HealthShare Victoria Procurement

HSV's benefits management 

HSV is responsible for delivering cost savings and broader benefits to health services through collective agreements. 

HSV has developed a benefits management framework that guides how it plans, tracks and evaluates these savings and benefits. This includes a:

• Guide for Benefits Reporting, which outlines the processes and procedures for tracking and reporting benefits
• Guide to Benefits Realisation, which details the steps involved in understanding, planning, realising, reporting and evaluating benefits within the procurement process. 

Methodology for calculating financial savings and benefits

Tracking and reporting actual savings and benefits from collective agreements is essential to be able to evaluate their performance. 

HSV measures and reports estimated financial savings and benefits based on its Guide for Benefits Reporting, which identifies 3 sources of savings and other benefits. 

HSV developed its benefits methodology following a 2012 external review of its previous methodology. The review recommended expanding benefits calculations beyond reducing and avoiding costs to include all further opportunities, such as purchasing best-match alternative products and services. This is in line with best practice. 

This approach balances cost efficiency with quality through clinically equivalent alternatives. It also reflects global health care procurement trends, where using generic products often delivers substantial savings.

Estimated financial savings and benefits

HSV estimates its annual procurement spending under collective agreements using historical spending data provided by suppliers. It then uses its benefits methodology to calculate the corresponding estimated financial savings and benefits.

Figure 3 shows a steady increase in the percentage of collective agreement spending attributed to estimated financial savings and benefits. This percentage increased from 12 per cent in 2020–21 to 15 per cent in 2023–24.

Figure 3: Estimated spending, financial savings and benefits from collective agreements, 2020–21 to 2023–2024 ($ billion)

Source: VAGO, based on HSV data and its 2020–21 to 2023–24 annual reports.

Challenges in verifying actual savings and benefits

HSV reports estimated savings and benefits. However, it does not verify if health services realise these savings. 

HSV advised that it tried measuring benefits using actual health services’ spending data, but the process was resource-intensive because there was no common product catalogue. 

Without a common product catalogue, each health service may use different:

• product descriptions
• pricing structures
• spending categories.

This makes it difficult to accurately track and compare purchases across the health system. 

This means HSV cannot verify if health services realise expected savings and benefits, which could affect the accuracy of its reported savings and benefits. 

For example, HSV includes further opportunities for cost savings in the savings and benefits figures it reports, even when health services do not adopt them. These are potential savings that health services can achieve by switching to functional equivalents (a substitute product that performs the same job or function as the original).

While identifying these as 'potential opportunity savings' in business cases is appropriate, this does not reflect actual savings and benefits. 

Two audited health services also advised that obtaining clinical approval can take months and demands significant clinical staff time. In some cases, audited health services provided clinical or operational reasons for not implementing HSV’s recommendations.

Given HSV does not track actual savings and benefits, reported figures:

• may overstate achieved benefits
• do not provide an accurate measure of value delivered to health services.

This represents a critical gap in HSV’s practice. 

Target setting under the Guide to Benefits Realisation

Measuring and monitoring actual savings and benefits against pre‐determined targets is essential for determining if collective agreements are performing as expected. 

HSV’s Guide to Benefits Realisation outlines the process for developing a benefits realisation plan, which includes:

• identifying and classifying savings and benefits
• setting baseline and target measures
• establishing monitoring frameworks. 

Limitations in HSV’s target setting 

HSV does not develop a benefits realisation plan for each collective agreement, which is a crucial step in aligning benefits with strategic objectives and business cases.

Instead, HSV sets financial savings and benefits targets in its procurement activity plan at both the category level as well as for individual collective agreements. HSV consolidates these targets into an overall savings target.

The procurement activity plan’s savings and benefits targets reflect HSV’s estimated savings before procurement. 

After awarding suppliers with contracts, HSV collects supplier-reported spending data for each health service over the previous 12 months. It then estimates annual spending under the new collective agreement based on the price set for the goods and services. 

This analysis assumes no major change in purchasing patterns. HSV reports these as actual savings, but they are in fact still estimates.

As Figure 4 shows this approach is inconsistent with better practice and HSV’s Guide to Benefits Realisation, which recommends:

• savings and benefit targets be set after procurement
• actual savings and benefits are measures throughout the collective agreement lifecycle.

Figure 4: Inconsistencies with best practice in savings and benefits target setting

Source: VAGO. 

