10 August 2021

Tender words that hurt

Finance KnowCents

When ADHA released the Digital Health Mobile Channel tender this month, the first thing I looked for, and hoped dearly not to see, was the mandate that any solution must already be used somewhere else.

Sadly, it was. This was yet another government tender that my company, and those like us, were not welcome to apply for.

This isn’t a new occurrence. The Alfred Health’s recent Electronic Patient Journey Board tender, released last month, has only two mandatory requirements, the first being someone else must already use the system. So, we couldn’t apply for that either.

With this precondition, it doesn’t matter that a new solution may be better, cheaper or safer. It’s new – therefore rendering it unwelcome in many governmental digital health tenders.

Why is this happening?

The underlying answer is fear. Public entities must be sensibly careful with taxpayer’s money. But they’re falling for the old “nobody ever got fired for buying IBM” sales maxim.

FUD – or Fear, Uncertainty and Doubt – is a marketing strategy used to persuade buyers to choose larger, more established vendors and/or technologies despite the technical and financial merits of their competitors. FUD plays on the assumption that more-established solutions are “safer” than an unknown or untested one, but we all know this is not necessarily true.

Well-masterminded FUD strategies convince customers that tragedy awaits those who buy new technologies. FUD is insidious and leads to recommendations for products that are technically and financially inferior simply because upper management is more likely to recognise the brand and approve them. Choosing a “reputable” brand can be attractive in a “blame culture”, as staff are less likely to be held accountable if something goes wrong.

Regardless of the reasons, this practice is unfair and anti-competitive. By refusing modern technologies, the practise fosters monopolies/oligopolies, which:

  • ensure high prices
  • disincentivise innovation
  • restrict competition

Not only does this practice virtually guarantee outdated healthcare technology, it also really hurts new and innovative Australian companies, because they are prevented from selling their solutions in their country, simply because they are new.

Also, the practice is self-fulfilling. Every tender that goes to an incumbent (typically international) is one fewer opportunity for an Australian company next time. It’s a downward spiral that ultimately hurts Australia and Australians, instead of helping them.

Instead of mandating that tenderers have previously implemented the solution, public entities should require tenderers prove their solution “can do” the job. This way, the public can be certain they’re getting the best solution on the market, and Australian innovators get a fair go.

Everyone knows that technology is changing rapidly, so a policy that disincentivises change cannot be good for anyone.

The most famous public servant of all, Winston Churchill, said: “Those who never change their minds, never change anything.” It’s time we changed our minds on digital health procurement practices, so we can all benefit from the change we deserve.

Build things of lasting value!

Chris De Sair is the Chief Operating Officer at IP Health.

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