Latex gloves, cotton gowns, plastic bedpans, stainless steel IV needles. These are just a few of the items hospitals purchase daily that are made from raw materials within the global commodity marketplace. 

"The prices of raw materials are driven by global supply and demand changes, which ultimately affect the price of hospital supplies," said Jeff King, project manager, Market Research. "Other global factors that can impact pricing include currency exchange rates, labor costs and transportation costs. We constantly monitor approximately 30 different indexes to help ensure the contracts we negotiate with suppliers offer members the best value for the products they need."

As an added benefit, Vizient summarizes this research and on a quarterly basis publishes the Budget Impact Projections report, which provides contract-specific price change forecasts to assist health care organizations in the supply-related budgeting process to more effectively manage their supply costs. The report includes:

  • Budget Impact Projections Highlights - Detailed trends on more than 30 raw materials indexes
  • Budget Impact Dashboard - An interactive, web-based dashboard that uses the “contract price change projections” for a customized view of your supply costs for budgeting purposes
  • Contract Price Change Projections - Price change forecasts for current Vizient contracts and upcoming bids and extensions over the next 12 to 24 months

"In looking at all of the index trends and data, we expect national market prices for supplies overall to increase 1.7 percent in 2016. However, our overall contract price projection is expected to decline 0.1 percent during the same time due to a number of contracts anticipating lower prices, and more than 86 percent of Vizient’s portfolios offering firm prices," said King.

Regarding key commodity indexes King monitors he said, "Rubber, latex and plastic resin pricing should maintain at current levels or decline further until there is a recovery in oil or market demand. Prices for steel, stainless steel, aluminum and copper all fell in 2015 and are not expected to rebound much in 2016. Nickel is the lone metal that is expected to rise slightly between now and 2017. Cotton prices in 2016-17 will likely remain near current levels, unless the global economy recovers and starts showing signs of growth, and the balanced supply and demand for wood pulp and paper will keep prices near current levels in 2016."

One index that is forecasting increased costs is food and nutrition. "The U.S. Department of Agriculture's Economic Research Service is projecting food inflation of 2.5 to 3.5 percent in 2016. Driving most of the increase is fruit and vegetable prices which are rising due to the effects of drought in California on supply," said King.

For more information, contact Jeff King, market research project manager at 972.581.5074 or jeff.king@vizientinc.com.

Note: Vizient market price projections are forecasts, not predictions. Forecasts are point-in-time estimates of price changes and are subject to changes in market conditions. Facilities may obtain additional price benefits and/or price protection through tier pricing or commitment.

Published: March 7, 2016