ARTED Başkanı Umut Gökalp Medikal Akademi Ankara Temsilcisi Hatice Pala Kaya’nın sorularını yanıtladı
Umut Gökalp, Chairman of Association of Research Based Medical Technologies Manufacturers (ARTED) said that if the value-based purchasing system is applied to non-imaging medical devices and consumables, the use of new technology would expand and the total benefit obtained would be more cost efficient. Interviewed by Hatica Pala Kaya, Medikal Akademi’s representative in Ankara, at the Medical Supply Congress held in Antalya, Umut Gökalp emphasized that if the government leads the way, the necessary infrastructure can be properly designed.
Technological age of most of the medical devices used in Turkey is 12 or 13 years
Explaining that that ARTED represents global companies manufacturing non-imaging treatment and diagnostic medical devices and consumables by using advanced technology. Umut Gökalp noted that the public tender system applied in Turkey is based on price, and that this fact makes it difficult for new technologies to be introduced to the market. He said “There are a considerable number of new products we can offer to the market. They are available for sale in Europe, America, Japan and even Asian countries, but unfortunately not in Turkey. Therefore, average technology age of this sector is about 12 or 13 years in Turkey.”
Emphasizing that the value-based purchasing system focuses not on the price but on the result and on the total benefit it provides until it yields to the result, Gökalp said: “Significance of the value-based purchasing system increases day after day. Healthcare services based on value is a healthcare provision model where healthcare service providers are paid in proportion with the results of the services they provided. Under value-based healthcare service agreements, healthcare service providers are paid for the contribution they make to patients in curing their conditions, reducing the effects and incidences of their chronic diseases, and living more healthy lives in a proven way.
For value-based healthcare services, the term ‘value’ is calculated by measuring the results achieved in terms of a patient’s health against the costs of those results. Value-based healthcare services benefit not only the healthcare systems, but also patients, medical service providers, suppliers and payers, and therefore the whole society.”
Competition for price serves suppliers with strong financial structure, value-based purchasing system leads to growth of domestic industry
Chairman of ARTED Umut Gökalp pointed out that the price-based purchasing system favoring low priced products is to the advantage of suppliers with a strong financial structure, adding “But the price is not the only criterion in the value-based purchasing system, so that domestic manufacturers may enjoy success in certain niches. This is the present situation. When it comes down to the price only, suppliers having the highest financial strength always win. If we can create niches where 20% of the total demand is manufactured at domestic level, not imported, it will be a great success.
If you prove your quality with figures –and relevant data will be accessible–, you will surely be able to sell domestic products. What I am talking about is a very radical change. It won’t be easy. As I mentioned, EU passed a resolution in 2014 to adopt this system in 2025. It won’t be easy, but it is feasible. If the government leads the way and provides coordination between the relevant agencies, Turkey can adopt this system too.”
Reminding that in this country Social Security Agency (SGK) is in charge of reimbursement and the Ministry of Health is in charge of providing healthcare services, Umut Gökalp said “It is a must for these two authorities to coordinate at all times. To see the big picture, all relevant agencies including even the Ministry of Finance and all authorities involved in development must establish a common strategy and take actions to achieve that strategy. This won’t be easy. It may be easier to set up such system in the recently adopted state presidency system. Because it may be possible at least to order a high authority to coordinate the relevant agencies.”
Hard times for domestic manufacturers
Pointing out that the price-based purchasing system has started to put a strain on the suppliers in the present economic structure and that even the global companies having relatively high financial strength, Umut Gökalp explained: “In fact, the present system is the survival of the fittest. As the price-based purchasing system is applied, large companies having a strong capital financial structure, not needing to borrow funds at the current high interest rates and being able to stand on its feet begin to dominate the market.
Many suppliers are unable to compete with those offering both lower prices and longer payment terms, so that they go bankrupt, and some international suppliers have to close down some of their departments. Furthermore, the rules governing the payment of medical devices and medical services bought were not updated for the costs increasing since the first Healthcare Provision Decree (SUT) had been issued in 2007. The fact that the prices are not updated as they should be makes it quite difficult for both the medical device industry and the private hospitals.
As you now, domestic manufacturers in Turkey are not large companies, the present system puts a heavy strain on them. Because the prices are kept low, payment terms are too long, and they have to borrow loans to finance their operations. And it is difficult for them to borrow loans. Those who can borrow loans have to pay interest as high as 36%, and they cannot survive for a long time under such high interest rate. Therefore, the present model can have an extremely negative impact on localization, and it unfortunately does so.”
Gökalp pointed out that some of the members of ARTED bought factories in Turkey and that ARTED does its best to persuade its members operating factories in Russia, Poland and South Africa to invest in Turkey. Reminding that it takes a long time to make such decisions, Gökalp emphasized that their members decide on investments by taking various criteria into consideration.
ÜTS as an important project
Stating that the Product Tracking System (ÜTS) set up in Turkey to discipline the medical device and material market and to create data is very important and will generate lots of data after it begins to operate in full capacity, Gökalp said it is easy for cheap and low-quality devices to enter the market: “For example, it takes about two years to register a medical product in Russia. It is much faster in Turkey. Devices not based on high technology and therefore offered at low prices are sold one way or another.”
This is one of the biggest problems. It would be unfair to allege that all relevant products are of low quality, because some of them are of good quality, but it would be useful to set up a better control mechanism in the long term. The Ministry is aware of this fact and is working on it. One of the purposes of the ÜTS is to solve this problem. ÜTS will measure the performance of each product and of each hospital.”
Payment problem persists, laws must be amended
Chairman of ARTED Umut Gökalp explained that one of the chronic problems of this sector is the delay of payments, so that university hospitals began to delay to pay their debts again and public hospitals apply extremely long payment terms, adding “In fact, Social Security Agency (SGK) reimburses to public hospitals in 60 days, but it takes those hospitals to pay us 8 or 9 months, and it takes university hospitals to pay us years. Pharmaceutical suppliers do not have this problem. They are paid in 90 days. What we ask is not a big thing, just the same treatment. The volume of the medical device sector is about 1/5 of that of the pharmaceutical sector. The problem arises from the fact that SGK reimburses the public hospitals, but they push us back of their payment list. Although medical devices are the most important thing for public hospitals and are used in surgical operations, they pay for medical devices only after paying for all other products.”
Hatice Pala Kaya
*Bu röportaj, Medikal Akademi‘de 26 Şubat 2019 tarihli çıkan habere aittir.