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Savingsgrowth confidential

Extract more value from SUD reprocessing:Lessons learned from the most successful health system programs

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Stryker Corporation or its affiliates own, use or have applied for the following trademarks or service marks: Stryker. All other trademarks are trademarks of their respective owners or holders. MKT10194 REV B 1847 | ©2018 Sustainability Solutions | sustainability.stryker.com

I The value of reprocessing: data and insights ...................................................2

II Attributes of health systems realizing top value............................................4

III Quantifying the untapped value ............................................................................5

IV Top three factors impacting growth .....................................................................6

V Secrets to extracting more value: best practices and case studies .......7

Table of contents

Savings growth confidential: Table of contents

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You have a successful single-use device (SUD) reprocessing program. You choose to reprocess because it’s the right thing to do. For your margins. For the environment. For the future of healthcare.

But how can you deliver incrementally more value to your organization with SUD reprocessing? What more should you be doing? These are the tough questions hospitals have to ask themselves as they continue to meet aggressive and necessary savings targets.

We’ll help you answer those questions by drawing upon the extensive data and insights collected from nearly 3,000 health systems over the past eight years.

Our goal is to help grow and maximize the value SUD reprocessing delivers to your organization to meet and exceed your financial and environmental goals. We’ll give you exclusive access to valuable peer intelligence—rich data1, testimonials and case studies that can be leveraged to advance your program success.

What you’ll learn:

� What growth numbers are realistic � What type of growth do ‘peak

programs’ achieve � Where growth actually comes from � What the best strategies are for getting

creative and keeping staff engaged

� What it takes to actualize the goal

The practice of SUD reprocessing has grown because leaders like you view it as a key initiative to achieve financial and environmental goals without sacrificing quality of care.

“Our single-use device reprocessing program was born out of necessity of savings, but it’s also a best practice for environmental impact,” stated Brian Dolan, director of supply chain & logistics at the University of Kansas Health System. “We view SUD reprocessing as a key tactic to making things more efficient and clinically effective. Not only are we reusing products in a sustainable fashion but we are also not overusing resources that can be allocated to something that can be more contributory to patient care delivery.”

What impact have you made? Since 2011, adoption rates of Stryker’s reprocessing program have grown by nearly four percent per year growing from 2,291 customers in 2011 to 2,867 customers in 2017. Health systems eliminated 77 million pounds of medical waste from landfills and saved more than $2 billion in supply costs over that eight-year period.

Number of customers

2,200

2,375

2,550

2,725

2,900

2011 2012 2013 2014 2015 2016 2017

I The value of reprocessing: data and insights

“Our single-use device reprocessing program was

born out of necessity of savings, but it’s also a

best practice for environmental impact.”

—Brian Dolan, director of supply chain & logistics,

University of Kansas Health System

Savings growth confidential: The value of reprocessing: data and insights

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In 2017 alone, 3,000 participating hospitals saved a collective $326 million and diverted 13.4 million pounds of waste from landfills. This was an annual increase of $27 million in supply chain savings and 500,000 pounds of medical waste diverted over the previous year.

Supply Chain savings

$290M

$300M

$310M

$320M

$330M

2016 savings 2017 savings

$326M

$299M

Waste diversion

12.8M lbs

13.0M lbs

13.1M lbs

13.3M lbs

13.4M lbs

2016 waste diversion 2017 waste diversion

13.4M lbs

12.9M lbs

How much should your reprocessing program realistically grow year-over-year? Let’s take a look at the numbers.

*PP = Peak programs

Mean savings reprocessing growth 2017 vs. 2016

0%

10%

20%

30%

40%

22%

9.7%

35%

9%

Hospital PP* Hospital IDN PP* IDN

We are not surprised to see this level of growth among our customers over the last year. In fact, two-thirds of our customers realized more growth in 2017 over their first year reprocessing with us. This is especially impressive because, historically, hospitals see the most growth in the first 12 months of their program and then plateau. This growth is because of your commitment to meeting your program goals.

Savings growth confidential: The value of reprocessing: data and insights

Peak programs are the top 20 health

systems currently reprocessing with

Stryker based on highest percentage

of SUD reprocessing program

savings for the size of the facility.

