Trend Watch: 3 New Realities of the Health System-Supplier Relationship That Are Improving Care

Updated on August 26, 2023
Bill Scott Strykers Sustainability Solutions copy

As part of the Affordable Care Act (ACA) rollout over the past seven-plus years, health systems have implemented cost containment initiatives and value analysis committees to identify creative ways to reduce costs without compromising patient care.

As the pressure to reduce costs continues today, health systems are now seeking more from their suppliers, causing shifts in those relationships. Here are three trends that have emerged in the health system-supplier relationship and the benefits to healthcare systems that can result.

1. Expanding the best product, best price mantra.

It’s well known that health systems are increasingly interested in doing business with suppliers that enable them to achieve financial sustainability without compromising patient care. They are focused on getting the best possible product for the best possible price. Now, they’re taking it one step further by looking for products that support their environmental sustainability as well.

There’s a long-standing perception in healthcare that you have to choose between cost and quality, or cost and environmental impact. This is no longer the case, but some – particularly clinicians – are still skeptical.

Take single-use medical device (SUD) reprocessing as one example. For nearly two decades, health systems have purchased reprocessed medical devices – that otherwise would have been thrown away – at a substantial discount to new devices. Reprocessed SUDs must meet FDA regulatory requirements for safety and efficacy before they can be offered for sale to health systems. Yet, some providers remain reluctant to take advantage of the practice’s financial and environmental benefits.

Self-proclaimed skeptic, Terrence Loftus, MD, MBA, FACS, former Medical Director Surgical Services and Clinical Resources at Banner Health, and some of his colleagues set out to independently conduct a double-blind study to see whether the reprocessed SUDs they used in their surgical cases performed any different than new devices. Their study, published in the December 2015 issue of the Journal of Medical Devices found that OEM devices were nearly five times more likely to be defective than reprocessed SUDs. Dr. Loftus admits he was surprised by the outcome, and it was a pivotal moment for him. “In the era of value-based purchasing, medical devices that cost twice as much and are reported to be defective more frequently challenge conventional definitions of reliability and value,” Loftus said. At Stryker, health systems have shared that the value of reprocessed SUDs is critical to maintaining both financial and environmental sustainability to carry out their patient care mission.

2. Reducing dependence on vendor support.

It’s important that health systems maintain independence in supply decisions. While vendor representatives can and, in many cases, do serve an important clinical support role, they can impact purchasing decisions that affect the organization’s bottom line.

At Stryker, we’ve witnessed vendors that threaten to remove clinical support in the EP Lab for cases that use reprocessed devices. We have also seen vendors request exclusive agreements, which limit competition and may prevent the health systems from negotiating contracts that best meet their financial goals.

Some health systems that are facing this challenge are addressing it by educating their staff to play the support role representatives once did so they can maintain independence in their supply decisions. Some suppliers, like Stryker, are even helping provide the education staff need in the EP Lab.

3. More shared-accountability options.

Health systems need all stakeholders, including suppliers, to be accountable in helping them achieve their goals. To that end, an increasing number of suppliers are offering shared-accountability contracts. The specifics for each supplier’s proposal may look slightly different, but they all include some form of risk- or value-sharing model.

One form is a savings guarantee model. The supplier accepts accountability for helping participating health systems meet mutually agreed upon savings goals. Health systems can feel confident that their savings goals will be achieved because they have a vendor that is willing to work with them to implement the best practices that drive these savings. 

Another way companies are providing shared-accountability is by refunding the purchase price of products if they do not meet their expectations. This provides health systems additional assurance on product performance.

In today’s healthcare market, providers are holding suppliers accountable. They expect them to be collaborative and active partners in providing value-based care while maintaining their sustainability. It’s what’s good for health systems, patients and the future of healthcare.

Bill Scott is senior marketing director for Stryker’s Sustainability Solutions division, an industry leader in providing third-party medical device reprocessing and remanufacturing services.