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What orthopedic mergers mean for hospitals

HandshakeFrom J&J’s merger between their DePuy division and Synthes to Zimmer’s acquisition of Biomet earlier this year, mergers and acquisitions have always been a strategic part of the medical device world. However, recent activity by some of the world’s most influential orthopedic device manufacturers are causing quite a stir. This began in early June of 2014 when Medtronic announced it was evaluating the takeover of Smith & Nephew and then later purchased Covdien. Some analysts believe this has put a stop to the Smith & Nephew bid while others believe Stryker is now looking to buy the company. However, more recently Stryker announced the acquisition of Pennsylvania’s Small Bone Innovations which offers the only PMA-approved, cementless, three-piece total ankle replacement system.

What does this mean for the hospital?

Until these mergers are completed, the companies will continue to run as separate entities, competing for sales. For the short term, continue to negotiate as normal. Typically, when these mergers go through, the contracts that are already in place are honored for the term of the agreement. For the long term, these mergers could prove to be beneficial to the hospital. These combined companies could provide the customer with a one stop shop for all orthopedic needs. This would allow the hospitals to pursue market share agreements across all lines of orthopedics to drive down the costs for implants, instruments and capital.

However, be wary of companies using these mergers against you in your negotiations for new or renewal of existing contracts. Until the mergers are complete, the companies will run separately, and contracts should be negotiated as such. As always, send your pricing to MD Buyline to compare to other hospitals. Our custom spend analysis takes your purchase scenario into consideration and we will compare you only to those hospitals with the same or smaller volume, same or smaller bed size or same or smaller market share commitment.

LeAnne Smith
ABOUT THIS EXPERT
LeAnne Smith, Consumables Analyst — Ms. LeAnne Smith joined MD Buyline in 2001, initially fulfilling the role of an associate analyst. Prior to joining MD Buyline, Ms. Smith worked with HELP International, a medical equipment consulting firm, as a project associate and oversaw equipment planning for surgery centers and clinics. At MD Buyline, Ms. Smith currently serves on the Buyline Consumables team as a senior analyst. She has been an integral part of the development and launch of several MD Buyline products and services, such as Buyline Consumables, Buyline Recall Tracker and the IBM Watson project.