Exploring How Demand and Supply Knowledge Can Improve Centralized Public Health Procurement

Despite the growing shift towards procurement centralization among governments around the world, questions remain as to how to increase purchasing within centralized frameworks. While centralized purchasing offers many benefits related to efficiency and quality control, users often prefer more flexible options for purchasing. An unanswered question is how knowledge of user requirements and market trends leads to framework agreements that reduce the inclination for users to purchase goods and services on their own. This study employs healthcare purchasing data from 21 regions in Italy from 2013–2023 to explore how different sources of knowledge about demand and supply affect centralization rates—both in respect to asset-specific and non-asset-specific products. Fixed effects regression results indicate that knowledge of supply gleaned from integrating technical experts into procurement teams enhances centralization for a range of offerings. The influence of demand-related knowledge on centralized purchasing varies by product type, however, with interpersonal exchanges proving more effective for non-asset-specific categories and logistical support mechanisms proving more critical for asset-specific product categories. The results provide longitudinal insights into conditions that are typically studied through cross-sectional data. They also offer important implications for the many countries operating publicly provided health programs, as well as those pursuing broader reforms tied to procurement centralization.