specific
Future State Pricing Models
A discussion of how these models could be leveraged for ADP is included below and continues on the next page. These models should be applied for the manufacturer cost and vendor price where appropriate based on the framework and decision criteria.
Model How could the model be leveraged in the future state?
Cost
Assessment Time and Materials
• Conduct a detailed review of the inputs. This may include a time and materials study or a third party review of costs. For example, in time and materials, the hourly rate would be defined by fully-loaded hourly market labour rates, and a market-defined standard defined period of time.
Market Price Assessment Survey, RFI, etc.
• In this model, price is based on upon analysis and research compiled from the targeted market
• Once the market price is established, vendors could be invited to participate at the defined price. This could be conducted formally using a Vendor of Record (VOR).
• There are several options for implementing this strategy. Examples of how this may be employed for ADP include a survey or a Request for Quotation (RFQ) / Request for Information (RFI) from the manufacturers / vendors / health service providers to gather information on the costs incurred.
Competitive
Tendering • Price is set by inviting bids or tenders and choosing the manufacturers / vendors from among the bids received.Competitive tendering would include both the manufacturer and vendor levels depending on the device type. Please see Appendix A.8 for further details. Can be a formal process or an informal process which may only involve obtaining quotations for infrequent purchases.
• For Option 3b, ADP would consult with a Steering Committee working with the SSO to detail the types of devices and the specifications required of the manufacturer, in issuing a competitive tender for price. For Option 3a, these decisions would be made internally in collaboration with the supply chain and policy staff.
• Consolidation of the product list would funnel volumes, increasing ADP’s buying power. The extent to which this was done should need to be informed by transactional data and the expertise of the health service providers, who hold intimate knowledge of the various devices and the needs that each is able to provide to the client.
• ADP would review the manufacturer proposals with the Steering Committee and select the successful bid(s).
• Devices purchases for ADP clients would be made at the ADP contracted price.
• Volume rebates and / or discounts would be payable to ADP.
• For infrequent and highly customized purchases, quotations would be obtained from manufactures (3). ADP would require the selection of the manufacturer quote that provided the best value for money.
* A price assessment is still required for assistive devices funded under the grant model as the price to fund the grant at needs to
Future State Pricing and Funding Model Matrix
Pricing and funding decisions need to be made concurrently to ensure an efficient and effective process.
Some pricing models are more congruent with one funding models over another. For example, for devices in which it is appropriate to provide grant funding based on the decision criteria, the required investment to attribute a value to the grant using a time and materials study may not be appropriate. Similarly if a competitive tender is used to set the price, this would most likely result in contractual terms under which ADP would be able to provide purchasing for its vendors. Where we have competitively tendered, it may not be appropriate to funding using a grant model.
Below we provide a matrix of funding and pricing models, together which maximize value for money. This matrix informs the first decision point on the future pricing and funding framework in the subsequent pages.
Pricing Model / Funding
Model Fixed Price Funding Maximum Contribution
Funding
Grant Cost
Assessment Time and Materials Survey, RFI, etc.
Market Price Assessment
Competitive Tendering
PwC 33Future State Pricing and Funding Framework
The following pricing framework is built on recommended ADP pricing objectives and assumes the completion of a comprehensive market assessment. A description of the decision points and critical elements for consideration when selecting the pricing strategy follow, as well as a mapping for each of the 26 device categories with a supporting rationale.
Future State Pricing and Funding Framework
Framework for Selecting the Pricing Model
Device
Price
Decision Point: Manufacturer Market Assessment
A market assessment, specifically a competitive analysis, should be the basis for evaluating the competitiveness of the
Ontario assistive devices market. In a market in which manufacturers compete for market share, ADP would be in a position to leverage a competitive tendering pricing strategy to drive the best price for the terms defined by ADP. If there is no or limited competition within the market, competitive tendering would likely not drive significant value in which case a pricing strategy built on a market pricing strategy may be more appropriate.
Decision Point: Spend / Volume
This decision point is informed by transactional-level historical ADP data and future projections for types and quantity of devices funded. Devices with a high level of spend (either by high volume, or by low volume and high unit cost) stand to gain the most through a bid pricing strategy. It should be noted that even a moderate consolidation of the product list will help drive volume at a category level. Devices with a low unit value would be more effectively priced with a market pricing strategy.
Future State Pricing and Funding Framework
Framework for Selecting the Pricing Model
Decision Point: Client Access to Vendor
Vendor
Cost
In markets where there are few vendors and/or underserviced regions, the pricing strategy chosen should not be prohibitive as to restrict access for clients. Competitive tendering or vendor rationalization in these types of market would not be
appropriate as limiting access would impede ADP’s ability to meet its strategic objectives. For assistive device categories whereby there are few vendors a pricing strategy built on a Cost Assessment Model may be more appropriate.
In markets with a vast number of vendors, competitive tendering which results in rationalizing the vendor base, would be expected to yield value without negatively impacting access. A detailed accessibility study would be required.
Decision Point: Variability of Inputs to Customize
The assistive devices require varying levels of resources and expertise to personalize them to meet the individual’s specific needs, and varying levels of service intensity. For example, we expect that the inputs to customize a prosthetic or orthotic would be highly variable from device to device. Variability of inputs may also exist from client to client, which is the situation in delivering home oxygen to a palliative vs. non palliative client. For some devices there may be limited variability of the inputs to customize a device. An example of this would be hearing aids.
