Cost of medical equipment

I just came across this blog from a medical student. At least I think its a medical student. Anyway, I couldn’t help but post a reply! Read his words first and then come back and read mine.

http://halfmd.wordpress.com/2008/06/02/the-unnecessary-cost-of-technology/

You couldn't have said it better! I work for a company called MEMdata (www.memdata.com). We have built a business on helping hospitals obtain equipment at competitive prices. We act as an equipment-centric, cost-reduction firm and equipment planner.

From what I've seen, department directors within facilities and many end users (including physicians) want to have the latest and greatest technology. The hospital or imaging facility down the street just got the latest wahoo gizmo and thus we need to do the same in order to compete. And it has to be brand X because the sales rep is really nice. Or the technology is infinitesimally better. Or that's the technology that I'm used to and I will only consider brand X.

And we've heard this too in support of the favored brand: "After all... these are patient lives we're talking about!" So the other brands available, all FDA approved, don’t work? Once the sales rep knows you’re hooked, you will pay a premium! We see it all the time.

Another factor working against you and a competitive price is the non-disclosure of price. Look carefully at your next proposal for that piece of equipment. Most have “Confidential” written all over them, especially in the small print at the bottom.

And we’ve heard this all too often: “This is a special price, just for you, so don’t tell anybody…” What??? Why can’t my buddy down the street get the same great deal? Or wait, he’s telling me that he can’t disclose his price to me either. So who really got the better deal?

Yet, I can walk into Wal-Mart, easily see the price of each piece of equipment and make an educated decision. I can walk into the grocery store and compare the cost of Pepsi and Coke, side by side. I can walk onto any new car lot and the price printed right there. And since I know the starting point, I can work from there to negotiate a fair price.

Not so with equipment. “List” price, as they call it, is very easily subject to change and we’ve seen it quickly fluctuate up and down within the same sales quarter. So you can’t even get a firm grip on the starting point to begin negotiations.

Each price is uniquely cloaked and haggled. No problem in haggling if you know what a good price is.

I find it interesting that I can surf the web and see how much people have contributed to political campaigns in my area by zip code. I can see how much my neighbor’s property is worth. And I can see how much my friend wasted on a BMW. But I can’t share or know the price of a piece of medical equipment until a sales person thinks I’m ready to buy. And even then they have to really believe I’m ready to buy or else I get a bloated price (often referred to as the “budgetary quote”), which I can share with no one.

And now the government wants price transparency in medical procedures (which I favor). But we’re still leaving the prices of the equipment to do the procedure cloaked!

And don’t even get me started on the GPO prices and the inflation they cause. Their kickbacks, I mean admin fees, are based directly on the price. The higher the price, the more they receive from the vendor.

The problem is that most hospitals and practitioners don’t know a good price for a piece of equipment. I know this because we’ve built a company helping clients achieve better prices. On average we identify 18% in savings for our clients. It is a crying shame that a 500-bed hospital can pay a premium more for the exact same piece of equipment than a 25-bed hospital. And vice versa, there are plenty of instances when our 25-bed hospitals pay the premium more than the larger institutions.

And we wonder why healthcare costs are skyrocketing! You are absolutely right! Only in healthcare…