By Thomas Ferro
This post is speaking to hospital and medical device senior executives. Single and dual contracting initiated by hospitals was seen as a vehicle to reduce costs, and yes, it helped accomplish that goal. The question I would like to raise is whether it is good for all industry stakeholders including: hospitals, manufacturer’s, insurance companies, and ultimately, patients.
The very nature of single or dual source awards is exclusionary in nature. Yes, full-line providers benefit but that is never good as it removes free market dynamics. In this particular case, it removes a large number of competitors from the bidding process as they are not full-line providers. Furthermore, it also limits the latest new products and technologies from the process as innovation is typically driven by the small and mid-size medical device companies and not the full-line providers. For healthcare providers, this approach is not aligned in positioning your institution as cutting edge and attracting potential patients with the very best in healthcare delivery. A serious disconnect that will negatively impact your institution over time. An institution’s reputation is not automatic but like respect, it must be continually earned. Lastly, a hospital might find that the increased volume of competitors in the bidding process may ultimately realize even more cost-savings.
One solution to overcome the limitations associated with single-dual source awards is thru Anatomical Contracting. Anatomical Contracting employs the same philosophical approach and structure in the bidding process but instead of one bidding process, it employs several. For instance, Anatomical Contracting could be broken down into foot & ankle, extremity, hip fractures, etc. This opens the door to allow more competitors into the bidding process as companies are no longer excluded due to its limited portfolio breadth. It also enables hospitals to realize a more competitive bidding process while opening the doors to bring in new products and technologies. Patients gain from access to the latest technologies and products that may better meet their clinical needs. Insurance providers potentially benefit from better patient care.
