Health Purchasing Victoria expects to spend about $1.3 million to start building a common product catalogue for the state's public hospitals.
The start-up costs are laid out in a procurement report (pdf) by the Victorian Auditor-General.
"Initial software development and implementation is estimated at $600,000 with
$100,000 a year in licence fees," the agency told the auditor.
"Staffing costs for implementation and ongoing management are estimated at $600,000 in year one, rising to $950,000 per year from year three onwards.
"HPV is working with health services to specify requirements for interfaces between [the Victorian catalogue] and the various catalogue systems they use. Additional costs for such interfaces are not yet quantifiable."
HPV has been working on the catalogue since 2009 but only received "in principle" approval of funding from the state's Department of Health to develop it in the middle of this year.
The department had previously allocated HPV some project funding for scoping work on the catalogue.
Development of the catalogue is a necessary step for Victoria to comply with a national product catalogue initiative run by the National e-Health Transition Authority (NeHTA).
It will also aid the creation of a database of public hospital purchasing data for the state. The database is one of HPV's statutory obligations under the Health Services Act.
Currently, HPV - which is the central procurement agency for public hospitals - holds contracts that account for about 23 percent of the annual public hospital purse.
Individual hospitals are responsible for the remainder of their spending and that spend is hard to track.
"Hospitals maintain separate catalogues and identify the same products in different ways making it very difficult for HPV to get reliable data on how much the sector is spending in each product category," the auditor noted.
Consistent data on the 77 percent - equivalent to $1.2 billion - of spend not covered by HPV's group purchasing power is necessary to allow HPV to identify products it could help negotiate a lower price for in future.
The auditor said that the database and catalogue projects needed to be finished "as soon as possible".
Full implementation of the Victorian product catalogue across the state's health services is expected by December 2013.
It is expected to deliver savings of around $2.9 million a year.