The CNEP Presents 2024 Recommendations to Advisory Commission That Could Unlock US$100 Million Per Year

In a presentation to the Advisory Commission for Structural Reforms in Public Spending (an advisory group coordinated by the Ministry of Finance and the Budget Office, DIPRES), the National Commission for Evaluation and Productivity (CNEP) outlined the main findings of its 2024 study “Efficiency in the Management of Procurement and Inventory in Hospitals,” commissioned by the Government of Chile.

The Commission emphasized that gradual implementation of a series of proposals in the report could free up fiscal resources in the medium and long term—an estimated US$100 million per year—without compromising the continuity or quality of hospital services.

Between 2018 and 2023, hospital spending on drugs and medical supplies increased by 23%, outpacing the growth of government operating expenses (19%) and quadrupling the population growth during the same period (8%). Currently, this spending exceeds US$1.6 billion annually and is concentrated in only 17% of hospitals nationwide. While this trend represents mounting pressure on the public budget, it also offers a concrete opportunity to contain expenditures without sacrificing quality, thus contributing to the sustainability of both the hospital system and overall public spending.

Of the total fiscal savings estimated—about US$100 million annually—CNEP attributes approximately US$70 million to management measures, such as the bundling of surgical supplies (standardizing materials for low-complexity procedures) and coordinated purchasing among hospitals. The remainder would result from improved hospital logistics, including centralized warehousing, inventory traceability, and more efficient distribution.

Presentation Highlights

On Monday, June 23, 2025, as part of the work by the Advisory Commission for Structural Reforms in Public Spending, CNEP was invited to present its findings on hospital purchases of pharmaceuticals and medical devices. Executive Secretary Rodrigo Krell and Senior Economist José Luis Contreras provided evidence supporting the need and potential to improve healthcare spending efficiency. They outlined concrete recommendations aimed at optimizing a critical area of the public budget.

Toward More Efficient Spending on Drugs and Medical Devices

The study confirms that hospital spending on these items surpasses US$1.6 billion per year—about 25% of central government spending on goods and services and nearly 2% of the total operational budget.

Efficiency improves when hospitals bundle interventions (standardizing materials for similar treatments), aggregate demand, and make joint purchases, supported by third-party logistics services that assist with inventory management.

Since 75% of the spending is concentrated in only 33 hospitals (17% of the total), CNEP recommends that initial efforts target these institutions to maximize early impact.

Additionally, around 60% of surgical care involves low-complexity procedures suitable for bundling. Evidence suggests that standardizing supply sets can reduce treatment costs by up to 20% without affecting outcomes. Coordinated purchasing has historically achieved price reductions between 10% and 40%, which could also reduce the wide spending variation (over 50%) seen across hospitals.

The report notes critical gaps in inventory management: heterogeneous, non-interoperable records; 60% of hospitals using internal systems; limited stock visibility with up to 40% held in untraceable peripheral storerooms; and unclear waste metrics (CGR audits suggest a 1.28% drug loss rate, double the declared 0.66%). External logistics services can reduce inventories by over 20% and overstocking by 50% without disrupting operations.

Concrete Proposals to Increase Efficiency

CNEP identified three main strategies:

1. Surgical Supply Bundling: Implementing bundling for low-complexity procedures could reduce annual spending by 1–2% (US$16–32 million), with minimal implementation cost. The Ministry of Health’s Regional Resolution Centers (CRRs) already reported savings of 35% on certain supplies after adopting these practices.
2. Coordinated Purchasing: Expanding coordinated hospital procurement—which accounted for only 5% of bids in 2022 and was not used in 2023—could yield 1.5–2.5% savings (US$24–40 million annually). Past efforts reduced costs by up to 59% for PPE, 40% for enteral nutrition, and 50% for anticoagulants.
3. Public-Private Partnerships (PPPs): CNEP recommends evaluating a PPP model for regional logistics hubs, based on the UK’s NHS Supply Chain and Peru’s EsSalud. Operators would manage warehousing and last-mile distribution, providing hospitals with essential inventory equipment and systems (e.g., ERP, barcode scanners). Pilot results from 2006 showed significant improvements: 75% labor savings, 80–90% warehouse intake time reduction, and complete inventory visibility.

Estimates suggest this PPP model could save 2–8% annually (US$36–144 million) over 3–5 years, with operating costs around 2.5% of total medical supply spending (US$45 million), or lower with integrated services.

An Opportunity for Fiscal Efficiency in Healthcare

Rodrigo Krell emphasized that these proposals offer a real opportunity to curb rising health costs via better management, without harming clinical care.

Each strategy—bundling, coordinated purchasing, and logistics modernization—carries a high fiscal impact and relatively low implementation cost.

Bundling could start with outpatient surgery pilots; coordinated procurement can scale quickly with administrative support; and PPPs offer long-term structural transformation. Combined, these actions chart a feasible roadmap for freeing fiscal space while safeguarding healthcare quality.

The Advisory Commission for Structural Reforms in Public Spending—composed of five experts from academia and public service—was tasked with identifying inefficiencies and making evidence-based proposals to achieve the government’s fiscal goal of a 0.0% structural deficit by 2029.

CNEP reiterated its willingness to support implementation and its ongoing commitment to evidence-based public policy in Chile.