Value based propositions starts with value focused contracts

Image Source: Company Websites

Image Source: Company Websites

Healthcare market is expected to grow not just in terms of numbers but also in terms of value propositions. This was thought, on foundation of which many reforms were structured and passed. However industry move on the same front became evident only recently, when there was an uptick in deals amid Medtech behemoths and Hospital centres, all revolving around value based contracts.

Value based healthcare contracting strategies saw an increased materialization in last few months. One common feature that was noticed in these partnerships was a relation that extended far beyond device sales, and stretched into an un-explored territory of streamlining running cost via various service packages.

One of the companies that were part of value based contract strategies was GE, which recently inked deal with Philadelphia’s Temple University Health System. Deal was in alignment with Jeff Immelt’s future plans for GE, and included upgrade of TUHS radiology centre, along with software support that health-centre could leverage to cut operational costs.

Deal surfaced up just after row of similar deals getting frozen between GE’s peers namely Siemens and Philips. While Philips landed a half billion dollar contract with WMC Health, Siemens locked hands with Canada based William Osler Health System.

The partnerships and contracts mark the beginning of an era where Hospital-Medtech relationship were not just to accomplish momentarily transactional tasks but spreads over continuous strategic task of reducing the operational spend. This fact is well prooven by the acknowledgment which outlined that GE-TUHS relation relied on the target of generating savings as high as USD 39 million over the contract tenure. These facts clearly outline that centre of these activities was to accomplish savings, which is a prime goal of hospital centres that are struggling to beat the bludgeoning cost pressures from various sides.

Key to execute this strategy lay in the development of technologies and platforms that reduce the operational cost at different layer. A simple example could be making the devices connected which helps in data sharing across physicians , patients and other associated personals , this reduces the cost of paper work, time requirement to execute patient treatment and other aspects, which on totality reduces the overall service cost to considerate amount.

Contracts amid various players in healthcare ecosystem will no longer be focused on tactical front , they are likely to expand and venture into strategic areas , where crux of the activity will lay in beating the cost pressures.

While the trend has just picked up, more similar deals will surface up in nearing future.

Keeping an eye for best strategy will drive the overall growth of healthcare sector.

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