Archive for May, 2011

05/20 2011

Product price variations

I wanted to make some observations about the wide price discrepancies of clinical products, which – it seems to me – are symptomatic of the complex dynamics of the marketplace. There are some recent changes in the landscape that play a role in creating these dynamics. As we learned from our recent research study, physicians are becoming much more active participants in the product purchasing process. This involvement is relatively new but growing rapidly, as are the skills and profile of supply chain/materials organizations charged with contracting and supply cost management. Add to this the Affordable Care Act requirement for value-based purchasing, which should ultimately make most products more competitive in price, given comparable clinical outcomes.

Many hospitals are also engaged in contract compliance and utilization management initiatives in order to ensure that: (a) the cost of a product used would be known and transparent at the time of purchase, and any non-contracted item would be flagged out quickly; and (b) the product is used appropriately from a clinical/evidence-based standpoint.

My hope is that the combination of greater physician engagement, more emphasis on evidence-based product utilization, and better administrative controls will reduce the senseless price variations as well as overall costs.