Target versus estimated financial savings and benefits

For the 5-year period from 2020–21 to 2024–25, HSV committed to achieving $838 million in savings and benefits. This target was agreed with the Department of Health and the Department of Treasury and Finance. 

As Figure 5 shows, HSV’s estimates of total savings and benefits have consistently exceeded targets up to 2023–24. However, HSV cannot show that health services achieved these estimated savings and benefits.

Figure 5: HSV’s target versus reported estimated financial savings and benefits from 2020–21 to 2023–24 ($ million)

Source: VAGO, based on HSV data.

Since 2023–24, there has been a shift in HSV's benefits methodology, which now focuses solely on reducing costs and it does not consider cost avoidance or further opportunity savings. 

This shift has reduced the recognised cumulative benefits to $251.2 million over 4 years.

Our calculations as a percentage of each collective agreement total spending

To compare savings across collective agreements of different sizes, we calculated benefits as a percentage of the total spending under the collective agreement (value under contract). This means that instead of just reporting dollar savings, we compare the estimated savings and benefits as a proportion of health services’ estimated spending under the collective agreement.

This approach follows the Department of Treasury and Finance’s method for reporting actual financial benefits in state Budget papers for government contracts.

As Figure 6 shows, financial savings and benefits as a percentage of spending vary significantly across categories, ranging from 1 per cent for indirect products and services (an estimated $4.5 million in savings and benefits from $547.1 million of health services' spending) to 78 per cent for pharmaceuticals (an estimated $171.8 million in savings and benefits from $220.1 million of health services' spending).

There is an average of 15 per cent across all categories.

Refer to Appendix D for more information on reported spending and estimated savings and benefits under each collective agreement and category.

Figure 6: Estimated financial savings and benefits as a percentage of spending by categories, 2023–24

Source: VAGO, based on HSV data.

Variability in savings and benefits

There is significant variability in performance across collective agreements. Our review of all collective agreements found that 23 per cent have estimated negative benefits, indicating increases in costs rather than savings or positive outcomes.

HSV explained that these negative outcomes are due to diminishing returns after repetitive tendering for the same goods and services. 

HSV also noted that, without its oversight, costs could have increased by 30 to 40 per cent. HSV did not provide evidence to support this.

These examples show the differences in savings and benefits across collective agreements. The variability in performance across agreements highlights the difficulty in accurately assessing financial outcomes without a structured approach to tracking benefits.

Estimated savings and benefits for audited health services

Figure 7 shows HSV's estimated savings and benefits for the audited health services, with cost avoidance representing the most significant form of savings. This is mostly due to the amount of existing collective agreements that have been renewed or extended rather than new collective agreements created for services not previously covered.

In addition to spending levels, the variation in estimated savings and benefits also reflects differences in product mix, which is influenced by the type of patients each health service treats. 

Figure 7: Estimated financial savings and benefits across audited health services, 2023–24 ($ million)

Note: Due to Terang and Mortlake Health Service’s small spending on goods and services, its estimated savings and benefits are too negligible to be shown on the graph. These savings and benefits are as follows: -$2,444 (cost reduction), $5,078 (cost avoidance) $9,178 (further opportunities for savings).

Source: VAGO, based on HSV data.

Feedback from smaller health services

Smaller audited health services, such as Bass Coast Health, Terang and Mortlake Health Service, and South West Healthcare, advised that collective agreements help reduce staffing and resource demands for procurement processes. 

They are confident that these agreements deliver more competitive pricing than they could achieve through individual negotiations. While they could not quantify their savings and benefits, HSV’s estimates suggest that they may still be achieving some savings.

Feedback from metropolitan health services

In contrast, the larger audited metropolitan health services – Monash Health and Peter MacCallum Cancer Centre – raised concerns that savings are concentrated in pharmaceuticals. 

As Figure 8 shows, in 2023–24 HSV estimated the following cost reduction savings:

• Peter MacCallum Cancer Centre estimated $5.6 million in total. However, of this amount, $5.9 million came from pharmaceuticals, while the other collective agreements resulted in a cost increase of $319,000.
• Monash Health estimated $4 million in total, with pharmaceuticals accounting for $3.8 million (94 per cent).

Figure 8: Estimated cost reduction savings at Monash Health and Peter MacCallum Cancer Centre, 2023–24 ($ million)

Source: VAGO, based on information from HSV.

Secondary procurement

Some audited health services advised us that they conduct further sourcing activities within collective agreements to get better value. This practice, often referred to as secondary procurement, involves seeking additional quotes or negotiating with multiple panel suppliers approved under HSV’s collective agreements.

