How Risk-Sharing Contracts with Supplier Partners Benefit Healthcare Providers
Tue Mar 29 13:00:00 CDT 2016
US Vice President of Strategic Partnership Solutions, Minimally Invasive Therapies Group, Medtronic
When a new medical technology hits the market, physicians in health systems and hospitals may request to obtain the item, no matter the expense. However, organizations may be reluctant to become "early adopters" of new medical technologies due to the financial risk involved. Shouldn’t an institution wait to invest in a technology until it is proven to deliver the financial and clinical outcomes claimed by the supplier?
Enter the Risk-Sharing Contract
The term “risk-sharing” has surfaced in the healthcare industry over the past few years, but what does it mean? In fact, there is no universal definition of this term. For our purposes, “risk-sharing contract” refers to a non-traditional method of assigning value in a transaction. With risk-sharing contracts, clinical and/or economic outcomes are measured and agreed upon prior to signing the contract, and payment is dependent on meeting the agreed-upon measures.
Risk-Sharing Contracts Benefit Organizations
These contracts can benefit healthcare providers in two key ways:
- When an organization is hesitant to invest in an expensive, new medical technology before it is proven, a risk-sharing contract mitigates the financial risk to the provider. The organization can work with the supplier to set a measurement of outcomes and will experience financial relief if the technology does not perform to these specifications.
- In situations where an organization is struggling to meet certain outcomes measures, the provider can partner with the supplier to increase data sharing transparency. Then the entities can work together using the shared data to reach the desired clinical or economic result.
Risk-sharing contracts make it possible for organizations to lead their community in adopting new medical technologies while protecting their financial position and potentially enhancing their outcomes.
How is your organization approaching risk-sharing partnerships with suppliers? What benefits and learnings can you share?
Mike LaCasse is the US Vice President of Strategic Partnership Solutions for the Medtronic Minimally Invasive Therapies Group based in New Haven, CT. Mike has held a number of sales leadership positions during his 19 year career at Medtronic. In his current role Mike and his team oversee strategic relationships with IDNs. In addition to contracting, his team is tasked with providing solutions that expand beyond product and price to the provider community.