by Dennis Walsh

The facts are sobering. A recent study by Deloitte revealed that hospitals need to generate $11,700,000 in new revenue to have the same impact as a $100,000 reduction in operation costs. There's no question hospitals can improve performance by finding smart ways to reduce costs without incurring the fiscal headache of untenable revenue goals. Despite the industry's considerable economic and political obstacles, there remains a simple strategy to help reduce the cost of care delivery without sacrificing quality: third-party medical device reprocessing.

Many of the best hospitals in the country reprocess, though more can maximize their programs to yield the greatest savings. Throughout my career of analyzing healthcare procurement processes, I've found reprocessing to be one of the most impactful cost-containment strategies with the greatest financial benefit for minimal capital investment.

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At the Hospital of Saint Raphael in New Haven, Conn., we realized our reprocessing program wasn't performing to its fullest, so we worked with our vendor partner, Stryker Sustainability Solutions, to integrate more reprocessed products into the operating room. As a result, we saved more than $520,000 in both 2008 and 2009. In 2010, we saved more than $330,000. In 2011, we're on track to surpass that. The savings are redirected to patient care initiatives, such as investing in essential equipment upgrades.

There are two key components to successful reprocessing programs; the first is negotiation and the second is education. When establishing purchasing agreements with group purchasing organizations or original equipment manufacturers, it's important to evaluate how the terms of the contract will impact your revenue stream. Avoid stipulations that will interfere with your ability to save money by hampering the purchase of FDA-approved reprocessed devices.

Education is equally, if not more, important than vigilant purchasing negotiations. The financial benefit of third-party medical device reprocessing can languish without clear lines of communication between hospital leadership and hospital staff, including physicians, nurses, and scrub techs who pull the product each day. At the Hospital of Saint Raphael, we've partnered with the surgical services team to ensure physicians and staff understand how reprocessing works, and how it creates savings opportunities without impacting their ability to care for patients.

Once staff is aware of how high costs erode hospitals' financial health and ability to perform, they want to do what it takes to drive better results. It's in all of our interests to take advantage of simple, proven strategies such as reprocessing to reduce costs and improve care without sacrificing quality.

Dennis Walsh is the director of supply chain management at the Hospital of Saint Raphael in New Haven, Conn. He's spent more than 20 years analyzing healthcare supply chain strategies and procurement processes. For more information visit www.srhs.org or, for more information about third-party medical device reprocessing, visit sustainability.stryker.com.