Unclear guidance 

HSV Purchasing Policy 5. Collective Purchasing and Supply Chain does not explicitly prohibit further sourcing within a panel arrangement. 

The policy states that health services must avoid practices that 'may have a subverting effect' on HSV’s functions, yet it does not define what this entails nor provide any examples. 

At the same time, HSV expressly supports health service–led sourcing for capital equipment which includes beds, mattresses, patient trolleys and treatment chairs. HSV acknowledges that pricing for capital equipment can vary depending on:

• specifications
• volume
• local requirements. 

In one instance, Monash Health got additional quotes for a bulk purchase of beds, and by negotiating with 2 panel suppliers, it secured lower unit prices and saved around $450,000. This allowed Monash to purchase more beds within the same budget it would have spent at the standard HSV price.

Changes to collective agreement terms

Although secondary procurement may offer potential savings, HSV's recent changes to its non- capital collective agreements aim to preserve its role in coordinating sourcing. These changes also aim to:

• maintain overall value for money
• ensure equity across health services
• ensure consistent procurement practices
• safeguard the collective purchasing power of its agreements. 

However, one audited health service raised concerns that HSV’s new changes may also restrict the use of rebates. These refer to discounts or payments returned to buyers based on purchase volumes and which are common in pharmaceutical purchasing. 

For example, this audited health service told us it receives a 12 per cent rebate on a single pharmaceutical product, which generates an estimated $340,000 in savings from a projected $2.2 million annual spend. 

Restricting such rebate arrangements could result in significant lost value across the health system. HSV advised rebate arrangements may breach contract terms or distort the intended outcomes of collective agreements.

Identifying non-financial benefits

HSV also identifies non-financial benefits in business cases. Although some can be difficult to quantify, they can provide additional value to the collective agreement. 

Non-financial benefits can include environmental, social and risk management outcomes, such as: 

• environmentally friendly alternatives being available
• reduced procurement risks through supplier vetting
• improved service quality through long-term supplier relationships
• lowered commercial and legal risks through standardised and legally endorsed terms.

Gaps in monitoring non-financial benefits

HSV outlines non-financial benefits in the business case for each collective agreement.

They are often important in gaining endorsement or approval for a business case, as they highlight potential long-term value or sector-wide improvements.

Where possible, HSV should measure and monitor them. But it has not done this consistently, even in cases where the benefits – such as waste reduction and carbon emissions – are relatively easy to quantify.

HSV has said that, in some cases, to measure and monitor these benefits it will need increased effort and support from health services to:

• identify non-financial benefits
• implement changes
• report on outcomes. 

However, we found instances where tracking non-financial benefits would not have required direct input from health services and HSV has failed to monitor them. 

For example, the business case for Compounded Chemotherapy and MAB Preparations outlined social procurement commitments that HSV asked of suppliers, such as:

• supporting safe and fair workplaces
• women’s equality and safety
• environmentally sustainable business practices.

However, HSV has not tracked if its suppliers fulfilled these commitments. This creates a gap in understanding the broader impact of collective agreements. 

As HSV does not monitor all these benefits, it cannot assess if health services are realising them. This gap not only limits HSV’s ability to show the full value of its collective agreements, but it also risks undermining its decision-making process.

Importance of accurate, comprehensive and timely data

Accurate, comprehensive and timely data is critical for effective procurement decision-making and achieving benefits. 

Reliable data should underpin how HSV measures:

• savings
• financial benefits
• overall value from collective agreements. 

Incomplete or inaccurate data can lead to flawed analyses and undermine HSV’s ability to deliver value to health services.

Statewide data 
challenges

HSV has told us that the quality, consistency and meaningfulness of procurement data is a statewide issue. 

When analysing spending and savings data for collective agreements, HSV faces significant challenges, due to:

• the quality of health services’ systems 
• the availability of comprehensive spending, price and volume data. 

Some purchase orders and invoices have little to no information or product descriptions, and they provide limited clarity on the goods or services procured. 

This is not compliant with the Department of Treasury and Finance’s Financial Reporting Directions, which require accurate and complete procurement records. These gaps hinder HSV and effective procurement oversight and HSV and health services' ability to monitor compliance.

Additionally, health services specify goods and services differently, making comparative analysis more complicated. 

Examples of the data challenges identified by HSV that make it difficult to use accounts payable data include:

• the same supplier appearing under multiple names
• missing or unclear invoice descriptions
• inconsistent product descriptions. For example, HSV identified 94 different variations for the drug adrenaline (epinephrine) from its standard name.

