By Grant Siders

Roughly half of an average hospital’s supply chain expenditures are paid after the product has already been used. For devices like joint replacements, pacemakers, or other implants, sales reps often walk products directly into the hospital, and only later does billing and reconciliation occur. This process, known as “Bill-Only,” has plagued hospitals and suppliers for years.

So-called Bill-Only “solutions” have emerged, automating some of the manual steps. But automating a broken system doesn’t fix it; it just perpetuates the problem. What’s needed is something bigger: a true network that benefits hospitals and suppliers alike.
The problem with bill-only
Bill-Only transactions create misalignment between suppliers and hospitals about price, terms, and product at the point of use. Contracts may exist, but documenting item delivery, usage, purchase orders, invoicing, reconciliation, and reporting is so complex that the average hospital loses an estimated $1.75 million annually in these transactions.

The original process relied on manual validation, leading to errors, delays, and disconnects across multiple hospital departments and supplier offices. Even with partial automation, the underlying issue remains: the lack of pre-transaction alignment.

Why current automated solutions don’t go far enough
While Bill-Only portals represent an improvement over purely manual processes, they don’t eliminate the core misalignment between providers and suppliers. In fact, federal oversight by the Department of Health and Human Services, Office of the Inspector General has recently flagged concerns with these one-sided solutions. Investigators noted that hospitals are increasingly requiring suppliers to use portals that primarily benefit the hospital, often at the supplier’s expense. Vendors are charged licensing fees without delivering appreciable benefits in return.

This creates a scenario where suppliers are forced into arrangements that don’t serve them, further straining already complex relationships. A system that disproportionately advantages one side of the transaction is not sustainable, and it risks regulatory scrutiny.

The needed solution: A true network
The only way to solve the Bill-Only problem is to create pre-transaction alignment between supplier and hospital. That means building a large-scale network where contract terms, products, and pricing are loaded in advance. This establishes a single source of truth that guides every step of the transaction.

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