Hospitals use logistics to help cut medical device costs

Hospitals—having spent the better part of the past decade working with their surgeons to narrow the variety of cardiovascular, orthopedic and other implants used in their operating rooms—are now looking for new ways to cut expenses related to these high-cost items.

The imperative to bring down the cost of physician preference items, or PPIs, has become particularly acute for orthopedic implants, as hospitals in 67 markets are now receiving bundled payments from Medicare for hip-and-knee replacement procedures. Under bundled payments, the hospital receives a flat fee for the operation. If the cost of the implant is particularly high, there’s less left over for everything else used during the procedure.

So supply-chain executives are taking a fine-toothed comb to every aspect of the purchase of PPIs. Distribution, inventory management, sterilization—anything that happens to a device on its trip from…

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