Assessment of data quality 

We assessed 3 main datasets collected by HSV against the 7 dimensions of data quality outlined in the Department of Premier and Cabinet’s Data Quality Guideline. Although this guideline does not formally apply to HSV, it is recognised as best practice and provides a framework for assessing critical and shared datasets.

These datasets were:

• supplier sales data
• health services’ accounts payable data
• health services’ purchase order data.

Our assessment found that HSV’s supplier sales data met most data quality requirements, while health services’ accounts payable and purchase order data had significant gaps and weaknesses across several dimensions.

Appendix E shows the results of our assessment of the datasets HSV collects against the key data quality dimensions.

Health services’ accounts payable and purchase order data should conform to a standardised framework. This would allow HSV to:

• accurately determine total purchases for each health service
• make more precise calculations of contract value and financial benefits under collective agreements. 

Given the limitations of health services’ data, HSV relies on its suppliers to capture and report spending data and requires all contracted suppliers to periodically submit sales data based on agreed standards and definitions. 

But it faces challenges in validating this data against health services’ data. This data is rarely useful for analysis due to inconsistent:

• definitions
• groupings
• terminology. 

This undermines HSV’s ability to effectively measure collective agreements' performance and savings, particularly for new collective agreements where historical data is difficult to interpret through accounts payable and purchase order records.

HSV also cannot easily validate self-reported supplier data, creating risks such as:

• excluding category items not supplied by participating suppliers
• underestimating historical spending and volumes due to incomplete supplier data.

Despite these challenges, HSV could leverage supplier-reported data more effectively. This is particularly the case for existing agreements, where suppliers have historical pricing and volume information. 

By systematically tracking price and volume changes across collective agreement periods, HSV could more accurately assess realised savings. While this may involve additional effort and coordination from both HSV and health services, it would strengthen the accuracy and credibility of reported savings.

HSV's collective agreement procurement process

A business case provides an evidence-based rationale for:

• market engagement
• resource allocation
• funding commitments.

As Figure 9 shows, HSV follows an 8-stage procurement process with key stages requiring business cases at 2 ‘gateways’. 

Figure 9: HSV's collective agreement procurement stages

Source: VAGO, based on HSV's sourcing procedure manuals.

Assessing key elements of business cases

We examined the business case documentation for a sample of 16 collective agreements to assess if they provided an audit trail of the decision-making process and met best-practice standards. 

We selected these based on the following criteria:

• coverage across the 5 collective agreement categories 
• different activity types, including:
  • creating new collective agreements 
  • renewing or extending existing collective agreements 
  • looking at renewal options
  • reviewing price
• feedback from health services on specific products and collective agreements.

Our assessment focused on the following elements in each business case:

• clear objectives for establishing or renewing an agreement, including an assessment to confirm the agreement aligns with HSV’s strategic goals and that it meets a service need
• analysis of past spending data and future spending projections 
• comprehensive market analysis 
• expected financial and non-financial benefits, including assumptions and methodologies for calculating financial benefits 
• consideration of sourcing options.
• approval and sign-off.

Figure 10 summarises the results of our assessment of HSV’s business case documentation against the key elements.

Figure 10: Assessment of key elements of collective agreement business cases

Note: ‘Substantially met’ means the business case documentation adequately addresses requirements. ‘Partially met’ means it partially addresses requirements with identifiable gaps. ‘Not met’ means there are weaknesses that mean the documentation falls short of the minimum required.

Source: VAGO analysis of business cases provided by HSV. 

Most business cases substantially met the key elements we assessed against. However, HSV could improve its business case documentation by more clearly outlining the objectives for establishing the collective agreement and explaining how the category strategically aligns with the annual procurement activity plan.

HSV advised us that it engages with the health sector on potential focus areas and provides visibility of upcoming and renewing collective agreements through the procurement activity plan. But this was not clearly reflected in the business cases we reviewed.

By addressing these gaps, HSV could:

• make sure all business cases align with its strategic direction and annual plans
• enhance the effectiveness of all its sourcing decisions
• enhance the value delivered through all collective agreements.

Challenges in benchmarking collective agreement pricing

Benchmarking is the process of comparing an organisation’s performance and pricing for goods and services against similar organisations.

Benchmarking its collective agreement pricing against comparable organisations can help HSV:

• identify best practices
• improve cost management
• make data-driven decisions. 

