Implementation of Alliance’s surgeon owned distribution model helps to save over $1.0 million

Sep 15 2009

A scientific exhibit recently presented at the American Academy of Orthopedic Surgeons (AAOS) showed that by implementing a surgeon-owned distribution model, with Alliance Surgical Distributors (Alliance), three California hospitals saved over $1.0 million. The realized cost savings were 34% below the hospitals’ best contracted prices from other vendors. Equally notable is the fact that Alliance has held prices constant for four straight years while traditional models continue with substantial annual price increases.

“After implementing Alliance’s surgeon owned distribution model we have, for the first time, met our hospital budget and calculated savings of over $200,000 in the first six months under this model,” Karen Jarvis, RN, Operating Room Director, Arrowhead Regional Medical Center.

With the cost of orthopedic implants soaring at a rate of over 13% annually, hospitals find they are losing money on many orthopedic services. The Alliance business model of surgeon owned and managed implant distribution has proven effective in restoring the viability of these valuable services for the community. This sensible model works by bringing local surgeons together to make quality choices in implants and then negotiate the bulk purchasing of these implants. This demonstrates the beneficial effect that physicians can have in decreasing healthcare costs while protecting the highest level of quality.

“The escalation of orthopedic implant prices is a direct result of the absence of effective market forces in this industry. Surgeons, who make decisions on which implant to use are often disconnected from any financial considerations, and largely unaware of the economic consequences of their decisions. This is compounded by the fact that implants are often purchased one at a time causing manufacturers to bear substantial inventory and logistical costs which they in turn pass on to their hospital clients,” comments Dr. John Steinmann founder of Alliance Surgical Distributors. “No prior surgeon or hospital model has demonstrated such profound effect in reducing costs associated with orthopedic implants.”