$113,909 $992,162

$1.3M

$5.6M

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What is surprising, and also encouraging, is just how much savings growth health systems can realize in one year. A 35 percent increase for the peak program customers is no small feat. Before we dive into the best practices they executed, let’s look at the attributes that set these health systems apart.

Building a successful SUD reprocessing program doesn’t happen overnight. Original equipment manufacturer (OEM) challenges are around every corner. This requires you to constantly respond to the changing healthcare landscape. There’s also the impact of staff turnover in your health system. These factors can make or break a program.

Peak program health system programs are not just driven by one individual on a mission, but they immerse reprocessing throughout their organization. Having your teams engaged and accountable at every level not only drives savings faster, but it ensures year-over-year savings improvement. Each of the following can make your program more immune to growth challenges.

Culture. Making reprocessing part of the organizational culture sets average hospitals apart from the peak program hospitals. Reprocessing isn’t a one-year commitment but ingrained in the health system’s long-term vision and planning. These health systems are able to recognize and give credit to their reprocessing program for the value it has provided over the continuum of time. The cultural commitment extends from c-level to supply chain, staff, surgeons and beyond. Instead of forcing reprocessed device adoption, these health systems let surgeons evaluate the products to build support and gather their input

when selecting reprocessing suppliers, and which products to take on next.

Commitment. Healthcare has experienced a number of changes in the last decade increasing the pressure to control costs, without sacrificing quality of care. The peak program health systems see reprocessing

as a critical point of leverage. They look to utilize the strategic leverage they gain from strong reprocessing savings results, and bring their reprocessing partner to the table to help them negotiate and save more dollars. They value their SUD reprocessor as a partner and help ensure that no other contracts get in the way of their reprocessing savings goals.

Leadership. SUD reprocessing is not a ‘set it and forget it’ program. It requires collaboration and communication to reach your goals. The peak program health systems have champions who are committed

Savings growth confidential: Attributes of health systems realizing top value

II Attributes of health systems realizing top value

For one health system that reprocesses in the OR, the

OR business manager makes it their personal mission

to grow staff engagement. When they introduced

reprocessing at a monthly general surgery meeting,

the administrative team notified surgeons that a rep

would be present through their cases and got all of

them to use reprocessed devices.

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to the program and makes time for it. They advocate. They share data and business reviews. They promote opportunities throughout the organization and there is a shared accountability to achieve their goals.

Whether you identify as having a peak program or not and whether you’re in your first or tenth year reprocessing, the data proves you can grow the value of your program. The growth potential is actually somewhat limitless. Industry analysts continue to paint reprocessing as a high growth market. Global Market Insights expects the global market to be $2.2 billion by 2022.2

At Stryker, our growth is driven by your goals to enhance your reprocessing program year-over-year. We continue to challenge ourselves to make smart decisions about new devices and offerings that will be the most meaningful to help you hit your financial and environmental goals, as well as to improve the speed and readiness for deeper program adoption.

For example, consider our expanding reprocessed device portfolio. Every time we add a new reprocessed device, we open the door to realize a new path to save

money and reduce waste. Since 2010, we’ve expanded our portfolio with 176 new products, resulting in millions of dollars in new savings opportunities.

While that’s exciting progress, that is only one of many avenues available to help you realize more value. Your growth strategy has to be sustainable for years, not just months. Therefore, we’ve gone beyond just FDA 510(k) clearances, and introduced a number of savings drivers to help you overcome common reprocessing hurdles and make it easier for you to achieve your goals year over year.

In the next section, let’s take a look at some of the key factors that we’ve seen impact savings.

Savings growth confidential: Quantifying untapped value

III Quantifying untapped value

Since the foundation of Sustainability Solutionsand our predecessor companies, our customershave collectively saved more than

$1 Billion

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There are three considerations that can have a dramatic impact on reprocessing program growth. Understanding what they are and the effect they can have on savings—good or bad—can keep you in control of your program growth.

Reprocessing’s inherent challenge is a varied supply of product to purchase. To realize more value, you need to ensure the maximum amount of reprocessable devices are being collected in your health system, and in turn available for you to purchase them back.

The current reality: collection compliance varies greatly across health systems and product lines but it isn’t uncommon to see a 50 percent compliance rate. In fact, no hospital has ever reached 100 percent collection compliance. This presents a big opportunity to unleash more program growth.