However, as identified in our 2005 audit Health procurement in Victoria, there are several factors that complicate the benchmarking process, including:

• differences in purchase volumes (larger volumes may secure volume discounts)
• contract terms (for example, if delivery is included or if there are separate freight charges)
• payment terms
• frequency of previous market tests (more frequent tests may lead to lower prices)
• market conditions at the time of pricing
• sequence of contract negotiations (prices in one jurisdiction may serve as benchmarks for others).

Despite this, benchmarking remains an important tool for assessing procurement performance and identifying opportunities for improvement.

Gaps in HSV’s benchmarking approach

HSV’s benchmarking approach has significant gaps. Without a formal benchmarking process, HSV is limited in its ability to systematically evaluate procurement outcomes and make sure it gets value for money.

If HSV established a formal benchmarking process, this would align its pricing and cost management practices with best practices across comparable markets. 

In turn, this would allow it to make more informed, data-driven decisions and get better value for money.

HSV’s 2012 external review also recommended that it develop scorecards to capture procurement performance, including measuring its return on investment. 

This would involve quantifying the financial and non-financial benefits achieved through collective agreements and comparing these against HSV’s operational costs of carrying out procurement. This would help HSV show the value generated by its activities and support ongoing performance monitoring and accountability.

HSV’s compliance framework

The Financial Management Act 1994 requires public sector agencies, including health services, to maintain effective controls over procurement processes to make sure they comply with government supply policies.

All health services must purchase from collective agreements unless HSV grants an exemption. If they fail to, this may mean they do not achieve the best value for money on their purchases.

The Health Services Act 1988 requires HSV to monitor health services to make sure they comply with HSV’s purchasing policies and directions. It also requires HSV to report irregularities to the health minister. 

HSV has developed a compliance framework as shown in Figure 11. 

The framework includes:

• compliance monitoring activities, such as:
  • a recurring 3-year program where health services are required to conduct an audit on their compliance with HSV’s purchasing policies and directions  
  • an annual self-assessment where health services evaluate their compliance with HSV's purchasing policies and mandatory collective agreements, including identifying and explaining any instances of non-compliance, such as contract leakage
  • annual attestation
• support and prevention activities, such as:
  • education
  • training
  • guidance.

Figure 11: HSV's compliance framework

*HSV has exempted health services from attesting compliance with HSV’s collective agreements for on and off-contract spending in their annual reports, as specified in HSV Purchasing Policy 1: Governance.

Source: VAGO, based on HSV’s compliance framework guidance.

HSV does not actively monitor contract leakage

Despite HSV‘s compliance activities, contract leakage is still occurring. For example, during the 2019 renegotiation of the Sterilisation Consumables and Related Services collective agreement, HSV’s predecessor, HPV, identified over $2.5 million in contract leakage across more than 50 health services. This was approximately 21 per cent of the total value of the collective agreement.

Identifying contract leakage is complex because detailed product-level scope needs to be interpreted across numerous collective agreements. Some purchases may appear non-compliant but may, in fact, fall outside the scope of a collective agreement. This could be due to a product's:

• size
• volume
• specific clinical requirements, such as a different format or variation needed for patient care not covered under the collective agreement at the time of purchase.

Changes to compliance attestation requirements

Under HSV’s purchasing policies, HSV requires health services to attest that they have appropriate internal controls and processes in place to make sure they materially comply with all requirements. This includes using mandatory HSV collective agreements.

In 2022–23, HSV began reviewing its purchasing policies and found that health services’ compliance attestations were not robust enough to detect non-compliance. 

To reduce the risk of inaccurate reporting to parliament, starting 2022–23, HSV exempted health services from attesting in their annual reports that there is no contract leakage. However, health services are still required to provide an overall attestation of compliance with HSV's purchasing policies.

This decision was driven by:

• data quality issues
• reliance on manual systems
• limited capacity or capability within some health services.

Health services remain responsible for complying with collective agreements and preventing contract leakage. While HSV's exemption decision was made to address concerns over data quality and reporting accuracy, this exemption means there is reduced oversight of contract leakage. 

However, compliance monitoring continues, and HSV has initiated a project to develop systems and processes for identifying contract leakage, as discussed below.

HSV’s pilot program to address contract leakage

HSV initiated a pilot project in March 2023 with 4 health services to develop systems and processes for identifying contract leakage. 

