Med Tech Companies: The Coming Hospital Purchasing Buzz Saw

January 16, 2013 — Leave a comment

MP900309510While doing some research on hospital buying behavior and the hospital supply chain, I came across some interesting statistics that surprised me.  As a Med Tech industry veteran and someone with leadership experience in the procurement function, the stats led me to the conclusion that suppliers to hospitals should be really worried.  Especially those suppliers who are uncertain of their value or those with sales team who lack an understanding of how professional buyers operate and negotiate.

Here are some stats to consider (all US statistics):

  1. It is estimated that supply costs now account for 30-40% of total procedure costs
  2. Physician preference items (things like implants, and expensive new devices) account for approximately 60% of total supply
  3. Hospital supply costs are growing at a much faster rate than other hospital costs
  4. Some pundits predict that hospital supply costs will exceed labor costs by 2020

We all know that hospitals will be under increasing pressure due to reimbursement cuts, healthcare reform, and other changes happening.  If you were running a hospital, where would you look for cost savings?  Obviously, supplier costs should be a key area of focus for smart hospital administrators.  Beware of the coming buzz saw, which will cut through your prices and margins if you are not prepared!

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