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Responsible medical device strategies can help curb rising cost of health care

August 25, 2010
by Lars Thording

This report originally appeared in the July 2010 issue of DOTmed Business News

As the U.S. health care overhaul unfolds, hospitals are under increased pressure to cut costs while maintaining quality patient care. During this time of change, hospitals must be looking for innovative supply chain strategies that reduce costs and optimize resources in order to support quality care.

Evaluating responsible medical device strategies is one possible solution. Congress is looking at a reform bill to give hospitals more leverage to negotiate price with medical device manufacturers. However, legislation will take time. One medical device solution that offers immediate cost savings with no capital investment is the purchase of reprocessed "single-use" devices (SUDs). Reprocessing programs are currently employed by more than 50 percent of U.S. hospitals and they have become proven solutions for addressing medical, economic and environmental responsibilities without compromising safety or efficacy.

Hospitals can expect to pay about 50 percent less for a reprocessed medical device versus what they would pay for the same device labeled as 'single-use.' Administrators understand that they're not only saving 50 percent of the purchase cost for each device, but they're also saving money that would be spent on special handling and waste management of that device were it discarded into the waste stream without further re-use. The cost savings add up quickly.

Ascent, a division of Stryker and the largest manufacturer of reprocessed SUDs in the U.S., tracks annual cost savings for its customer base, which comprises more than 1,800 hospitals and hospital systems. In 2008, Ascent's customers saved more than $138 million. In 2009, on a per hospital basis, some facilities saved more than $600,000 through reprocessing programs. While these numbers are impressive, there is room for even more significant savings to the health care system in the future. According to the Association for Medical Device Reprocessors, if just 1 or 2 percent of all medical devices labeled by the manufacturer as single-use were reprocessed, the health care industry would save almost $2 billion every year.

Reprocessing allows hospitals to deploy more of their scarce resources to enhance patient care through quality initiatives. Each hospital can decide where to re-direct its cost savings based on its greatest needs, which could include hiring staff or purchasing equipment. For some hospitals, cost savings from reprocessing can make the difference between hiring or firing a nurse. In addition to direct cost-savings, some hospitals are experiencing an unexpected benefit from purchasing reprocessed devices. They are using the lower-cost devices as leverage when negotiating the price of single-use devices with OEMs.