High volume items, in particular, can be difficult to maximize collections on. When staff are handling patient care products like pulse oximeters or ECG leads, for example, it can be easy for them to throw the device in the waste bin. We tend to see poor compliance mostly in the patient care products, followed by surgical products with vascular products suffering from collection compliance the least. Our peak program customers have a collection compliance that is 49 percent better than our average customer on a per-bed basis.

Your SUD reprocessing program consists of three parts: collecting devices to send to a third-party reprocessor, buying back the devices after reprocessing and using the reprocessed devices. However, buy-back is where you can lose out on significant savings. In fact, Practice Greenhealth reported that 97 percent of participating health systems collected devices in the OR, but only 85 percent reported purchasing them back.3 That is consistent with our customer data across all categories of devices: only 87 percent of Stryker customers buy back their available devices. Yet, the general rule is: the more you buy reprocessed, the less you buy new. Which translates to significant savings.

OEM pushback has become the hurdle every health system faces. In fact, OEM contractual limitations are the number one reason hospitals struggle with hitting reprocessed savings targets. Other tactics OEMs are deploying include forcing new iterations of devices and software to lock out reprocessors and pulling case support in the EP lab when reprocessed devices are used.

As SUD reprocessing has grown and taken market share from OEMs, the OEMs have deployed these aggressive tactics to protect revenue. We have seen this and we have heard from our customers about their struggles.

Savings growth confidential: Quantifying untapped value

IV Top three considerations for impacting growth

Commitment to buy-back

Collection compliance

Anti-reprocessing tactics

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You are not alone. Look no further than a health system in North Carolina that saw its savings drop 43 percent—by over $355,000—from 2013 to 2014 due to contracts. The savings lost from these contracts can be drastic and sometimes you do not even realize you have signed an agreement that can restrict or prohibit reprocessing, until it is too late.

While it is hard to quantify the savings lost from these OEM challenges, any loss makes it harder to reach your goals.

Whether you currently have a peak program or are on your way there, the reality is, most health systems have experienced a loss of savings due to their very own OEM contracts. While you cannot control the OEMs, being aware and committed to growing your program can help ensure these anti-reprocessing tactics are thwarted.

Meeting the goals you set for your reprocessing program is a daily commitment. Success is hard fought and earned through you, your team and your organization.

The peak program health systems are continuously seeking out ways to push their program forward, despite obstacles. It takes partnership and we are there with you. We take customer feedback seriously, and understand the issues impacting your savings. Finding diversified avenues to realize growth and overcome obstacles is key. Sustainable growth can’t just come from new 510(k) clearances.

We’ve unveiled the strategies that our top-growth customers are using to increase value, reduce internal and external hurdles and differentiate their programs in the marketplace.

CollectionsCollections are integral to every SUD reprocessing program, yet no health system has ever reached 100 percent collection compliance on any product line. This means that even the peak program health systems have room to grow.

Our sales representatives have found that the most

Savings growth confidential: Secrets of extracting more value: Best practices . . .

Have you experienced this at your health system? If so, talk to your Stryker representative or keep reading to learn

how other health systems have overcome these challenges.

V Secrets to extracting more value: Best practices and case studies

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successful facilities engage them in the process. Instead of simply designing savings goals around the number of devices collected, track real-time device usage data to help unlock your true savings potential. For instance, if a report that shows that you use an average of 250 compression sleeves each month, your sales representative can determine what your actual savings would be if you collected 100 percent of those devices.

Once you have identified your growth potential, here are three ways the peak program health systems have succeeded at achieving collections goals.

1. Support from senior leadership. While it is the frontline staff that are actually responsible for getting the devices into designated collection containers, the health systems that have seen the most improvement have garnered support from senior leadership. To help keep the senior leadership engaged, one health system in the Midwest shares a monthly progress report with the savings numbers and graphics to show the progress that has been made to date.

Another health system in the Southwest gained support from the top down and had a corporate-wide strive for 100 percent collection compliance. This yielded almost 20 percent growth in their annual savings in one year. 2. Staff buy-in. Because collections are critical to sustaining and growing the value of SUD reprocessing, it is important your staff stay aware and motivated. One of the biggest hurdles to collections is staff turnover. To overcome this obstacle, you have to be constantly educating. Some health systems allow their

reprocessing representative to hold formal in-services on a regular basis. Others have incorporated some reprocessing awareness education into new employee on-boarding procedures.

