Single-source Medical Device Purchasing Savings

By November 20, 2019 Commentary

As we often noted, price is the primary cause of high health spending in the US.  We have high prices for services, like inpatient hospitalizations and specialist visits.  But we also have very high medical product prices–drugs, biologics and medical devices.  The cost of many medical devices that are implanted is bundled into hospital charges for the procedure.  As hospitals come under their own cost pressures, they have looked at how to lower the cost of these devices.  One obvious approach is to force manufacturers to bid for the business and only use one source for an implantable device.  A study in JAMA Network Open explores whether such an approach generates cost savings or has any implications for quality.   (JAMA Network Open)   The article describes efforts by the Cleveland Clinic to reduce its cost of devices.  The institution had first reduced the number of vendors for commodity-type implants and also sought a bundled price on devices and equipment used for minimally invasive surgery.  In 2015, the clinic went to a sole source for commodity devices and renegotiated prices on more complex devices.  The study focussed on spinal implants and the cost savings achieved from this approach, while looking at quality of care outcomes.

Surgeons often have preferences around certain devices, and those preferences may be financially motivated.  A committee of physicians and surgeons was used to make decisions, but doctors with significant financial interests related to a particular device were not permitted to vote.  Following the purchasing process, adherence to the selected devices was monitored and non-adherent physicians were counseled.  The quality study examined adults who received a lumbar fusion from 2009 through the middle of 2017.  The patients were grouped into those treated during the multivendor period, about 272 patients, those with a dual vendor, 587 patients, and those treated during the single vendor period, 514 patients.  Patients were matched based on health status and various demographic factors.  The outcomes were need for revision surgery, complications, 30-day readmissions and certain patient-reported measures, like pain and quality of life.  Revision and complication rates showed no statistical difference across the patient groups.  Readmissions, which were showing a declining trend in any event during this period, also were not significantly different.  The patient-reported outcomes also were similar.  The intitial efforts to limit purchasing to fewer vendors saved the clinic about 25% on device cost for spinal implants.  The move to a sole vendor for commodity devices created a further 21% savings.  It is very clear that these approaches generated real savings with no risk to quality of care.  The biggest impediment to wider adoption of these tactics is physician biases and preferences, which are often financially motivated.  Involving doctors in the purchasing process, as was done here, may help reduce resistance, but in any event, hospitals and other purchasers should be encouraged to force change if needed.  If widely applied, such purchasing tactics could save the system a lot of money.

Kevin Roche

Author Kevin Roche

The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry through Roche Consulting, LLC. Mr. Roche is available to assist health care companies through consulting arrangements and may be reached at khroche@healthy-skeptic.com.

More posts by Kevin Roche

Leave a Reply