Contract terms can curtail costs of new medical devices

Healthcare Financial Management, Annual, 2006 by Peter Stille

Is your hospital paying for expensive new medical devices that vendors convince physicians to try out? Here are two simple ways to curtail these unexpected costs:

* Add a term to your supplier contracts that says something like this: "New technology that has not been added to the existing contract before delivery is not authorized for purchase." This politely informs suppliers that they risk nonpayment by introducing new technology without agreed-upon deliberations.

* Institute hospital procedures to back up this contract term. Require purchasing staff to seek executive authorization before issuing purchase orders for medical devices that are not matched back to a contract. Also, establish a committee to rationalize purchase of new products.

Peter Stille is principal consultant, Strategic Sourcing Results, Chicago. He can be reached at p-stille@strategicsourcingresults. com.