Another way to keep staff engaged is to provide visibility and celebrate your successes as you hit financial and waste diversion milestones. As part of supporting those efforts, we launched a program, “Pulse Ox for the Planet.” The program donates to the National Forest Foundation as a reward to health systems that increase their annual pulse oximeter collections. In the inaugural year, 153 customers participated; each increasing their pulse oximeter collections by an average of 12 percent. This resulted in 5,000 trees being planted. This is a win-win for facilities as staff is excited about the positive environmental impact of the initiative and it also delivers savings.

Participating in this program helped a 7,000-bed health system in the Southwest realize a 19 percent increase in annual savings in 2017. Staff was motivated to strive for strong collection numbers when they saw the financial and environmental sustainability results.

3. Simplified process. Once staff buy in, the peak program health systems strive to make the collection process easy for them. Providing quality patient care is the top priority for your clinicians, nurses and techs, and they don’t need to be troubled with searching for the appropriate collection containers. Talk with your sales representative to ensure that the collection containers are always available in convenient

locations. Also, adding signage around the health system can help keep collections top of mind.

Work with your floor managers to identify ideal collection bin placements throughout every area of the hospital. Not involving your staff is a missed opportunity. Those that are actually involved day to day can provide insight


No customer has ever reached 100 percent

collections compliance on any product line.

This means that even the peak program health

systems have room to grow.

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into how to simplify the process for others. Lastly, reducing the size of red sharps bins in the operating room can further encourage staff to place appropriate devices in the SUD reprocessing collection bin. Buy-backFocusing simply on improving collection compliance can be an effective and easy strategy. For that reason, we see a lot of health systems stop there. But making the most of your hard work in collections means ensuring that your hospitals are buying back all of the devices they drove to collect. Top health systems dedicate their focus to buying back a broad range of reprocessed devices.

Most health systems don’t capitalize on this opportunity because of lack of device availability or a challenging purchasing process. When your supply chain department has to manage ordering from multiple contracts, it can hinder the number of devices you buy back. But our goal is to make this process more seamless and less cumbersome for every health system, as well as ensure that devices are available for buy back.

The hospitals that realized the most value with buy-back focused on two things: the device types and areas of the hospital that they buy back reprocessed devices and ensuring 100 percent fill rate.

Device types and areas of the hospital. When it comes to your reprocessing program, if you don’t buy any devices, you won’t save any money. Because reprocessed devices can be purchased back at a fraction of the cost of a new device, the more you buy, the more you save.

We make purchasing back devices easier by collecting from over 3,500 facilities and maintaining the largest pool of reprocessed inventory. Our selection of devices spans over 3,000 SKUs, offering the widest array of product categories throughout the hospital—including the OR, EP lab and patient floor. We’re continually exploring devices to pursue FDA 510(k) clearance on—

devices that are over and above what you currently use and we currently offer.

To realize these savings, it is important to reevaluate the products and areas of your health system that you are reprocessing on a yearly basis. Then determine which areas are easiest to grow. Beyond just buying more of the same device, it’s important to buy products in different areas of your hospital to increase device savings exponentially. However, only 62 percent of our customers reprocess in all three areas. An IDN on the East Coast set out to increase its savings by adopting reprocessing in the EP lab. It added electrophysiology catheters, ICE catheters and steerable introducer sheaths increasing its savings by $586,849, or 726 percent, in just one year.

Another hospital in the Northwest, created a reprocessing task force to identify new opportunities to grow its savings on a monthly basis. By doing this, it found new devices to buy back in the EP lab and OR. Partnering with sales representatives to track and meet goals allowed it to achieve more than $1 million in savings.

Having more products available is another path for savings growth, but it doesn’t complete the puzzle. Making the purchasing process easier is critical.

Fill ratesOnce products are collected, it is important for a reprocessing supplier to turn devices around quickly because substituting them for OEM devices will maximize savings potential. Even as the market leader —collecting from nearly 3,000 customers—demand for devices does exceed our inventory from time to time. In order to manage this, we work with health systems to distinguish which products can be offered back at 100 percent usage. We also continually pursue partnerships to increase predictability of savings for our customers.

Northern Nevada, the largest local non-profit healthcare network, did a full savings analysis in its OR and set a goal to purchase back 100 percent of its


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LigaSure and Harmonic devices. Focusing on these two devices led to 284 percent savings growth in one year.