In the pilot, HSV tested for contract leakage by reviewing purchase orders over a 3-month period for these health services and comparing them to the:

• central pricing schedule, which is a list of pre-negotiated prices for goods and services
• the Victorian product catalogue, which is a list of approved products available for purchase by Victorian health services.

It used purchase order data instead of accounts payable data, as purchase orders include product or part numbers. This made it easier to match items to HSV's collective agreements. 

By comparing this data to the Victorian product catalogue, HSV identified purchases made by health services from suppliers without a contract for those products. 

HSV’s initial analysis confirms that contract leakage is happening. It has identified approximately $3 million in potential leakage across 24 collective agreements in the 4 health services in the pilot. 

However, this estimate is likely to be overstated. HSV is working with the health services to confirm the actual leakage. 

Figure 12 shows the extent of contract leakage across the 24 collective agreements at the 4 health services in the pilot.

In one case, HSV and one of the health services in the pilot identified over $800,000 in potential contract leakage through a combination of HSV’s analysis and the health service’s own review. 

This leakage happened because its maintenance team incorrectly applied ministerial directions and instructions intended for construction works and services instead of HSV policies.

HSV expects to complete the pilot project in 2026. This includes developing a data analytics tool to:

• help health services assess spending data more accurately
• support compliance attestations. 

The tool will also enable HSV to better monitor and follow up on potential contract leakage.

HSV’s approach in the pilot is sound. Leveraging purchase order data, given the current issues with accounts payable data, allows for more precise analysis. 

Developing data analytics is a promising step towards improving data consistency and visibility. However, HSV’s future work should focus on collaborating with the sector to gradually enhance data quality. This would provide a more complete view of procurement activity.

Health services’ 
monitoring for contract leakage

While HSV has a responsibility to monitor compliance, health services must also have systems and processes to prevent contract leakage. 

Health services are better positioned than HSV to detect contract leakage by analysing their own finance and procurement system data.

HSV also has an important role in enabling and overseeing compliance by:

• monitoring system-wide patterns
• supporting capability uplift
• prompting action where necessary.

However, the 5 audited health services do not know if leakage is happening and cannot provide evidence they are effectively preventing it.

HSV and audited health services have identified several challenges faced by health services, including:

• a lack of systems, capability and capacity to gather and analyse data for assessing spending under collective agreements 
• staff shortages, particularly in procurement and finance, and particularly for small to medium-sized and regional health services.

Monash Health has also identified challenges in determining if purchases are compliant, as collective agreements may not include the goods or services that meet a health service’s specific requirements.

For example, a health service might need a product in a different size or format that is not covered by the collective agreement. Without detailed guidance on what constitutes contract leakage, it is unclear if such purchases would be considered non-compliant.

The finance and procurement systems at audited health services do not easily allow them to identify purchases made through a collective agreement. This means it is difficult for these health services to make sure they comply with HSV’s policies, including using mandatory collective agreements.

Health services are required to comply with the Financial Management Act 1994 and HSV's purchasing policies. Failure to do so could:

• mean health services miss opportunities to achieve best value for money 
• undermine the broader objectives of collective agreements.

Exemption criteria

Under HSV Purchasing Policy 5: Collective Purchasing and Supply Chain, health services that wish to opt out of a collective agreement must apply for an exemption. 

The policy defines the process, criteria and conditions for granting exemptions, ensuring a structured approach to procurement outside of collective agreements. 

To maintain consistency, HSV has also developed a guide for its employees to follow when managing exemption requests.

Health services may apply for an exemption under the following circumstances.

While exemptions may be necessary, there are risks if HSV does not manage the process effectively. 

Justifying and maintaining a record of exemptions is crucial for upholding the integrity and cost effectiveness of collective agreements. 

A central record:

• helps HSV to make sure health services comply
• enables trend analysis. 

By tracking exemptions, HSV can identify patterns, such as frequent requests, that may indicate issues with the scope or offerings of the collective agreements.

Trends in exemption requests

HSV records all exemption requests and notifies its procurement and supply chain committee, following the agreed authority delegations for decisions about exemptions. 

As shown in Figure 13, the number of exemption applications submitted by health services has declined from 39 in 2020–21 to 6 in 2023–24. 

HSV attributes this decline to:

• improved guidance
• process education
• proactive engagement with health services
• the value delivered by collective agreements.

While HSV reviews exemptions objectively, if it formally tracked key metrics this could improve transparency and help identify systemic issues within collective agreements. These key metrics could include: 

• exemption processing times
• patterns in exemption requests by health services
• potential links to contract leakage.