NPO & Social Impact · Procurement & Sourcing
A lower price is not a saving if the patient cannot use the product
Commercial optimisation in healthcare procurement cannot be separated from clinical suitability. KuTh ran the commercial and product-validation tracks in parallel — invoice analysis, benchmarking and repricing on one side; intended use, fit, skin and prescription factors, continuity of supply and specialist review on the other. KuTh structured the comparison. The client’s clinical specialists kept the acceptance decision.
- R12.07m
- annual portfolio reconstructed
- 3
- procurement sectors segmented
- 8.22%
- initial modelled opportunity
- ~39.7%
- of later model clinically contingent
Proof context: A national health-focused non-profit organisation
The situation
Supplier totals could not answer the question
For a national health-focused non-profit, KuTh reconstructed medical-product purchasing from supplier invoices across twelve months, separating the portfolio into primary ostomy products, ostomy-support products and general medical consumables. The work moved below supplier-level totals to individual products, quantities, price ranges and purchasing patterns.
The financial pattern was uneven in a way that spend size alone would have hidden. Primary ostomy products made up almost three-quarters of the baseline but carried only a 1.78% opportunity rate. Ancillary products were a fifth of spend yet carried 31.49% — and produced 78.62% of the total initial opportunity. Substitution flexibility and price dispersion matter more than category size.
Baseline architecture
Where the spend and the opportunity actually sat
Scroll table sideways →
| Sector | Annual spend | Share | Initial modelled opportunity | Rate |
|---|---|---|---|---|
| Primary ostomy products | R8,895,870.32 | 73.71% | R158,452.92 | 1.78% |
| Ostomy ancillary / support | R2,478,020.83 | 20.53% | R780,324.88 | 31.49% |
| General medical consumables | R695,295.79 | 5.76% | R53,768.38 | 7.73% |
| Total | R12,069,186.95 | 100.00% | R992,546.18 | 8.22% |
The R992,546.18 was a modelled annual opportunity on the reconstructed portfolio, explicitly dependent on data checking and — where products changed — clinical and product validation. It is not a realised saving.
The core principle
Two tracks, run in parallel and never merged
A lower price is not a valid saving if the product cannot be safely or practically substituted, prescribed, accepted, supplied reliably, or approved by the client’s clinical specialists.
- The commercial track. Invoice and price analysis, supplier benchmarking, market testing and repricing — establishing what the portfolio cost and what it could cost.
- The product-validation track. Intended use, fit, material and skin considerations, patient and prescription factors, continuity of supply and specialist review — establishing whether a change was actually possible.
- The decision boundary. KuTh structured the comparison so specialists could judge an alternative on its real use attributes rather than a generic claim that two products were “similar”. The acceptance decision stayed with the client’s clinicians throughout.
What clinical review did to the model
A rejected alternative is a control event, not a failed analysis
Clinical review was not a one-off sign-off. Over six weeks in early 2024 the permissible scope narrowed — primary stoma products were to remain unchanged while ancillary products stayed open; alternatives were accepted after due diligence; further alternatives were requested; and at least one previously accepted alternative was later reconsidered. Each change moved the financial model.
The lesson is not that clinical review made optimisation impossible. It is that clinical review changed the set of savings that could responsibly remain in the implementable model. Approximately 39.7% of the later provisional position was exposed to whether specific alternatives were accepted.
Patient factors compound this. Someone may be accustomed to an existing product, a doctor may have prescribed a particular one, stoma shape and skin condition affect fit, and medical-aid exhaustion can drive demand for cheaper alternatives later in the benefit cycle. A model assuming 100% conversion would overstate value if only a portion of patients can or will convert.
Result classification
Six states, and what each one permits you to say
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| Classification | Publication treatment |
|---|---|
| Baseline spend | May be reported as the portfolio reviewed, subject to stated source limitations |
| Modelled opportunity | Report as opportunity only — never as realised saving |
| Provisionally validated | Report with explicit qualification and status |
| Clinically accepted | Commercial benefit can move toward implementation modelling |
| Implemented | Purchase route, pricing and product have actually changed — track against orders and invoices |
| Realised | May be reported as realised only to the extent actual transactions support it |
This engagement reached modelled and provisional. It did not establish a single final realised figure, and none is claimed.
Evidence and publication boundary
Neither R992,546.18 nor R1,788,234.30 is presented as a fully realised annual saving, because the source evidence does not support that classification for the whole amount. The first is an initial model; the second a later provisional position after incumbent engagement and further price work, with checks and acceptance still underway.
The source preserves its own limitations and so does this page: the first clinical review rested on an invoice set roughly 80–85% complete; product acceptance status changed during the engagement; patient uptake remained uncertain; supplier terms were still developing and could carry commitment conditions; the later model was still being cross-checked to the accounting system; a distributor change created continuity uncertainty; a supplier asserted an undercharge requiring reconciliation; and some planned supplier and medical work was halted, limiting completion of implementation steps.
Client and supplier identities, product brands and unit rates are withheld. A publication does not become weaker by stating its limits — it becomes more credible, because a reader can tell what the evidence proves from what stayed provisional.
Supporting documents