Access to consistent fill rates also helps ensure efficiency in the supply chain department. One health system in the Midwest has found it important to communicate with us regularly, especially on devices with unpredictable usage patterns. The reality is the reprocessed purchasing process often includes hospitals issuing a PO but when the PO has exceeded the reprocessed device inventory, the health system has to issue a second PO to the OEM to make up the difference. These extra steps can feel cumbersome and result in the OEM purchase being the default. But when the health system communicates which devices it can provide with 100-percent fill rate, the supply chain can establish a steady flow of products and consistency during the purchasing process.

To address inventory issues and to simplify the purchasing process, we introduced Save Simply™, a partnership with Royal Philips, which allows us to deliver a blend of new and reprocessed Philips ECG leads for one low price. This guarantees that health systems can receive 100 percent fill rates in certain product categories. In 2017, a nearly 500-bed hospital in New York City grew its savings by 63 percent from 2016. By switching to the Save Simply™ platform they achieved 100 percent fill of demand, and are on track to grow by an additional 102 percent for 2018.

Anti-reprocessing tacticsHistorically, it is in the OEMs’ best interest to stifle reprocessing programs. We recognize that pushing back on OEMs isn’t always easy. But speak up and let them know that reprocessing is important to you, especially if you are driving more volume to them. Encourage fair competition for business. There’s room for both new and reprocessed devices in your facilities and your budget. Here are some ways our top health systems have stepped up to protect their reprocessing program savings.

Forcing new iterations of hardware and software to lock out reprocessorsBefore you upgrade or switch devices, discuss with your sales representative what it means for your savings and your ability to reprocess devices.

Pulling case support Gaining independence from OEMs in the EP lab can be critical to reaching your savings goals. According to a recent study by Millennium Research Group, Inc., the market for reprocessed devices expects significant growth, especially in the cardiovascular medical device segment, over the next few years.4 We understand it is important to have staff trained to use the devices and provide case support. But relying on the OEM can limit your ability to use a reprocessed device in a case. To help our customers, we have introduced the first educational program to teach you how to operate device consoles without OEM support. This means you no longer have to choose between case support or savings. Hospitals that have implemented this program have gained more control over their supply chain decisions, ultimately helping them save money.

OEMs locking reprocessing out of contracts Hospitals that have successfully overcome this hurdle have proactively engaged us to protect their reprocessing program and deliver continuous savings. This includes reaching out to your sales representative when new products or technology are offered by the OEM before you sign a contract. Just one OEM contractual limitation could impact your savings for as long as three years. However, engaging us in the conversation means we can help advise regarding the total savings value at stake and offer creative ideas for addressing your pain points.

Taking it one step further, one academic medical center in the Midwest works hard to manage contracts and relationships among its vendors. Instead of letting its savings suffer, it brings both vendors into a room to discuss how they can work together to make sure that they are hitting both their contract and savings goals. It aligns all its partners on the expectations


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and priorities of the health system. It is vocal about keeping reprocessing a high priority. Sharing this level of information can help everyone work together in concert and creates a transparent environment that your vendors should appreciate. At the end of the day, it is putting the best interest of the health system first.

ConclusionWe hope this paper gives you the well-deserved pat on the back and added inspiration to keep pushing your program goals. There are ways to grow every year, regardless of how long ago or recently you implemented a reprocessing program. The savings potential is there—and it can start with you. Hold your program to the peak program. Set goals. Apply best practices.

1. Data contained herein is based upon Stryker customer data, unless otherwise noted and is not representative of the entire SUD reprocessing industry data.

2. Global Market Research. (2018) Reprocessed Medical Devices Market Share - Industry Size Report. Retrieved from https://www.gminsights.com/industry-analysis/reprocessed-medical-devices-market

3. Practice Greenhealth. (2016) 2016 Sustainability Benchmark Report. Retrieved from https://practicegreenhealth.org/about/press/press-releases/practice-greenhealth’s-sustainability-benchmark-report-shows-strong-progr

4. Millennium Research Group, Inc. (2018) Reprocessed Devices Medtech 360 report


We want to know: What’s the one key takeaway that you’re going to leverage to enhance your program? Please share with your Stryker representative and, together, let’s create an action plan to make it happen. We’ll hold ourselves accountable to realizing your goal.

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